1 G.R. No.

140047 July 13, 2004

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, petitioner, vs. V.P. EUSEBIO CONSTRUCTION, INC.; 3-PLEX INTERNATIONAL, INC.; VICENTE P. EUSEBIO; SOLEDAD C. EUSEBIO; EDUARDO E. SANTOS; ILUMINADA SANTOS; AND FIRST INTEGRATED BONDING AND INSURANCE COMPANY, INC., respondents.

DECISION

DAVIDE, JR., C.J.: This case is an offshoot of a service contract entered into by a Filipino construction firm with the Iraqi Government for the construction of the Institute of Physical Therapy-Medical Center, Phase II, in Baghdad, Iraq, at a time when the Iran-Iraq war was ongoing. In a complaint filed with the Regional Trial Court of Makati City, docketed as Civil Case No. 91-1906 and assigned to Branch 58, petitioner Philippine Export and Foreign Loan Guarantee Corporation1 (hereinafter Philguarantee) sought reimbursement from the respondents of the sum of money it paid to Al Ahli Bank of Kuwait pursuant to a guarantee it issued for respondent V.P. Eusebio Construction, Inc. (VPECI). The factual and procedural antecedents in this case are as follows: On 8 November 1980, the State Organization of Buildings (SOB), Ministry of Housing and Construction, Baghdad, Iraq, awarded the construction of the Institute of Physical TherapyMedical Rehabilitation Center, Phase II, in Baghdad, Iraq, (hereinafter the Project) to Ajyal Trading and Contracting Company (hereinafter Ajyal), a firm duly licensed with the Kuwait Chamber of Commerce for a total contract price of ID5,416,089/046 (or about US$18,739,668).2 On 7 March 1981, respondent spouses Eduardo and Iluminada Santos, in behalf of respondent 3-Plex International, Inc. (hereinafter 3-Plex), a local contractor engaged in construction business, entered into a joint venture agreement with Ajyal wherein the former undertook the execution of the entire Project, while the latter would be entitled to a commission of 4% of the contract price.3 Later, or on 8 April 1981, respondent 3-Plex, not being accredited by or registered with the Philippine Overseas Construction Board (POCB), assigned and transferred all its rights and interests under the joint venture agreement to VPECI, a construction and engineering firm duly registered with the POCB.4 However, on 2 May 1981, 3-Plex and VPECI entered into an agreement that the execution of the Project would be under their joint management.5 The SOB required the contractors to submit (1) a performance bond of ID271,808/610 representing 5% of the total contract price and (2) an advance payment bond of ID541,608/901 representing 10% of the advance payment to be released upon signing of the contract.6 To comply with these requirements, respondents 3-Plex and VPECI applied for the issuance of a guarantee with petitioner Philguarantee, a government financial institution empowered to issue guarantees for qualified Filipino contractors to secure the performance of approved service contracts abroad.7 Petitioner Philguarantee approved respondents' application. Subsequently, letters of guarantee8 were issued by Philguarantee to the Rafidain Bank of Baghdad covering 100% of the performance and advance payment bonds, but they were not accepted by SOB. What SOB required was a letter-guarantee from Rafidain Bank, the government bank of Iraq. Rafidain Bank then issued a performance bond in favor of SOB on the condition that another foreign bank, not Philguarantee, would issue a counter-guarantee to cover its exposure. Al Ahli Bank of

Kuwait was, therefore, engaged to provide a counter-guarantee to Rafidain Bank, but it required a similar counterguarantee in its favor from the petitioner. Thus, three layers of guarantees had to be arranged.9 Upon the application of respondents 3-Plex and VPECI, petitioner Philguarantee issued in favor of Al Ahli Bank of Kuwait Letter of Guarantee No. 81-194-F 10 (Performance Bond Guarantee) in the amount of ID271,808/610 and Letter of Guarantee No. 81-195-F11 (Advance Payment Guarantee) in the amount of ID541,608/901, both for a term of eighteen months from 25 May 1981. These letters of guarantee were secured by (1) a Deed of Undertaking12 executed by respondents VPECI, Spouses Vicente P. Eusebio and Soledad C. Eusebio, 3-Plex, and Spouses Eduardo E. Santos and Iluminada Santos; and (2) a surety bond13 issued by respondent First Integrated Bonding and Insurance Company, Inc. (FIBICI). The Surety Bond was later amended on 23 June 1981 to increase the amount of coverage from P6.4 million to P6.967 million and to change the bank in whose favor the petitioner's guarantee was issued, from Rafidain Bank to Al Ahli Bank of Kuwait.14 On 11 June 1981, SOB and the joint venture VPECI and Ajyal executed the service contract15 for the construction of the Institute of Physical Therapy Medical Rehabilitation Center, Phase II, in Baghdad, Iraq, wherein the joint venture contractor undertook to complete the Project within a period of 547 days or 18 months. Under the Contract, the Joint Venture would supply manpower and materials, and SOB would refund to the former 25% of the project cost in Iraqi Dinar and the 75% in US dollars at the exchange rate of 1 Dinar to 3.37777 US Dollars.16 The construction, which was supposed to start on 2 June 1981, commenced only on the last week of August 1981. Because of this delay and the slow progress of the construction work due to some setbacks and difficulties, the Project was not completed on 15 November 1982 as scheduled. But in October 1982, upon foreseeing the impossibility of meeting the deadline and upon the request of Al Ahli Bank, the joint venture contractor worked for the renewal or extension of the Performance Bond and Advance Payment Guarantee. Petitioner's Letters of Guarantee Nos. 81-194-F (Performance Bond) and 81-195-F (Advance Payment Bond) with expiry date of 25 November 1982 were then renewed or extended to 9 February 1983 and 9 March 1983, respectively.17 The surety bond was also extended for another period of one year, from 12 May 1982 to 12 May 1983.18 The Performance Bond was further extended twelve times with validity of up to 8 December 1986,19 while the Advance Payment Guarantee was extended three times more up to 24 May 1984 when the latter was cancelled after full refund or reimbursement by the joint venture contractor.20 The surety bond was likewise extended to 8 May 1987.21 As of March 1986, the status of the Project was 51% accomplished, meaning the structures were already finished. The remaining 47% consisted in electro-mechanical works and the 2%, sanitary works, which both required importation of equipment and materials.22 On 26 October 1986, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full payment of its performance bond counter-guarantee. Upon receiving a copy of that telex message on 27 October 1986, respondent VPECI requested Iraq Trade and Economic Development Minister Mohammad Fadhi Hussein to recall the telex call on the performance guarantee for being a drastic action in contravention of its mutual agreement with the latter that (1) the imposition of penalty would be held in abeyance until the completion of the project; and (2) the time extension would be open, depending on the developments on the negotiations for a foreign loan to finance the completion of the project.23 It also wrote SOB protesting the call for lack of factual or legal basis, since the failure to complete the Project was due to (1) the Iraqi government's lack of foreign exchange with which to pay its (VPECI's) accomplishments and (2) SOB's noncompliance for the past several years with the provision in the contract that 75% of the billings would be paid in US dollars.24 Subsequently, or on 19 November 1986, respondent VPECI advised the petitioner not to pay yet Al Ahli Bank because efforts were being exerted for the amicable settlement of the Project.25 On 14 April 1987, the petitioner received another telex message from Al Ahli Bank stating that it had already paid to Rafidain Bank the sum of US$876,564 under its letter of guarantee, and demanding reimbursement by the petitioner of what it paid to the latter bank plus interest thereon and related expenses.26 Both petitioner Philguarantee and respondent VPECI sought the assistance of some government agencies of the Philippines. On 10 August 1987, VPECI requested the Central Bank to hold in abeyance the payment by the petitioner "to allow the diplomatic machinery to take its course, for otherwise, the Philippine government , through the Philguarantee and the Central Bank, would become instruments of the Iraqi Government in consummating a clear act of injustice and inequity committed against a Filipino contractor."27

On 27 August 1987, the Central Bank authorized the remittance for its account of the amount of US$876,564 (equivalent to ID271, 808/610) to Al Ahli Bank representing full payment of the performance counter-guarantee for VPECI's project in Iraq. 28 On 6 November 1987, Philguarantee informed VPECI that it would remit US$876,564 to Al Ahli Bank, and reiterated the joint and solidary obligation of the respondents to reimburse the petitioner for the advances made on its counterguarantee.29 The petitioner thus paid the amount of US$876,564 to Al Ahli Bank of Kuwait on 21 January 1988.30 Then, on 6 May 1988, the petitioner paid to Al Ahli Bank of Kuwait US$59,129.83 representing interest and penalty charges demanded by the latter bank.31 On 19 June 1991, the petitioner sent to the respondents separate letters demanding full payment of the amount ofP47,872,373.98 plus accruing interest, penalty charges, and 10% attorney's fees pursuant to their joint and solidary obligations under the deed of undertaking and surety bond.32 When the respondents failed to pay, the petitioner filed on 9 July 1991 a civil case for collection of a sum of money against the respondents before the RTC of Makati City. After due trial, the trial court ruled against Philguarantee and held that the latter had no valid cause of action against the respondents. It opined that at the time the call was made on the guarantee which was executed for a specific period, the guarantee had already lapsed or expired. There was no valid renewal or extension of the guarantee for failure of the petitioner to secure respondents' express consent thereto. The trial court also found that the joint venture contractor incurred no delay in the execution of the Project. Considering the Project owner's violations of the contract which rendered impossible the joint venture contractor's performance of its undertaking, no valid call on the guarantee could be made. Furthermore, the trial court held that no valid notice was first made by the Project owner SOB to the joint venture contractor before the call on the guarantee. Accordingly, it dismissed the complaint, as well as the counterclaims and cross-claim, and ordered the petitioner to pay attorney's fees of P100,000 to respondents VPECI and Eusebio Spouses and P100,000 to 3-Plex and the Santos Spouses, plus costs. 33 In its 14 June 1999 Decision,34 the Court of Appeals affirmed the trial court's decision, ratiocinating as follows: First, appellant cannot deny the fact that it was fully aware of the status of project implementation as well as the problems besetting the contractors, between 1982 to 1985, having sent some of its people to Baghdad during that period. The successive renewals/extensions of the guarantees in fact, was prompted by delays, not solely attributable to the contractors, and such extension understandably allowed by the SOB (project owner) which had not anyway complied with its contractual commitment to tender 75% of payment in US Dollars, and which still retained overdue amounts collectible by VPECI. Second, appellant was very much aware of the violations committed by the SOB of its contractual undertakings with VPECI, principally, the payment of foreign currency (US$) for 75% of the total contract price, as well as of the complications and injustice that will result from its payment of the full amount of the performance guarantee, as evident in PHILGUARANTEE's letter dated 13 May 1987 . Third, appellant was fully aware that SOB was in fact still obligated to the Joint Venture and there was still an amount collectible from and still being retained by the project owner, which amount can be set-off with the sum covered by the performance guarantee. Fourth, well-apprised of the above conditions obtaining at the Project site and cognizant of the war situation at the time in Iraq, appellant, though earlier has made representations with the SOB regarding a possible amicable termination of the Project as suggested by VPECI, made a complete turn-around and insisted on acting in favor of the unjustified "call" by the foreign banks.35

The petitioner then came to this Court via Rule 45 of the Rules of Court claiming that the Court of Appeals erred in affirming the trial court's ruling that I RESPONDENTS ARE NOT LIABLE UNDER THE DEED OF UNDERTAKING THEY EXECUTED IN FAVOR OF PETITIONER IN CONSIDERATION FOR THE ISSUANCE OF ITS COUNTER-GUARANTEE AND THAT PETITIONER CANNOT PASS ON TO RESPONDENTS WHAT IT HAD PAID UNDER THE SAID COUNTER-GUARANTEE. II PETITIONER CANNOT CLAIM SUBROGATION. III IT IS INIQUITOUS AND UNJUST FOR PETITIONER TO HOLD RESPONDENTS LIABLE UNDER THEIR DEED OF UNDERTAKING.36 The main issue in this case is whether the petitioner is entitled to reimbursement of what it paid under Letter of Guarantee No. 81-194-F it issued to Al Ahli Bank of Kuwait based on the deed of undertaking and surety bond from the respondents. The petitioner asserts that since the guarantee it issued was absolute, unconditional, and irrevocable the nature and extent of its liability are analogous to those of suretyship. Its liability accrued upon the failure of the respondents to finish the construction of the Institute of Physical Therapy Buildings in Baghdad. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the principal debtor, the contract is called suretyship. 37 Strictly speaking, guaranty and surety are nearly related, and many of the principles are common to both. In both contracts, there is a promise to answer for the debt or default of another. However, in this jurisdiction, they may be distinguished thus: 1. A surety is usually bound with his principal by the same instrument executed at the same time and on the same consideration. On the other hand, the contract of guaranty is the guarantor's own separate undertaking often supported by a consideration separate from that supporting the contract of the principal; the original contract of his principal is not his contract. 2. A surety assumes liability as a regular party to the undertaking; while the liability of a guarantor is conditional depending on the failure of the primary debtor to pay the obligation. 3. The obligation of a surety is primary, while that of a guarantor is secondary. 4. A surety is an original promissor and debtor from the beginning, while a guarantor is charged on his own undertaking. 5. A surety is, ordinarily, held to know every default of his principal; whereas a guarantor is not bound to take notice of the non-performance of his principal. 6. Usually, a surety will not be discharged either by the mere indulgence of the creditor to the principal or by want of notice of the default of the principal, no matter how much he may be injured thereby. A guarantor is often discharged by the mere indulgence of the creditor to the principal, and is usually not liable unless notified of the default of the principal. 38

In determining petitioner's status, it is necessary to read Letter of Guarantee No. 81-194-F, which provides in part as follows: In consideration of your issuing the above performance guarantee/counter-guarantee, we hereby unconditionally and irrevocably guarantee, under our Ref. No. LG-81-194 F to pay you on your first written or telex demand Iraq Dinars Two Hundred Seventy One Thousand Eight Hundred Eight and fils six hundred ten (ID271,808/610) representing 100% of the performance bond required of V.P. EUSEBIO for the construction of the Physical Therapy Institute, Phase II, Baghdad, Iraq, plus interest and other incidental expenses related thereto. In the event of default by V.P. EUSEBIO, we shall pay you 100% of the obligation unpaid but in no case shall such amount exceed Iraq Dinars (ID) 271,808/610 plus interest and other incidental expenses. (Emphasis supplied)39 Guided by the abovementioned distinctions between a surety and a guaranty, as well as the factual milieu of this case, we find that the Court of Appeals and the trial court were correct in ruling that the petitioner is a guarantor and not a surety. That the guarantee issued by the petitioner is unconditional and irrevocable does not make the petitioner a surety. As a guaranty, it is still characterized by its subsidiary and conditional quality because it does not take effect until the fulfillment of the condition, namely, that the principal obligor should fail in his obligation at the time and in the form he bound himself.40 In other words, an unconditional guarantee is still subject to the condition that the principal debtor should default in his obligation first before resort to the guarantor could be had. A conditional guaranty, as opposed to an unconditional guaranty, is one which depends upon some extraneous event, beyond the mere default of the principal, and generally upon notice of the principal's default and reasonable diligence in exhausting proper remedies against the principal.41 It appearing that Letter of Guarantee No. 81-194-F merely stated that in the event of default by respondent VPECI the petitioner shall pay, the obligation assumed by the petitioner was simply that of an unconditional guaranty, not conditional guaranty. But as earlier ruled the fact that petitioner's guaranty is unconditional does not make it a surety. Besides, surety is never presumed. A party should not be considered a surety where the contract itself stipulates that he is acting only as a guarantor. It is only when the guarantor binds himself solidarily with the principal debtor that the contract becomes one of suretyship.42 Having determined petitioner's liability as guarantor, the next question we have to grapple with is whether the respondent contractor has defaulted in its obligations that would justify resort to the guaranty. This is a mixed question of fact and law that is better addressed by the lower courts, since this Court is not a trier of facts. It is a fundamental and settled rule that the findings of fact of the trial court and the Court of Appeals are binding or conclusive upon this Court unless they are not supported by the evidence or unless strong and cogent reasons dictate otherwise.43 The factual findings of the Court of Appeals are normally not reviewable by us under Rule 45 of the Rules of Court except when they are at variance with those of the trial court. 44 The trial court and the Court of Appeals were in unison that the respondent contractor cannot be considered to have defaulted in its obligations because the cause of the delay was not primarily attributable to it. A corollary issue is what law should be applied in determining whether the respondent contractor has defaulted in the performance of its obligations under the service contract. The question of whether there is a breach of an agreement, which includes default or mora,45 pertains to the essential or intrinsic validity of a contract. 46 No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed by most legal systems, however, is that the intrinsic validity of a contract must be governed by the lex contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the law intended by them either expressly or implicitly (the lex loci intentionis). The law selected may be implied from such factors as substantial connection with the transaction, or the nationality or domicile of the parties.47 Philippine courts would do well to adopt the first and most basic rule in most legal systems, namely, to allow the parties to select the law applicable to their contract, subject to the limitation that it is not against the law, morals, or public policy of the forum and that the chosen law must bear a substantive relationship to the transaction. 48 It must be noted that the service contract between SOB and VPECI contains no express choice of the law that would govern it. In the United States and Europe, the two rules that now seem to have emerged as "kings of the hill"

are (1) the parties may choose the governing law; and (2) in the absence of such a choice, the applicable law is that of the State that "has the most significant relationship to the transaction and the parties."49 Another authority proposed that all matters relating to the time, place, and manner of performance and valid excuses for nonperformance are determined by the law of the place of performance or lex loci solutionis, which is useful because it is undoubtedly always connected to the contract in a significant way.50 In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties is the Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether respondent VPECI defaulted in its obligations may be determined by the laws of Iraq. However, since that foreign law was not properly pleaded or proved, the presumption of identity or similarity, otherwise known as the processual presumption, comes into play. Where foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours.51 Our law, specifically Article 1169, last paragraph, of the Civil Code, provides: "In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him." Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by reason of a cause imputable to the former. 52 It is the non-fulfillment of an obligation with respect to time.53 It is undisputed that only 51.7% of the total work had been accomplished. The 48.3% unfinished portion consisted in the purchase and installation of electro-mechanical equipment and materials, which were available from foreign suppliers, thus requiring US Dollars for their importation. The monthly billings and payments made by SOB54reveal that the agreement between the parties was a periodic payment by the Project owner to the contractor depending on the percentage of accomplishment within the period. 55 The payments were, in turn, to be used by the contractor to finance the subsequent phase of the work. 56 However, as explained by VPECI in its letter to the Department of Foreign Affairs (DFA), the payment by SOB purely in Dinars adversely affected the completion of the project; thus: 4. Despite protests from the plaintiff, SOB continued paying the accomplishment billings of the Contractor purely in Iraqi Dinars and which payment came only after some delays. 5. SOB is fully aware of the following: 5.2 That Plaintiff is a foreign contractor in Iraq and as such, would need foreign currency (US$), to finance the purchase of various equipment, materials, supplies, tools and to pay for the cost of project management, supervision and skilled labor not available in Iraq and therefore have to be imported and or obtained from the Philippines and other sources outside Iraq. 5.3 That the Ministry of Labor and Employment of the Philippines requires the remittance into the Philippines of 70% of the salaries of Filipino workers working abroad in US Dollars; 5.5 That the Iraqi Dinar is not a freely convertible currency such that the same cannot be used to purchase equipment, materials, supplies, etc. outside of Iraq; 5.6 That most of the materials specified by SOB in the CONTRACT are not available in Iraq and therefore have to be imported; 5.7 That the government of Iraq prohibits the bringing of local currency (Iraqui Dinars) out of Iraq and hence, imported materials, equipment, etc., cannot be purchased or obtained using Iraqui Dinars as medium of acquisition.

8. Following the approved construction program of the CONTRACT, upon completion of the civil works portion of the installation of equipment for the building, should immediately follow, however, the CONTRACT specified that these equipment which are to be installed and to form part of the PROJECT have to be procured outside Iraq since these are not being locally manufactured. Copy f the relevant portion of the Technical Specification is hereto attached as Annex "C" and made an integral part hereof; 10. Due to the lack of Foreign currency in Iraq for this purpose, and if only to assist the Iraqi government in completing the PROJECT, the Contractor without any obligation on its part to do so but with the knowledge and consent of SOB and the Ministry of Housing & Construction of Iraq, offered to arrange on behalf of SOB, a foreign currency loan, through the facilities of Circle International S.A., the Contractor's Sub-contractor and SACE MEDIO CREDITO which will act as the guarantor for this foreign currency loan. Arrangements were first made with Banco di Roma. Negotiation started in June 1985. SOB is informed of the developments of this negotiation, attached is a copy of the draft of the loan Agreement between SOB as the Borrower and Agent. The Several Banks, as Lender, and counter-guaranteed by Istituto Centrale Per II Credito A Medio Termine (Mediocredito) Sezione Speciale Per L'Assicurazione Del Credito All'Exportazione (Sace). Negotiations went on and continued until it suddenly collapsed due to the reported default by Iraq in the payment of its obligations with Italian government, copy of the news clipping dated June 18, 1986 is hereto attached as Annex "D" to form an integral part hereof; 15. On September 15, 1986, Contractor received information from Circle International S.A. that because of the news report that Iraq defaulted in its obligations with European banks, the approval by Banco di Roma of the loan to SOB shall be deferred indefinitely, a copy of the letter of Circle International together with the news clippings are hereto attached as Annexes "F" and "F-1", respectively.57 As found by both the Court of Appeals and the trial court, the delay or the non-completion of the Project was caused by factors not imputable to the respondent contractor. It was rather due mainly to the persistent violations by SOB of the terms and conditions of the contract, particularly its failure to pay 75% of the accomplished work in US Dollars. Indeed, where one of the parties to a contract does not perform in a proper manner the prestation which he is bound to perform under the contract, he is not entitled to demand the performance of the other party. A party does not incur in delay if the other party fails to perform the obligation incumbent upon him. The petitioner, however, maintains that the payments by SOB of the monthly billings in purely Iraqi Dinars did not render impossible the performance of the Project by VPECI. Such posture is quite contrary to its previous representations. In his 26 March 1987 letter to the Office of the Middle Eastern and African Affairs (OMEAA), DFA, Manila, petitioner's Executive Vice-President Jesus M. Taedo stated that while VPECI had taken every possible measure to complete the Project, the war situation in Iraq, particularly the lack of foreign exchange, was proving to be a great obstacle; thus: VPECI has taken every possible measure for the completion of the project but the war situation in Iraq particularly the lack of foreign exchange is proving to be a great obstacle. Our performance counterguarantee was called last 26 October 1986 when the negotiations for a foreign currency loan with the Italian government through Banco de Roma bogged down following news report that Iraq has defaulted in its obligation with major European banks. Unless the situation in Iraq is improved as to allay the bank's apprehension, there is no assurance that the project will ever be completed. 58 In order that the debtor may be in default it is necessary that the following requisites be present: (1) that the obligation be demandable and already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance because it must appear that the tolerance or benevolence of the creditor must have ended. 59 As stated earlier, SOB cannot yet demand complete performance from VPECI because it has not yet itself performed its obligation in a proper manner, particularly the payment of the 75% of the cost of the Project in US Dollars. The VPECI cannot yet be said to have incurred in delay. Even assuming that there was delay and that the delay was attributable to VPECI, still the effects of that delay ceased upon the renunciation by the creditor, SOB, which could be implied when the latter granted several extensions of time to the former. 60 Besides, no demand has

yet been made by SOB against the respondent contractor. Demand is generally necessary even if a period has been fixed in the obligation. And default generally begins from the moment the creditor demands judicially or extrajudicially the performance of the obligation. Without such demand, the effects of default will not arise.61 Moreover, the petitioner as a guarantor is entitled to the benefit of excussion, that is, it cannot be compelled to pay the creditor SOB unless the property of the debtor VPECI has been exhausted and all legal remedies against the said debtor have been resorted to by the creditor.62 It could also set up compensation as regards what the creditor SOB may owe the principal debtor VPECI.63 In this case, however, the petitioner has clearly waived these rights and remedies by making the payment of an obligation that was yet to be shown to be rightfully due the creditor and demandable of the principal debtor. As found by the Court of Appeals, the petitioner fully knew that the joint venture contractor had collectibles from SOB which could be set off with the amount covered by the performance guarantee. In February 1987, the OMEAA transmitted to the petitioner a copy of a telex dated 10 February 1987 of the Philippine Ambassador in Baghdad, Iraq, informing it of the note verbale sent by the Iraqi Ministry of Foreign Affairs stating that the past due obligations of the joint venture contractor from the petitioner would "be deducted from the dues of the two contractors."64 Also, in the project situationer attached to the letter to the OMEAA dated 26 March 1987, the petitioner raised as among the arguments to be presented in support of the cancellation of the counter-guarantee the fact that the amount of ID281,414/066 retained by SOB from the Project was more than enough to cover the counter-guarantee of ID271,808/610; thus: 6.1 Present the following arguments in cancelling the counterguarantee: The Iraqi Government does not have the foreign exchange to fulfill its contractual obligations of paying 75% of progress billings in US dollars. It could also be argued that the amount of ID281,414/066 retained by SOB from the proposed project is more than the amount of the outstanding counterguarantee.65 In a nutshell, since the petitioner was aware of the contractor's outstanding receivables from SOB, it should have set up compensation as was proposed in its project situationer. Moreover, the petitioner was very much aware of the predicament of the respondents. In fact, in its 13 May 1987 letter to the OMEAA, DFA, Manila, it stated: VPECI also maintains that the delay in the completion of the project was mainly due to SOB's violation of contract terms and as such, call on the guarantee has no basis. While PHILGUARANTEE is prepared to honor its commitment under the guarantee, PHILGUARANTEE does not want to be an instrument in any case of inequity committed against a Filipino contractor. It is for this reason that we are constrained to seek your assistance not only in ascertaining the veracity of Al Ahli Bank's claim that it has paid Rafidain Bank but possibly averting such an event. As any payment effected by the banks will complicate matters, we cannot help underscore the urgency of VPECI's bid for government intervention for the amicable termination of the contract and release of the performance guarantee. 66 But surprisingly, though fully cognizant of SOB's violations of the service contract and VPECI's outstanding receivables from SOB, as well as the situation obtaining in the Project site compounded by the Iran-Iraq war, the petitioner opted to pay the second layer guarantor not only the full amount of the performance bond counterguarantee but also interests and penalty charges. This brings us to the next question: May the petitioner as a guarantor secure reimbursement from the respondents for what it has paid under Letter of Guarantee No. 81-194-F?

As a rule, a guarantor who pays for a debtor should be indemnified by the latter67 and would be legally subrogated to the rights which the creditor has against the debtor.68 However, a person who makes payment without the knowledge or against the will of the debtor has the right to recover only insofar as the payment has been beneficial to the debtor.69 If the obligation was subject to defenses on the part of the debtor, the same defenses which could have been set up against the creditor can be set up against the paying guarantor.70 From the findings of the Court of Appeals and the trial court, it is clear that the payment made by the petitioner guarantor did not in any way benefit the principal debtor, given the project status and the conditions obtaining at the Project site at that time. Moreover, the respondent contractor was found to have valid defenses against SOB, which are fully supported by evidence and which have been meritoriously set up against the paying guarantor, the petitioner in this case. And even if the deed of undertaking and the surety bond secured petitioner's guaranty, the petitioner is precluded from enforcing the same by reason of the petitioner's undue payment on the guaranty. Rights under the deed of undertaking and the surety bond do not arise because these contracts depend on the validity of the enforcement of the guaranty. The petitioner guarantor should have waited for the natural course of guaranty: the debtor VPECI should have, in the first place, defaulted in its obligation and that the creditor SOB should have first made a demand from the principal debtor. It is only when the debtor does not or cannot pay, in whole or in part, that the guarantor should pay.71 When the petitioner guarantor in this case paid against the will of the debtor VPECI, the debtor VPECI may set up against it defenses available against the creditor SOB at the time of payment. This is the hard lesson that the petitioner must learn. As the government arm in pursuing its objective of providing "the necessary support and assistance in order to enable [Filipino exporters and contractors to operate viably under the prevailing economic and business conditions,"72 the petitioner should have exercised prudence and caution under the circumstances. As aptly put by the Court of Appeals, it would be the height of inequity to allow the petitioner to pass on its losses to the Filipino contractor VPECI which had sternly warned against paying the Al Ahli Bank and constantly apprised it of the developments in the Project implementation. WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit, and the decision of the Court of appeals in CA-G.R. CV No. 39302 is AFFIRMED. No pronouncement as to costs. SO ORDERED.

2 G.R. No. 122191 October 8, 1998 SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon City, respondents.

QUISUMBING, J.: This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the Resolution 1dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4 and the Orders 5 dated August 29, 1994 6 and February 2, 1995 7 that were issued by the trial court in Civil Case No. Q-93-18394. 8 The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned Decision 9, are as follows: On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi Arabia. . . . On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah AlGazzawi, the latter as an accomplice. When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the Jakarta incident. They then requested her to go back to Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with the police for the immediate release of the detained crew members but did not succeed because plaintiff refused to cooperate. She was afraid that she might be tricked into something she did not want because of her inability to understand the local dialect. She also declined to sign a blank paper and a document written in the local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from the Jakarta flights. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he brought her to the police station where the police took her passport and questioned her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the afternoon flight out of Jeddah. One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a

certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a document written in Arabic. They told her that this was necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with the male crew, in contravention of Islamic tradition. 10

Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah continued to serve in the international flights. 11 Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was terminated from the service by SAUDIA, without her being informed of the cause. On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled Al-Balawi ("AlBalawi"), its country manager. On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the following grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case. On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15. Saudia filed a reply 16 thereto on March 3, 1994. On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended Complaint 18. The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss Amended Complaint filed by Saudia. From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on September 20, 1994, its Motion for Reconsideration 21 of the Order dated August 29, 1994. It alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed her Opposition 22 (To Defendant's Motion for Reconsideration).

In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply, even if that ground is raised for the first time on appeal. Additionally, SAUDIA alleged that the Philippines does not have any substantial interest in the prosecution of the instant case, and hence, without jurisdiction to adjudicate the same. Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows: Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on September 20, 1994, and the Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994, considering that a perusal of the plaintiffs Amended Complaint, which is one for the recovery of actual, moral and exemplary damages plus attorney's fees, upon the basis of the applicable Philippine law, Article 21 of the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this Court as regards the subject matter, and there being nothing new of substance which might cause the reversal or modification of the order sought to be reconsidered, the motion for reconsideration of the defendant, is DENIED.
SO ORDERED. 25

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order 26 with the Court of Appeals. Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order 27 dated February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless otherwise directed, in the interim. In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate court denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to wit: The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al.,v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division). SO ORDERED. On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for Review with Prayer for Temporary Restraining Order dated October 13, 1995. However, during the pendency of the instant Petition, respondent Court of Appeals rendered the Decision 30dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum considering that the Amended Complaint's basis for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and in case of an adverse ruling, find recourse in an appeal. On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining Order 31dated April 30, 1996, given due course by this Court. After both parties submitted their Memoranda, 32 the instant case is now deemed submitted for decision. Petitioner SAUDIA raised the following issues: I The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the New Civil Code since the proper law applicable is the law of the Kingdom of Saudi Arabia inasmuch as this case involves what is known in private international law as a "conflicts problem".

Otherwise, the Republic of the Philippines will sit in judgment of the acts done by another sovereign state which is abhorred. II Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the matter as to absence of leave of court is now moot and academic when this Honorable Court required the respondents to comment on petitioner's April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of Court should be construed with liberality pursuant to Section 2, Rule 1 thereof. III
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al." and filed its April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15day reglementary period as provided for under Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet become final and executory and this Honorable Court can take cognizance of this case. 33

From the foregoing factual and procedural antecedents, the following issues emerge for our resolution: I. WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES". II. WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THIS CASE PHILIPPINE LAW SHOULD GOVERN. Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule. 34 On the other hand, private respondent contends that since her Amended Complaint is based on Articles 19 35 and 21 36 of the Civil Code, then the instant case is properly a matter of domestic law. 37 Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events occurred in two states, the Philippines and Saudi Arabia. As stated by private respondent in her Amended Complaint 38 dated June 23, 1994: 2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in the Philippines. It may be served with summons and other court processes at Travel Wide Associated Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila. xxx xxx xxx 6. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to deport Thamer and Allah after two weeks of detention. Eventually, they were

again put in service by defendant SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila. 7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors reauested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA in Jeddah, Saudi Arabia. When she saw him, he brought her to the police station where the police took her passport and questioned her about the Jakarta incident. Miniewy simply stood by as the police put pressure on her to make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the police return her passport and allowed her to catch the afternoon flight out of Jeddah. 8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sigh a document written in Arabic. They told her that this was necessary to close the case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27, 1993. Plaintiff then returned to Manila. 9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila manger, Aslam Saleemi, that the investigation was routinary and that it posed no danger to her. 10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take that flight. At the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at the crew quarters, until further orders. 11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and listening to the music in violation of Islamic laws; (3) socializing with the male crew, in contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the Philippines Embassy in Jeddah. The latter helped her pursue an appeal from the decision of the court. To pay for her upkeep, she worked on the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely served the international flights. 39

Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree with petitioner that the problem herein could present a "conflicts" case. A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more states is said to contain a "foreign element". The presence of a foreign element is inevitable since social and economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or conception. 40 The forms in which this foreign element may appear are many. 41 The foreign element may simply consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract between nationals of one State involves properties situated in another State. In other cases, the foreign element may assume a complex form. 42 In the instant case, the foreign element consisted in the fact that private respondent Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of the employment of Morada

with the petitioner Saudia as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a "conflicts" situation to arise. We thus find private respondent's assertion that the case is purely domestic, imprecise. A conflicts problem presents itself here, and the question of jurisdiction 43 confronts the court a quo. After a careful study of the private respondent's Amended Complaint, 44 and the Comment thereon, we note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code. On one hand, Article 19 of the New Civil Code provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice give everyone his due and observe honesty and good faith. On the other hand, Article 21 of the New Civil Code provides: Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages. Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that: The aforecited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes. Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree with private respondent's assertion that violations of Articles 19 and 21 are actionable, with judicially enforceable remedies in the municipal forum. Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of Court on jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the subject matter of the suit.48 Its authority to try and hear the case is provided for under Section 1 of Republic Act No. 7691, to wit: Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is hereby amended to read as follows: Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction: xxx xxx xxx (8) In all other cases in which demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and cots or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds Two hundred Thousand pesos (P200,000.00). (Emphasis ours) xxx xxx xxx And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue, Quezon City, is appropriate: Sec. 2 Venue in Courts of First Instance. [Now Regional Trial Court] (a) xxx xxx xxx

(b) Personal actions. All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiff resides, at the election of the plaintiff. Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and obstacles to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient forum, "vex", "harass", or "oppress" the defendant, e.g. by inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum should rarely be disturbed. 49 Weighing the relative claims of the parties, the court a quo found it best to hear the case in the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains substantial connections. That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of forum of the plaintiff (now private respondent) should be upheld. Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted herself to the jurisdiction of the court. The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal of Morada's Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial court's jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack of jurisdiction. As held by this Court in Republic vs. Ker and Company, Ltd.: 51 We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower court's jurisdiction over defendant's person, prayed for dismissal of the complaint on the ground that plaintiff's cause of action has prescribed. By interposing such second ground in its motion to dismiss, Ker and Co., Ltd. availed of an affirmative defense on the basis of which it prayed the court to resolve controversy in its favor. For the court to validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon the latter's person, who, being the proponent of the affirmative defense, should be deemed to have abandoned its special appearance and voluntarily submitted itself to the jurisdiction of the court. Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person, it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If his motion is for any other purpose than to object to the jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of the court. A special appearance by motion made for the purpose of objecting to the jurisdiction of the court over the person will be held to be a general appearance, if the party in said motion should, for example, ask for a dismissal of the action upon the further ground that the court had no jurisdiction over the subject matter. 52

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof, justified. As to the choice of applicable law, we note that choice-of-law problems seek to answer two important questions: (1) What legal system should control a given situation where some of the significant facts occurred in two or more states; and (2) to what extent should the chosen legal system regulate the situation. 53

Several theories have been propounded in order to identify the legal system that should ultimately control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice and predictability, they do not always do so. The forum is then faced with the problem of deciding which of these two important values should be stressed. 54 Before a choice can be made, it is necessary for us to determine under what category a certain set of facts or rules fall. This process is known as "characterization", or the "doctrine of qualification". It is the "process of deciding whether or not the facts relate to the kind of question specified in a conflicts rule." 55 The purpose of "characterization" is to enable the forum to select the proper law. 56 Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact. 57 An essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of contact". Choice-oflaw rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. 58 Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law. 59 These "test factors" or "points of contact" or "connecting factors" could be any of the following: (1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation; (3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved; (4) the place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in contracts and torts; (5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties, or the place where a power of attorney is to be exercised; (6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; (7) the place where judicial or administrative proceedings are instituted or done. The lex fori the law of the forum is particularly important because, as we have seen earlier, matters of "procedure" not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls under one of the exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment. 60(Emphasis ours.)

After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed admitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis for private respondent's assertion that although she was already working in Manila, petitioner brought her to Jeddah on the pretense that she would merely testify in an investigation of the charges she made against the two SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out, she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws and tradition. There is likewise logical basis on record for the claim that the "handing over" or "turning over" of the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer. Petitioner's purported act contributed to and amplified or even proximately caused additional humiliation, misery and suffering of

private respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private respondent under the guise of petitioner's authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done, once duly proven. Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or "point of contact" could be the place or places where the tortious conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, "act with justice, give her due and observe honesty and good faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our view what is important here is the place where the over-all harm or the totality of the alleged injury to the person, reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below (herein private respondent). All told, it is not without basis to identify the Philippines as the situs of the alleged tort. Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern theories and rules on tort liability 61 have been advanced to offer fresh judicial approaches to arrive at just results. In keeping abreast with the modern theories on tort liability, we find here an occasion to apply the "State of the most significant relationship" rule, which in our view should be appropriate to apply now, given the factual context of this case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered. 62 As already discussed, there is basis for the claim that over-all injury occurred and lodged in the Philippines. There is likewise no question that private respondent is a resident Filipina national, working with petitioner, a resident foreign corporation engaged here in the business of international air carriage. Thus, the "relationship" between the parties was centered here, although it should be stressed that this suit is not based on mere labor law violations. From the record, the claim that the Philippines has the most significant contact with the matter in this dispute, 63 raised by private respondent as plaintiff below against defendant (herein petitioner), in our view, has been properly established. Prescinding from this premise that the Philippines is the situs of the tort complained of and the place "having the most interest in the problem", we find, by way of recapitulation, that the Philippine law on tort liability should have paramount application to and control in the resolution of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City, which could properly apply Philippine law. Moreover, we find untenable petitioner's insistence that "[s]ince private respondent instituted this suit, she has the burden of pleading and proving the applicable Saudi law on the matter." 64 As aptly said by private respondent, she has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21" of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings, she never alleged that Saudi law should govern this case. 65 And as correctly held by the respondent appellate court, "considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia, then the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia is". 66 Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's denial of defendant's (herein petitioner's) motion to dismiss the case. Not only was jurisdiction in order and venue properly laid, but appeal after trial was obviously available, and expeditious trial itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately concerned with the ultimate outcome of the case below, not just for the benefit of all the litigants, but also for the vindication of the country's system of law and justice in a transnational setting. With these guidelines in mind, the trial court must proceed to try and adjudge the case in the light of relevant

Philippine law, with due consideration of the foreign element or elements involved. Nothing said herein, of course, should be construed as prejudging the results of the case in any manner whatsoever. WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for further proceedings. SO ORDERED.

3 G.R. No. L-104776 December 5, 1994 BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of 1,767 NAMEDCOMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL MUNDO, petitioners, vs. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL BUILDERS CORPORATION, respondents. G.R. Nos. 104911-14 December 5, 1994 BIENVENIDO M. CADALIN, ET AL., petitioners, vs. HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. and/or ASIA INTERNATIONAL BUILDERS CORPORATION, respondents. G.R. Nos. 105029-32 December 5, 1994 ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT INTERNATIONAL, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA, SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN ALEJANDRE, WILFREDO D. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B. AMUL, AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE ARLITA, HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO, FALCONERO BANAAG, RAMON BARBOSA, FELIX BARCENA, FERNANDO BAS, MARIO BATACLAN, ROBERTO S. BATICA, ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M. BOBIER, DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO, GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE CAILAO, IRENEO CANDOR, JOSE CASTILLO, MANUEL CASTILLO, REMAR CASTROJERES, REYNALDO CAYAS, ROMEO CECILIO, TEODULO CREUS, BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO DE GUZMAN, ONOFRE DE RAMA, IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON, ANTONIO S. DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR., EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN ESGUERRA, EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO ESPIRITU, NESTOR M. ESTEVA, BENJAMIN ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO, JESUS GABAWAN, ROLANDO GARCIA, ANGEL GUDA, PACITO HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U. LIRIO LORETO LONTOC, ISRAEL LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN, LEOVIGILDO MARCIAL, NOEL MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO, FRANCIS MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R. OLIVARES, PEDRO ORBISTA, JR., RICARDO ORDONEZ, ERNIE PANCHO, JOSE PANCHO, GORGONIO P. PARALA, MODESTO PINPIN, JUANITO PAREA, ROMEO I. PATAG, FRANCISCO PINPIN, LEONARDO POBLETE, JAIME POLLOS, DOMINGO PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL, GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C. REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G. RICAZA, RODELIO RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES, JOSE ROBLEZA, QUIRINO RONQUILLO, AVELINO M. ROQUE, MENANDRO L. SABINO, PEDRO SALGATAR, EDGARDO SALONGA, NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR., GABRIEL SANTOS, JUANITO SANTOS, PAQUITO SOLANTE, CONRADO A. SOLIS, JR., RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC, MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO, BENEDICTO TORRES, MAXIMIANO TORRES, FRANCISCO G. TRIAS, SERGIO A. URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN VICTORIA, GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES, DOMINGO VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO AALAGOS, NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES, EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO, CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO, RODRIGO G.

ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN ACTA, EUGENIO C. ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO ACUPAN, MANUEL P. ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO, MANUEL P. AGUINALDO, DANTE AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO, JR., CONRADO ALCANTARA, LAMBERTO Q. ALCANTARA, MARIANITO J. ALCANTARA, BENCIO ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L. ALEJANDRO, MAXIMINO ALEJANDRO, ALBERTO ALMENAR, ARNALDO ALONZO, AMADO ALORIA, CAMILO ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS AMORES, BERNARD P. ANCHETA, TIMOTEO O. ANCHETA, JEOFREY ANI, ELINO P. ANTILLON, ARMANDRO B. ANTIPONO, LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO, FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O. ARATEA, ARTURO V. ARAULLO, PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO ARCIAGA, JOSE AREVALO, JUANTO AREVALO, RAMON AREVALO, RODOLFO AREVALO, EULALIO ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO ASUNCION, ARTEMIO M. ASUNCION, EDGARDO ASUNCION, REXY M. ASUNCION, VICENTE AURELIO, ANGEL AUSTRIA, RICARDO P. AVERILLA, JR., VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA, FELIMON BACAL, JOSE L. BACANI, ROMULO R. BALBIERAN, VICENTE BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O. BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS, VIVENCIO C. BAUAN, GAUDENCIO S. BAUTISTA, LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO BAUTISTA, RUPERTO B. BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA, WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN, EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO I. BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN, ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL, JR., FRANCISCO BICOL, ROGELIO BICOL, ROMULO L. BICOL, ROGELIO BILLIONES, TEOFILO N. BITO, FERNANDO BLANCO, AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S. BOOC, JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C. BRECINO, EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO, ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO BUTIONG, JR., HONESTO P. CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN, MOISES CABATAY, HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C. CAGAYAT, ROGELIO L. CALAGOS, REYNALDO V. CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA, RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO, ROBERTO CAMANA, FLORANTE C. CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS, EPIFANIO A. CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON, MENANDRO M. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR., CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ, TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO, ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA, WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M. FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES, BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO, VALERIANO FRANCISCO, RODOLFO GABAWAN, ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO

N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G. GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR., ALEXIS GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H. HABANA, RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO D. HILADO, JUSTO HILAPO, ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO, MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES, GENEROSO IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER, ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE LEMOS, JR., PEDRO G. DE LEON, MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING, RENATO LISING, WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO M. LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ, BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M. LUALHATI, EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI, SEBASTIAN LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO MACALINO, RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V. MACARAIG, RODOLFO V. MACARAIG, BENJAMIN MACATANGAY, HERMOGENES MACATANGAY, RODEL MACATANGAY, ROMULO MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT, ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V. MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO, RICARDO MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI, MANUEL MANALILI, ANGELO MANALO, AGUILES L. MANALO, LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON MAPILE, ROBERTO C. MARANA, NEMESIO MARASIGAN, WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A. MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE, RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO MENDOZA, JR., CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED, RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR MINIMO, BENJAMIN MIRANDA, FELIXBERTO D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO MONTON, RENATO MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M. MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ, ERNESTO NAPALAN, MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO D. NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO NEPUMUCENO, HERBERT G. NG, FLORENCIO NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA, DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO, REYNALDO P. OCSON, BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA, QUINCIANO PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR., JOSE V. PASION, ANGELITO M. PENA, DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO, FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE, DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L. QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO, RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO A. RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.

RAMIREZ, ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA, REDENTOR C. REY, ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO R. REYES, GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M. RICO, EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS RONQUILLO, ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO, RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO, VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M. SANCHA, ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S. SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G. SILVA, EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS, EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA, FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P. TALUSIK, FERMIN TARUC, JR., LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO UMALI, SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P. VIDALLO, SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA, ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M. VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA,respondents. Gerardo A. Del Mundo and Associates for petitioners. Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for BRII/AIBC. Florante M. De Castro for private respondents in 105029-32.

QUIASON, J.: The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine Overseas Employment Administration's Administrator, et. al.," was filed under Rule 65 of the Revised Rules of Court: (1) to modify the Resolution dated September 2, 1991 of the National Labor Relations Commission (NLRC) in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to render a new decision: (i) declaring private respondents as in default; (ii) declaring the said labor cases as a class suit; (iii) ordering Asia International Builders Corporation (AIBC) and Brown and Root International Inc. (BRII) to pay the claims of the 1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro guilty of forum-shopping; and (v) dismissing POEA Case No. L-86-05-460; and (3) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-288). The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National Labor Relations Commission, et. al.," was filed under Rule 65 of the Revised Rules of Court:

(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the Labor Code of the Philippines instead of the ten-year prescriptive period under the Civil Code of the Philippines; and (ii) denied the "three-hour daily average" formula in the computation of petitioners' overtime pay; and (2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-25; 26-220). The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al., v. National Labor Relations Commission, et. al." was filed under Rule 65 of the Revised Rules of Court: (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). 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. 1416). 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 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. L86-05-460. 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 "ExParte 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 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. 105029-32, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679729; 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. 748864; 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. 10491114,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. 9871105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397); 14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II); 15) Joint Manifestation and Motion involving Domingo B. Solano and six co-claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R. Nos. 104911-14). III The facts as found by the NLRC are as follows: We have taken painstaking efforts to sift over the more than fifty volumes now comprising the records of these cases. From the records, it appears that the complainants-appellants allege that they were recruited by respondent-appellant AIBC for its accredited foreign principal, Brown & Root, on various dates from 1975 to 1983. They were all deployed at various projects undertaken by Brown & Root in several countries in the Middle East, such as Saudi Arabia, Libya, United Arab Emirates and Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia. Having been officially processed as overseas contract workers by the Philippine Government, all the individual complainants signed standard overseas employment contracts (Records, Vols. 25-32. Hereafter, reference to the records would be sparingly made, considering their chaotic arrangement)

with AIBC before their departure from the Philippines. These overseas employment contracts invariably contained the following relevant terms and conditions. PART B (1) Employment Position Classification : (Code) : (2) Company Employment Status : (3) Date of Employment to Commence on : (4) Basic Working Hours Per Week : (5) Basic Working Hours Per Month : (6) Basic Hourly Rate : (7) Overtime Rate Per Hour : (8) Projected Period of Service (Subject to C(1) of this [sic]) : Months and/or Job Completion xxx xxx xxx 3. HOURS OF WORK AND COMPENSATION a) The Employee is employed at the hourly rate and overtime rate as set out in Part B of this Document. b) The hours of work shall be those set forth by the Employer, and Employer may, at his sole option, change or adjust such hours as maybe deemed necessary from time to time. 4. TERMINATION a) Notwithstanding any other terms and conditions of this agreement, the Employer may, at his sole discretion, terminate employee's service with cause, under this agreement at any time. If the Employer terminates the services of the Employee under this Agreement because of the completion or termination, or suspension of the work on which the Employee's services were being utilized, or because of a reduction in force due to a decrease in scope of such work, or by change in the type of construction of such work. The Employer will be responsible for his return transportation to his country of origin. Normally on the most expeditious air route, economy class accommodation. xxx xxx xxx 10. VACATION/SICK LEAVE BENEFITS a) After one (1) year of continuous service and/or satisfactory completion of contract, employee shall be entitled to 12-days vacation leave with pay. This shall be computed at the basic wage rate. Fractions of a year's service will be computed on a pro-rata basis. b) Sick leave of 15-days shall be granted to the employee for every year of service for non-work connected injuries or illness. If the employee failed to avail of such leave benefits, the same shall be forfeited at the end of the year in which said sick leave is granted. 11. BONUS A bonus of 20% (for offshore work) of gross income will be accrued and payable only upon satisfactory completion of this contract. 12. OFFDAY PAY

The seventh day of the week shall be observed as a day of rest with 8 hours regular pay. If work is performed on this day, all hours work shall be paid at the premium rate. However, this offday pay provision is applicable only when the laws of the Host Country require payments for rest day. In the State of Bahrain, where some of the individual complainants were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on June 16, 1976, otherwise known as the Labour Law for the Private Sector (Records, Vol. 18). This decree took effect on August 16, 1976. Some of the provisions of Amiri Decree No. 23 that are relevant to the claims of the complainants-appellants are as follows (italics supplied only for emphasis): Art. 79: . . . A worker shall receive payment for each extra hour equivalent to his wage entitlement increased by a minimum of twenty-five per centum thereof for hours worked during the day; and by a minimum of fifty per centum thereof for hours worked during the night which shall be deemed to being from seven o'clock in the evening until seven o'clock in the morning. . . . Art. 80: Friday shall be deemed to be a weekly day of rest on full pay. . . . an employer may require a worker, with his consent, to work on his weekly day of rest if circumstances so require and in respect of which an additional sum equivalent to 150% of his normal wage shall be paid to him. . . . Art. 81: . . . When conditions of work require the worker to work on any official holiday, he shall be paid an additional sum equivalent to 150% of his normal wage. Art. 84: Every worker who has completed one year's continuous service with his employer shall be entitled to leave on full pay for a period of not less than 21 days for each year increased to a period not less than 28 days after five continuous years of service. A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his service in that year. Art. 107: A contract of employment made for a period of indefinite duration may be terminated by either party thereto after giving the other party thirty days' prior notice before such termination, in writing, in respect of monthly paid workers and fifteen days' notice in respect of other workers. The party terminating a contract without giving the required notice shall pay to the other party compensation equivalent to the amount of wages payable to the worker for the period of such notice or the unexpired portion thereof. Art. 111: . . . the employer concerned shall pay to such worker, upon termination of employment, a leaving indemnity for the period of his employment calculated on the basis of fifteen days' wages for each year of the first three years of service and of one month's wages for each year of service thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to the period of his service completed within a year. All the individual complainants-appellants have already been repatriated to the Philippines at the time of the filing of these cases (R.R. No. 104776, Rollo, pp. 5965). 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 complainantsappellants prayed for; and, if so, whether or not these awards are valid. Fifth: Whether or not the POEA erred in holding respondents AIBC and Brown & Root jointly are severally liable for the judgment awards despite the alleged finding that the former was the employer of the complainants; (a) Whether or not the POEA has acquired jurisdiction over Brown & Root; (b) Whether or not the undisputed fact that AIBC was a licensed construction contractor precludes a finding that Brown & Root is liable for complainants claims. Sixth: Whether or not the POEA Administrator's failure to hold respondents in default constitutes a reversible error. Seventh: Whether or not the POEA Administrator erred in dismissing the following claims: a. Unexpired portion of contract; b. Interest earnings of Travel and Reserve Fund; c. Retirement and Savings Plan benefits; d. War Zone bonus or premium pay of at least 100% of basic pay; e. Area Differential Pay;

f. Accrued interests on all the unpaid benefits; g. Salary differential pay; h. Wage differential pay; i. Refund of SSS premiums not remitted to SSS; j. Refund of withholding tax not remitted to BIR; k. Fringe benefits under B & R's "A Summary of Employee Benefits" (Annex "Q" of Amended Complaint); l. Moral and exemplary damages; m. Attorney's fees of at least ten percent of the judgment award; n. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and the accreditation of B & R issued by POEA; o. Penalty for violations of Article 34 (prohibited practices), not excluding reportorial requirements thereof. Eighth: Whether or not the POEA Administrator erred in not dismissing POEA Case No. (L) 8665-460 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; (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 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. 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 factoamended 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 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). 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 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; 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-84-06555. 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. 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 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 overseasemployment contracts, which became the law of the parties. They contend that the principle that a law is deemed to be a part of a contract applies only to provisions of Philippine law in relation to contracts executed in the Philippines. The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided that the laws of the host country became applicable to said contracts if they offer terms and conditions more favorable that those stipulated therein. It was stipulated in said contracts that: The Employee agrees that while in the employ of the Employer, he will not engage in any other business or occupation, nor seek employment with anyone other than the Employer; that he shall devote his entire time and attention and his best energies, and abilities to the performance of such duties as may be assigned to him by the Employer; that he shall at all times be subject to the direction and control of the Employer; and that the benefits provided to Employee hereunder are substituted for and in lieu of all other benefits provided by any applicable law, provided of course, that total remuneration and benefits do not fall below that of the host country regulation or custom, it being understood that should applicable laws establish that fringe benefits, or other such benefits additional to the compensation herein agreed cannot be waived, Employee agrees that such compensation will be adjusted downward so that the total compensation hereunder, plus the nonwaivable 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. 3739). 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.

4 G.R. No. 100835 October 26, 1993 REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS and the SPOUSES JAMES ANTHONY HUGHES and LENITA MABUNAY HUGHES, respondents. The Solicitor General for petitioner. Westremundo y. De Guzman for private respondents.

VITUG, J.: James Anthony Hughes, a natural born citizen of the United States of America, married Lenita Mabunay Hughes, a Filipino Citizen, who herself was later naturalized as a citizen of that country. On 29 June 1990, the spouses jointly filed a petition with the Regional Trial Court of Angeles City, Branch 60, to adopt Ma. Cecilia, Neil and Maria, all surnamed Mabunay, minor niece and nephews of Lenita, who had been living with the couple even prior to the filing of the petition. The minors, as well as their parents, gave consent to the adoption. On 29 November 1990, the Regional Trial Court rendered a decision granting the petition. a petition for Review onCertiorari was filed with this Court, assailing the trial court's decision. This Court referred the case to the Court of Appeals which, on 09 July 1991, affirmed the trial court's decision. Hence, the present petition. The petitioner assigned a lone error on the part of the respondent court, thus THE LOWER COURT ERRED IN GRANTING THE PETITION FOR ADOPTION OF SPOUSES JAMES ANTHONY HUGHES AND LENITA MABUNAY HUGHES BECAUSE THEY ARE NOT QUALIFIED TO ADOPT UNDER PHILIPPINE LAW. It is clear that James Anthony Hughes is not qualified to adopt. Executive Order No. 209, otherwise known as "The Family Code of the Philippines," is explicit. Art. 184. The following persons may not adopt : (1) The guardian with respect to the ward prior to the approval of the final accounts rendered upon the termination of their guardianship relation; (2) Any person who has been convicted of a crime involving moral turpitude; (3) An alien, except: (a) A former Filipino citizen who seeks to adopt a relative by consanguinity; (b) One who seeks to adopt the legitimate child of his or her Filipino spouse; or (c) One who is married to a Filipino citizen and seeks to adopt jointly with his or her Filipino spouse a relative by consanguinity of the latter. Aliens not included in the foregoing exceptions may adopt Filipino children in accordance with the rules in inter-country adoption as may be provided by law.

While James Anthony unquestionably is not permitted to adopt under any of the exceptional cases enumerated in paragraph (3) of the aforequoted article, Lenita, however, can qualify pursuant to paragraph (3)(a). The problem in her case lies, instead, with Article 185 of Executive Order No. 209, expressing as follows: Art. 185. Husband and wife must jointly adopt, except in the following cases: (1) When one spouse seeks to adopt his own illegitimate child; or (2) When one spouse seeks to adopt the legitimate child of the other. Lenita may not thus adopt alone since Article 185 requires a joint adoption by the husband and the wife, a condition that must be read along together with Article 184. The old law on adoption, Presidential Decree No. 603 (The Child and Youth Welfare Code), exactly adopted that found in then Article 336 of the Civil Code. Article 29, Section B, Chapter I, Title II, of the said decree provided : Art. 29. Husband and wife may jointly adopt. In such case, parental authority shall be exercised as if the child were their own by nature. Observe that the law then in force used the word "may" under which regime, a joint adoption by the spouses was apparently not made obligatory. The provision was later amended, however by Executive Order No. 91, dated 17 December 1986, of President Corazon C. Aquino. The new Article 29 expressed, thus Art. 29. Husband and wife may jointly adopt. In such case, parental authority shall be exercised as if the child were their own by nature. If one of the spouses is an alien, both husband and wife shall jointly adopt. Otherwise, the adoption shall not be allowed. As amended by Executive Order 91, Presidential Decree No. 603, had thus made it mandatory for both the spouses to jointly adopt when one of them was an alien. The law was silent when both spouses were of the same nationality. The Family Code has resolved any possible uncertainty. Article 185 thereof now expresses the necessity for joint adoption by the spouses except in only two instances (1) When one spouse seeks to adopt his own legitimate child; or (2) When one spouse seeks to adopt the legitimate child of the other. It is in the foregoing cases when Article 186 of the Code, on the subject of parental authority, can aptly find governance. Article 186. In case husband and wife jointly adopt or one spouse adopts the legitimate child of the other, joint parental authority shall be exercised by the spouses in accordance with this Code. The respondent court, in affirming the grant of adoption by the lower court, has theorized that James Anthony should merely be considered a "nominal or formal party" in the proceedings. This view of the appellate court cannot be sustained. Adoption creates a status that is closely assimilated to legitimate paternity and filiation with corresponding rights and duties that necessarily flow from adoption, such as, but not necessarily confined to, the exercise of parental authority, use of surname of the adopter by the adopted, as well as support and successional rights. These are matters that obviously cannot be considered inconsequential to the parties. We are not unmindful of the possible benefits, particularly in this instance, that an adoption can bring not so much for the prospective adopting parents as for the adopted children themselves. We also realize that in proceedings of this nature, paramount consideration is given to the physical, moral, social and intellectual welfare of the adopted for

whom the law on adoption has in the first place been designed. When, however, the law is clear and no other choice is given, 1 we must obey its full mandate. Even then, we find it difficult to conclude this opinion without having to call the attention of the appropriate agencies concerned to the urgency of addressing the issue on inter-country adoption, a matter that evidently is likewise espoused by the Family Code (Article 184, last paragraph, Family Code). WHEREFORE, the petition is GRANTED and the decision of the respondent court is REVERSED and SET ASIDE. No costs. SO ORDERED.

5 G.R. No. L-22595 November 1, 1927

Testate Estate of Joseph G. Brimo, JUAN MICIANO, administrator, petitioner-appellee, vs. ANDRE BRIMO, opponent-appellant. Ross, Lawrence and Selph for appellant. Camus and Delgado for appellee.

ROMUALDEZ, J.: The partition of the estate left by the deceased Joseph G. Brimo is in question in this case. The judicial administrator of this estate filed a scheme of partition. Andre Brimo, one of the brothers of the deceased, opposed it. The court, however, approved it. The errors which the oppositor-appellant assigns are: (1) The approval of said scheme of partition; (2) denial of his participation in the inheritance; (3) the denial of the motion for reconsideration of the order approving the partition; (4) the approval of the purchase made by the Pietro Lana of the deceased's business and the deed of transfer of said business; and (5) the declaration that the Turkish laws are impertinent to this cause, and the failure not to postpone the approval of the scheme of partition and the delivery of the deceased's business to Pietro Lanza until the receipt of the depositions requested in reference to the Turkish laws. The appellant's opposition is based on the fact that the partition in question puts into effect the provisions of Joseph G. Brimo's will which are not in accordance with the laws of his Turkish nationality, for which reason they are void as being in violation or article 10 of the Civil Code which, among other things, provides the following: Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to the amount 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 or the country in which it may be situated. But the fact is that the oppositor did not prove that said testimentary dispositions are not in accordance with the Turkish laws, inasmuch as he did not present any evidence showing what the Turkish laws are on the matter, and in the absence of evidence on such laws, they are presumed to be the same as those of the Philippines. (Lim and Lim vs. Collector of Customs, 36 Phil., 472.) It has not been proved in these proceedings what the Turkish laws are. He, himself, acknowledges it when he desires to be given an opportunity to present evidence on this point; so much so that he assigns as an error of the court in not having deferred the approval of the scheme of partition until the receipt of certain testimony requested regarding the Turkish laws on the matter. The refusal to give the oppositor another opportunity to prove such laws does not constitute an error. It is discretionary with the trial court, and, taking into consideration that the oppositor was granted ample opportunity to introduce competent evidence, we find no abuse of discretion on the part of the court in this particular. There is, therefore, no evidence in the record that the national law of the testator Joseph G. Brimo was violated in the testamentary dispositions in question which, not being contrary to our laws in force, must be complied with and executed.
lawphil.net

Therefore, the approval of the scheme of partition in this respect was not erroneous.

In regard to the first assignment of error which deals with the exclusion of the herein appellant as a legatee, inasmuch as he is one of the persons designated as such in will, it must be taken into consideration that such exclusion is based on the last part of the second clause of the will, which says: Second. I like desire to state that although by law, I am a Turkish citizen, this citizenship having been conferred upon me by conquest and not by free choice, nor by nationality and, on the other hand, having resided for a considerable length of time in the Philippine Islands where I succeeded in acquiring all of the property that I now possess, it is my wish that the distribution of my property and everything in connection with this, my will, be made and disposed of in accordance with the laws in force in the Philippine islands, requesting all of my relatives to respect this wish, otherwise, I annul and cancel beforehand whatever disposition found in this will favorable to the person or persons who fail to comply with this request. The institution of legatees in this will is conditional, and the condition is that the instituted legatees must respect the testator's will to distribute his property, not in accordance with the laws of his nationality, but in accordance with the laws of the Philippines. If this condition as it is expressed were legal and valid, any legatee who fails to comply with it, as the herein oppositor who, by his attitude in these proceedings has not respected the will of the testator, as expressed, is prevented from receiving his legacy. The fact is, however, that the said condition is void, being contrary to law, for article 792 of the civil Code provides the following: Impossible conditions and those contrary to law or good morals shall be considered as not imposed and shall not prejudice the heir or legatee in any manner whatsoever, even should the testator otherwise provide. And said condition is contrary to law because it expressly ignores the testator's national law when, according to article 10 of the civil Code above quoted, such national law of the testator is the one to govern his testamentary dispositions. Said condition then, in the light of the legal provisions above cited, is considered unwritten, and the institution of legatees in said will is unconditional and consequently valid and effective even as to the herein oppositor. It results from all this that the second clause of the will regarding the law which shall govern it, and to the condition imposed upon the legatees, is null and void, being contrary to law. All of the remaining clauses of said will with all their dispositions and requests are perfectly valid and effective it not appearing that said clauses are contrary to the testator's national law. Therefore, the orders appealed from are modified and it is directed that the distribution of this estate be made in such a manner as to include the herein appellant Andre Brimo as one of the legatees, and the scheme of partition submitted by the judicial administrator is approved in all other respects, without any pronouncement as to costs. So ordered.

6 G.R. No. 112573 February 9, 1995 NORTHWEST ORIENT AIRLINES, INC. petitioner, vs. COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.: This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming the dismissal of the petitioner's complaint to enforce the judgment of a Japanese court. The principal issue here is whether a Japanese court can acquire jurisdiction over a Philippine corporation doing business in Japan by serving summons through diplomatic channels on the Philippine corporation at its principal office in Manila after prior attempts to serve summons in Japan had failed. Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation incorporated under Philippine laws. As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the following are the factual and procedural antecedents of this controversy: On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its Japan branch, entered into an International Passenger Sales Agency Agreement, whereby the former authorized the latter to sell its air transportation tickets. Unable to remit the proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said agreement, plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the ticket sales, with claim for damages. On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District Court of Japan against defendant at its office at the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt to serve the summons was unsuccessful because the bailiff was advised by a person in the office that Mr. Dinozo, the person believed to be authorized to receive court processes was in Manila and would be back on April 24, 1980. On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr. Dinozo refused to accept the same claiming that he was no longer an employee of the defendant. After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to have the complaint and the writs of summons served at the head office of the defendant in Manila. On July 11, 1980, the Director of the Tokyo District Court requested the Supreme Court of Japan to serve the summons through diplomatic channels upon the defendant's head office in Manila. On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of summons (p. 276, Records). Despite receipt of the same, defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court proceeded to hear the plaintiff's complaint and on [January 29, 1981], rendered judgment ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up to and until payment is completed (pp. 12-14, Records). On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the judgment. Defendant not having appealed the judgment, the same became final and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for enforcement of the judgment was filed by plaintiff before the Regional Trial Court of Manila Branch 54. 2

On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese Court sought to be enforced is null and void and unenforceable in this jurisdiction having been rendered without due and proper notice to the defendant and/or with collusion or fraud and/or upon a clear mistake of law and fact (pp. 41-45, Rec.). Unable to settle the case amicably, the case was tried on the merits. After the plaintiff rested its case, defendant on April 21, 1989, filed a Motion for Judgment on a Demurrer to Evidence based on two grounds: (1) the foreign judgment sought to be enforced is null and void for want of jurisdiction and (2) the said judgment is contrary to Philippine law and public policy and rendered without due process of law. Plaintiff filed its opposition after which the court a quo rendered the now assailed decision dated June 21, 1989 granting the demurrer motion and dismissing the complaint (Decision, pp. 376-378, Records). In granting the demurrer motion, the trial court held that: The foreign judgment in the Japanese Court sought in this action is null and void for want of jurisdiction over the person of the defendant considering that this is an action in personam; the Japanese Court did not acquire jurisdiction over the person of the defendant because jurisprudence requires that the defendant be served with summons in Japan in order for the Japanese Court to acquire jurisdiction over it, the process of the Court in Japan sent to the Philippines which is outside Japanese jurisdiction cannot confer jurisdiction over the defendant in the case before the Japanese Court of the case at bar. Boudard versus Tait 67 Phil. 170. The plaintiff contends that the Japanese Court acquired jurisdiction because the defendant is a resident of Japan, having four (4) branches doing business therein and in fact had a permit from the Japanese government to conduct business in Japan (citing the exhibits presented by the plaintiff); if this is so then service of summons should have been made upon the defendant in Japan in any of these alleged four branches; as admitted by the plaintiff the service of the summons issued by the Japanese Court was made in the Philippines thru a Philippine Sheriff. This Court agrees that if the defendant in a foreign court is a resident in the court of that foreign court such court could acquire jurisdiction over the person of the defendant but it must be served upon the defendant in the territorial jurisdiction of the foreign court. Such is not the case here because the defendant was served with summons in the Philippines and not in Japan. Unable to accept the said decision, plaintiff on July 11, 1989 moved for reconsideration of the decision, filing at the same time a conditional Notice of Appeal, asking the court to treat the said notice of appeal "as in effect after and upon issuance of the court's denial of the motion for reconsideration." Defendant opposed the motion for reconsideration to which a Reply dated August 28, 1989 was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance upon Boudard vs. Tait 4 wherein it was held that "the process of the court has no extraterritorial effect and no jurisdiction is acquired over the person of the defendant by serving him beyond the boundaries of the state." To support its position, the Court of Appeals further stated: In an action strictly in personam, such as the instant case, personal service of summons within the forum is required for the court to acquire jurisdiction over the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To confer jurisdiction on the court, personal or substituted service of

summons on the defendant not extraterritorial service is necessary (Dial Corp vs. Soriano, 161 SCRA 739). But while plaintiff-appellant concedes that the collection suit filed is an action in personam, it is its theory that a distinction must be made between an action in personam against a resident defendant and an action in personam against a non-resident defendant. Jurisdiction is acquired over a nonresident defendant only if he is served personally within the jurisdiction of the court and over a resident defendant if by personal, substituted or constructive service conformably to statutory authorization. Plaintiff-appellant argues that since the defendant-appellee maintains branches in Japan it is considered a resident defendant. Corollarily, personal, substituted or constructive service of summons when made in compliance with the procedural rules is sufficient to give the court jurisdiction to render judgment in personam. Such an argument does not persuade. It is a general rule that processes of the court cannot lawfully be served outside the territorial limits of the jurisdiction of the court from which it issues (Carter vs. Carter; 41 S.E. 2d 532, 201) and this isregardless of the residence or citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129 NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service within the proper territorial limits on defendant or someone authorized to accept service for him. Thus, a defendant, whether a resident or not in the forum where the action is filed, must be served with summons within that forum. But even assuming a distinction between a resident defendant and non-resident defendant were to be adopted, such distinction applies only to natural persons and not in the corporations. This finds support in the concept that "a corporation has no home or residence in the sense in which those terms are applied to natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in its brief: Residence is said to be an attribute of a natural person, and can be predicated on an artificial being only by more or less imperfect analogy. Strictly speaking, therefore, a corporation can have no local residence or habitation. It has been said that a corporation is a mere ideal existence, subsisting only in contemplation of law an invisible being which can have, in fact, no locality and can occupy no space, and therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v. Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202) Jurisprudence so holds that the foreign or domestic character of a corporation is to be determined by the place of its origin where its charter was granted and not by the location of its business activities (Jennings v. Idaho Rail Light & P. Co., 26 Idaho 703, 146 p. 101), A corporation is a "resident" and an inhabitant of the state in which it is incorporated and no other (36 Am. Jur. 2d, p. 49). Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws. Clearly, its residence is the Philippines, the place of its incorporation, and not Japan. While defendant-appellee maintains branches in Japan, this will not make it a resident of Japan. A corporation does not become a resident of another by engaging in business there even though licensed by that state and in terms given all the rights and privileges of a domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).
On this premise, defendant appellee is a non-resident corporation. As such, court processes must be served upon it at a place within the state in which the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct. 354). 5

It then concluded that the service of summons effected in Manila or beyond the territorial boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court over the person of SHARP; hence, its decision was void.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court contending that the respondent court erred in holding that SHARP was not a resident of Japan and that summons on SHARP could only be validly served within that country. A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is shown. It is also proper to presume the regularity of the proceedings and the giving of due notice therein. 6 Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors-in-interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has regularly performed its official duty. Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its validity.7 Being the party challenging the judgment rendered by the Japanese court, SHARP had the duty to demonstrate the invalidity of such judgment. In an attempt to discharge that burden, it contends that the extraterritorial service of summons effected at its home office in the Philippines was not only ineffectual but also void, and the Japanese Court did not, therefore acquire jurisdiction over it. It is settled that matters of remedy and procedure such as those relating to the service of process upon a defendant are governed by the lex fori or the internal law of the forum. 8 In this case, it is the procedural law of Japan where the judgment was rendered that determines the validity of the extraterritorial service of process on SHARP. As to what this law is is a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like any other fact. 9 Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an official publication or by a duly attested or authenticated copy thereof. It was then incumbent upon SHARP to present evidence as to what that Japanese procedural law is and to show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly, the presumption of validity and regularity of the service of summons and the decision thereafter rendered by the Japanese court must stand. Alternatively in the light of the absence of proof regarding Japanese law, the presumption of identity or similarity or the so-called processual presumption 10 may be invoked. Applying it, the Japanese law on the matter is presumed to be similar with the Philippine law on service of summons on a private foreign corporation doing business in the Philippines. Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign corporation doing business in the Philippines, service may be made: (1) on its resident agent designated in accordance with law for that purpose, or, (2) if there is no such resident agent, on the government official designated by law to that effect; or (3) on any of its officers or agents within the Philippines. If the foreign corporation has designated an agent to receive summons, the designation is exclusive, and service of summons is without force and gives the court no jurisdiction unless made upon him. 11 Where the corporation has no such agent, service shall be made on the government official designated by law, to wit: (a) the Insurance Commissioner in the case of a foreign insurance company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c) the Securities and Exchange Commission, in the case of other foreign corporations duly licensed to do business in the Philippines. Whenever service of process is so made, the government office or official served shall transmit by mail a copy of the summons or other legal proccess to the corporation at its home or principal office. The sending of such copy is a necessary part of the service. 12 SHARP contends that the laws authorizing service of process upon the Securities and Exchange Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may be, presuppose a situation wherein the foreign corporation doing business in the country no longer has any branches or offices within the Philippines. Such contention is belied by the pertinent provisions of the said laws. Thus, Section 128 of the Corporation Code13 and Section 190 of the Insurance Code 14 clearly contemplate two situations: (1) if the corporation had left the Philippines or had ceased to transact business therein, and (2) if the corporation has no designated agent. Section 17 of the General Banking Act 15 does not even speak a corporation which had ceased to transact business in the Philippines.

Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive court processes in Japan. This silence could only mean, or least create an impression, that it had none. Hence, service on the designated government official or on any of SHARP's officers or agents in Japan could be availed of. The respondent, however, insists that only service of any of its officers or employees in its branches in Japan could be resorted to. We do not agree. As found by the respondent court, two attempts at service were made at SHARP's Yokohama branch. Both were unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person authorized to accept court process, was in Manila. On the second, Mr. Dinozo was present, but to accept the summons because, according to him, he was no longer an employee of SHARP. While it may be true that service could have been made upon any of the officers or agents of SHARP at its three other branches in Japan, the availability of such a recourse would not preclude service upon the proper government official, as stated above. As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons for SHARP be served at its head office in the Philippine's after the two attempts of service had failed. 16 The Tokyo District Court requested the Supreme Court of Japan to cause the delivery of the summons and other legal documents to the Philippines. Acting on that request, the Supreme Court of Japan sent the summons together with the other legal documents to the Ministry of Foreign Affairs of Japan which, in turn, forwarded the same to the Japanese Embassy in Manila . Thereafter, the court processes were delivered to the Ministry (now Department) of Foreign Affairs of the Philippines, then to the Executive Judge of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila. This service is equivalent to service on the proper government official under Section 14, Rule 14 of the Rules of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP's contention that such manner of service is not valid under Philippine laws holds no water. 17 In deciding against the petitioner, the respondent court sustained the trial court's reliance on Boudard vs. Tait 18where this Court held: The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a money judgment, must be based upon personal service within the state which renders the judgment. xxx xxx xxx The process of a court, has no extraterritorial effect, and no jurisdiction is acquired over the person of the defendant by serving him beyond the boundaries of the state. Nor has a judgment of a court of a foreign country against a resident of this country having no property in such foreign country based on process served here, any effect here against either the defendant personally or his property situated here. Process issuing from the courts of one state or country cannot run into another, and although a nonresident defendant may have been personally served with such process in the state or country of his domicile, it will not give such jurisdiction as to authorize a personal judgment against him. It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial Corp. vs. Soriano, 20 as well as the principle laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher. 21 The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment of the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial court dismissed the case because the Hanoi court never acquired jurisdiction over the person of the defendant considering that "[t]he, evidence adduced at the trial conclusively proves that neither the appellee [the defendant] nor his agent or employees were ever in Hanoi, French Indo-China; and that the deceased Marie Theodore Jerome Boudard had never, at any time, been his employee." In Magdalena Estate, what was declared invalid resulting in the failure of the court to acquire jurisdiction over the person of the defendants in an action in personam was the service of summons through publication against non-appearing resident defendants. It was claimed that the latter concealed themselves to avoid personal service of summons upon them. In Dial, the defendants were foreign corporations which were not, domiciled and licensed to engage in business in the Philippines and which did not have officers or agents, places of business, or properties here. On the other hand, in the instant case, SHARP was doing business in Japan and was maintaining four branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court of a territory to render a personal judgment against anyone upon service made outside its limits was applicable alike to cases of residents and nonresidents. The principle was put at rest by the United States Supreme Court when it ruled in the 1940 case ofMilliken vs. Meyer 22 that domicile in the state is alone sufficient to bring an absent defendant within the reach of the state's jurisdiction for purposes of a personal judgment by means of appropriate substituted service or personal service without the state. This principle is embodied in section 18, Rule 14 of the Rules of Court which allows service of summons on residents temporarily out of the Philippines to be made out of the country. The rationale for this rule was explained in Milliken as follows:
[T]he authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties. "Enjoyment of the privileges of residence within the state, and the attendant right to invoke the protection of its laws, are inseparable" from the various incidences of state citizenship. The responsibilities of that citizenship arise out of the relationship to the state which domicile creates. That relationship is not dissolved by mere absence from the state. The attendant duties, like the rights and privileges incident to domicile, are not dependent on continuous presence in the state. One such incident of domicile is amenability to suit within the state even during sojourns without the state, where the state has provided and employed a reasonable method for apprising such an absent party of the proceedings against him. 23

The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict technical sense, such domicile as a corporation may have is single in its essence and a corporation can have only one domicile which is the state of its creation. 25 Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident in another state in which it has offices and transacts business. This is the rule in our jurisdiction and apropos thereto, it may be necessery to quote what we stated in State Investment House, Inc, vs. Citibank, N.A., 26 to wit: The issue is whether these Philippine branches or units may be considered "residents of the Philippine Islands" as that term is used in Section 20 of the Insolvency Law . . . or residents of the state under the laws of which they were respectively incorporated. The answer cannot be found in the Insolvency Law itself, which contains no definition of the term, resident, or any clear indication of its meaning. There are however other statutes, albeit of subsequent enactment and effectivity, from which enlightening notions of the term may be derived. The National Internal Revenue Code declares that the term "'resident foreign corporation' applies to a foreign corporation engaged in trade or business within the Philippines," as distinguished from a "'non-resident foreign corporation' . . . (which is one) not engaged in trade or bussiness within the Philippines." [Sec. 20, pars. (h) and (i)]. The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries, affiliation, extension offices or any other units of corporation or juridical person organized under the laws of any foreign country operating in the Philippines shall be considered residents of the Philippines. [Sec. 1(e)]. The General Banking Act, Republic Act No. 337, places "branches and agencies in the Philippines of foreign banks . . . (which are) called Philippine branches," in the same category as "commercial banks, savings associations, mortgage banks, development banks, rural banks, stock savings and loan associations" (which have been formed and organized under Philippine laws), making no distinction between the former and the latter in so far as the terms "banking institutions" and "bank" are used in the Act [Sec. 2], declaring on the contrary that in "all matters not specifically covered by special provisions applicable only to foreign banks, or their branches and agencies in the Philippines, said foreign banks or their branches and agencies lawfully doing business in the Philippines "shall be bound by all laws, rules, and regulations applicable to domestic banking corporations of the same class, except such laws, rules and regulations as provided for the creation, formation, organization, or dissolution of corporations or as fix the relation, liabilities, responsibilities, or duties of members, stockholders or officers of corporation. [Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing business in the Philippines, which is a defendant in a civil suit, may not be considered a non-resident within the scope of the legal provision authorizing attachment against a defendant not residing in the Philippine Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary attachment may not be applied for and granted solely on the asserted fact that the defendant is a foreign corporation authorized to do business in the Philippines and is consequently and necessarily, "a party who resides out of the Philippines." Parenthetically, if it may not be considered as a party not residing in the Philippines, or as a party who resides out of the country, then, logically, it must be considered a party who does reside in the Philippines, who is a resident of the country. Be this as it may, this Court pointed out that: . . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly licensed to do business here, to the status of domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be entirely out of line with this policy should we make a discrimination against a foreign corporation, like the petitioner, and subject its property to the harsh writ of seizure by attachment when it has complied not only with every requirement of law made specially of foreign corporations, but in addition with every requirement of law made of domestic corporations. . . . Obviously, the assimilation of foreign corporations authorized to do business in the Philippines "to the status of domestic corporations, subsumes their being found and operating as corporations, hence,residing, in the country. The same principle is recognized in American law: that the residence of a corporation, if it can be said to have a residence, is necessarily where it exercises corporate functions . . .;" that it is considered as dwelling "in the place where its business is done . . .," as being "located where its franchises are exercised . . .," and as being "present where it is engaged in the prosecution of the corporate enterprise;" that a "foreign corporation licensed to do business in a state is a resident of any country where it maintains an office or agent for transaction of its usual and customary business for venue purposes;" and that the "necessary element in its signification is locality of existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493]. In as much as SHARP was admittedly doing business in Japan through its four duly registered branches at the time the collection suit against it was filed, then in the light of the processual presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the jurisdiction of the courts therein and may be deemed to have assented to the said courts' lawful methods of serving process. 27 Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only under the processual presumption but also because of the presumption of regularity of performance of official duty. We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be without merit. We find no evidence that would justify an award for attorney's fees and litigation expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for exemplary damages warranted. Under Article 2234 of the Civil Code, before the court may consider the question of whether or not exemplary damages should be awarded, the plaintiff must show that he is entitled to moral, temperate, or compensatory damaged. There being no such proof presented by NORTHWEST, no exemplary damages may be adjudged in its favor. WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary damages but REVERSED insofar as in sustained the trial court's dismissal of NORTHWEST's complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court of Manila, and another in its stead is hereby rendered ORDERING private respondent C.F. SHARP L COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of said case, with interest thereon at the legal rate from the filing of the complaint therein until the said foreign judgment is fully satisfied.

Costs against the private respondent. SO ORDERED.

7 G.R. No. L-24006 November 25, 1967

JOSEFINA JUANA DE DIOS RAMIREZ MARCAIDA, petitioner-appellant, vs. LEONCIO V. AGLUBAT, in his capacity as Deputy Local Civil Registrar of Manila, respondent-appellee. Jose W. Diokno for petitioner-appellant. Office of the Solicitor General for respondent-appellee. SANCHEZ, J.: Refusal of the Local Civil Registrar of Manila to record an Escritura de Adopcion executed in Madrid, Spain, is now challenged before this Court on appeal by registrant-adoptee from a judgment of the Court of First Instance of Manila confirmatory of such refusal. The disputed deed of adoption had its inception, thus: Prior to October 21, 1958, proceedings for adoption were started before the Court of First Instance of Madrid, Spain by Maria Garnier Garreau, then 84 years of age, adopting Josefina Juana de Dios Ramirez Marcaida, 55 years, a citizen of the Philippines. Both were residents of Madrid, Spain. On that date, October 21, 1958, the court granted the application for adoption and gave the necessary judicial authority, once the judgment becomes final, to execute the corresponding adoption document "con arreglo al articulo 177 del Codigo Civil." The adoption document became necessary for the reason that under Article 177 of the Civil Code of Spain, "[a]probada definitivamente la adopcion por el Juez, se otorgara escritura, expresando en ella las condiciones con que se haya hecho, y se inscribira en el Registro Civil correspondiente." In compliance, on November 29, 1958, the notarial document of adoption which embodies the court order of adoption whereunder Maria Garnier Garreau formally adopted petitioner, was executed before Notary Public Braulio Velasco Carrasquedo of Madrid. In that document, Maria Gernier Garreau instituted petitioner, amongst other conditions as here unica y universal heredera de todos sus bienes, derechos y acciones, presentes y futuros. In conformity with our law, this escritura de adopcion was, on December 10, 1953, authenticated by Emilio S. Martinez, Philippine Vice Consul, Philippine Embassy, Madrid, who issued the corresponding certificate of authentication.1 The document of adoption was filed in the Office of the Local Civil Registrar of Manila on January 15, 1959. The Registrar, however, refused to register that document upon the ground that under Philippine law, adoption can only be had through judicial proceeding. And since the notarial document of adoption is not a judicial proceeding, it is not entitled to registration. Failing in her move to reconsider, petitioner went to the Court of First Instance of Manila on mandamus.2 As adverted to earlier, the mandamus petition did not prosper. The lower court in its decision of February 28, 1964, dismissed said petition. Petitioner's lone assignment of error reads: "The lower court erred in declaring the 'escritura de adopcion' as authenticated by the Philippine Vice Consul in Madrid, Spain, as not registrable in the Philippines." 1. Act 3753 of the Philippine Legislature, entitled "An Act to establish a civil register," in Section 1 thereof, recites that a "civil register is established for recording the civil status of persons, in which shall be entered," amongst others, "(g) adoptions." It provides for local civil registrars. Complementary thereto are Article 407 of our Civil Code which commands that "[a]cts, events and judicial decrees concerning the civil status of persons shall be recorded in the civil register;" and Article 408 of the same Code which, in language similar, directs that "[t]he following shall be entered in the civil register: . . . (8) adoptions; . . ." The law is clear. The compulsory tenor of the word "shall" leaves no alternative. It is a command. 2. But the Solicitor General, hewing to the line drawn by the court below, argues that petitioner's case does not come within the purview of Article 409 of the Civil Code, which states that:

Art. 409. In cases of legal separation, adoption, naturalization and other judicial orders mentioned in the preceding article it shall be the duty of the clerk of the court which issued the decree to ascertain whether the same has been registered, and if this has not been done, to send a copy of said decree to the civil registry of the city or municipality where the court is functioning. and Section 11 of Act 3753, which reads: Sec. 11. Duties of clerks of court to register certain decisions. In cases of legitimation, acknowledgment, adoption, naturalization, and change of given or family name, or both, upon the decree of the court becoming final, it shall be the duty of the clerk of the court which issued the decree to ascertain whether the same has been registered, and if this has not been done, to have said decree recorded in the office of the civil registrar of the municipality where the court is functioning. It is at once apparent that the cited legal provisions refer to adoptions effected in the Philippines. For, indeed, Article 409 of the Civil Code and Section 10 of the Registry Law speak of adoption which shall be registered in the municipality or city where the court issuing the adoption decree is functioning. But, the trial court concluded that what is registrable is only adoption obtained through a judgment rendered by a Philippine court. We are not persuaded to adopt the Government's theory. We are at a loss to understand how it could be concluded that the structure of the law did not authorize registration of foreign adoptions. We perceive that Article 409 and Section 10 aforesaid were incorporated into the statute books merely to give effect to our law3 which required judicial proceedings for adoption. Limitation of registration of adoptions to those granted by Philippine courts is a misconception which a broader view allows us now to correct. For, if registration is to be narrowed down to local adoptions, it is the function of Congress, not of this Court, to spell out such limitation. We cannot carve out a prohibition where the law does not so state. Excessive rigidity serves no purpose. And, by Articles 407 and 408 of our Civil Code, the disputed document of adoption is registrable. 3. No suggestion there is in the record that prejudice to State and adoptee, or any other person for that matter, would ensue from the adoption here involved. The validity thereof is not under attack. At any rate, whatever may be the effect of adoption, the rights of the State and adoptee and other persons interested are fully safeguarded by Article 15 of our Civil Code which, in terms explicit, provides that: "Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines even though living abroad." 4. Private international law offers no obstacle to recognition of foreign adoption. This rests on the principle that the status of adoption, created by the law of a State having jurisdiction to create it, will be given the same effect in another state as is given by the latter state to the status of adoption when created by its own law.4It is quite obvious then that the status of adoption, once created under the proper foreign law, will be recognized in this country, except where public policy or the interests of its inhabitants forbid its enforcement and demand the substitution of the lex fori. Indeed, implicit in Article 15 of our Civil Code just quoted, is that the exercise of incidents to foreign adoption "remains subject to local law."5 It is high time for this Court to formulate a rule on the registration of foreign adoptions. We hold that an adoption created under the law of a foreign country is entitled to registration in the corresponding civil register of the Philippines. It is to be understood, however, that the effects of such adoption shall be governed by the laws of this country.6 Conformably to the foregoing, the lower court's decision of February 28, 1964 dismissing the mandamus petition appealed from, is hereby reversed; and the Local Civil Registrar of Manila is hereby directed to register the deed of adoption (Escritura de Adopcion) by Maria Garnier Garreau in favor of petitioner Josefina de Dios Ramirez Marcaida. No costs. So ordered.

8 G.R. No. 161434 March 3, 2004

MARIA JEANETTE C. TECSON and FELIX B. DESIDERIO, JR., petitioners, vs. The COMMISSION ON ELECTIONS, RONALD ALLAN KELLY POE (a.k.a. FERNANDO POE, JR.) and VICTORINO X. FORNIER, respondents. x-----------------------------x G.R. No. 161634 March 3, 2004

ZOILO ANTONIO VELEZ, petitioner, vs. RONALD ALLAN KELLEY POE, a.k.a. FERNANDO POE, JR., respondent. x-----------------------------x G. R. No. 161824 March 3, 2004

VICTORINO X. FORNIER, petitioner, vs. HON. COMMISSION ON ELECTIONS and RONALD ALLAN KELLEY POE, ALSO KNOWN AS FERNANDO POE JR., respondents. DECISION VITUG, J.: Citizenship is a treasured right conferred on those whom the state believes are deserving of the privilege. It is a "precious heritage, as well as an inestimable acquisition,"1 that cannot be taken lightly by anyone either by those who enjoy it or by those who dispute it. Before the Court are three consolidated cases, all of which raise a single question of profound importance to the nation. The issue of citizenship is brought up to challenge the qualifications of a presidential candidate to hold the highest office of the land. Our people are waiting for the judgment of the Court with bated breath. Is Fernando Poe, Jr., the hero of silver screen, and now one of the main contenders for the presidency, a natural-born Filipino or is he not? The moment of introspection takes us face to face with Spanish and American colonial roots and reminds us of the rich heritage of civil law and common law traditions, the fusion resulting in a hybrid of laws and jurisprudence that could be no less than distinctly Filipino. Antecedent Case Settings On 31 December 2003, respondent Ronald Allan Kelly Poe, also known as Fernando Poe, Jr. (hereinafter "FPJ"), filed his certificate of candidacy for the position of President of the Republic of the Philippines under the Koalisyon ng Nagkakaisang Pilipino (KNP) Party, in the forthcoming national elections. In his certificate of candidacy, FPJ, representing himself to be a natural-born citizen of the Philippines, stated his name to be "Fernando Jr.," or "Ronald Allan" Poe, his date of birth to be 20 August 1939 and his place of birth to be Manila. Victorino X. Fornier, petitioner in G.R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon. Commission on Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr., Respondents," initiated, on 09 January 2004, a petition docketed SPA No. 04-003 before the Commission on Elections ("COMELEC") to disqualify FPJ and to deny due course or to cancel his certificate of candidacy upon the thesis that FPJ made a material misrepresentation in his certificate of candidacy by claiming to be a natural-born Filipino citizen when in

truth, according to Fornier, his parents were foreigners; his mother, Bessie Kelley Poe, was an American, and his father, Allan Poe, was a Spanish national, being the son of Lorenzo Pou, a Spanish subject. Granting, petitioner asseverated, that Allan F. Poe was a Filipino citizen, he could not have transmitted his Filipino citizenship to FPJ, the latter being an illegitimate child of an alien mother. Petitioner based the allegation of the illegitimate birth of respondent on two assertions - first, Allan F. Poe contracted a prior marriage to a certain Paulita Gomez before his marriage to Bessie Kelley and, second, even if no such prior marriage had existed, Allan F. Poe, married Bessie Kelly only a year after the birth of respondent. In the hearing before the Third Division of the COMELEC on 19 January 2004, petitioner, in support of his claim, presented several documentary exhibits - 1) a copy of the certificate of birth of FPJ, 2) a certified photocopy of an affidavit executed in Spanish by Paulita Poe y Gomez attesting to her having filed a case for bigamy and concubinage against the father of respondent, Allan F. Poe, after discovering his bigamous relationship with Bessie Kelley, 3) an English translation of the affidavit aforesaid, 4) a certified photocopy of the certificate of birth of Allan F. Poe, 5) a certification issued by the Director of the Records Management and Archives Office, attesting to the fact that there was no record in the National Archives that a Lorenzo Poe or Lorenzo Pou resided or entered the Philippines before 1907, and 6) a certification from the Officer-In-Charge of the Archives Division of the National Archives to the effect that no available information could be found in the files of the National Archives regarding the birth of Allan F. Poe. On his part, respondent, presented twenty-two documentary pieces of evidence, the more significant ones being - a) a certification issued by Estrella M. Domingo of the Archives Division of the National Archives that there appeared to be no available information regarding the birth of Allan F. Poe in the registry of births for San Carlos, Pangasinan, b) a certification issued by the Officer-In-Charge of the Archives Division of the National Archives that no available information about the marriage of Allan F. Poe and Paulita Gomez could be found, c) a certificate of birth of Ronald Allan Poe, d) Original Certificate of Title No. P-2247 of the Registry of Deeds for the Province of Pangasinan, in the name of Lorenzo Pou, e) copies of Tax Declaration No. 20844, No. 20643, No. 23477 and No. 23478 in the name of Lorenzo Pou, f) a copy of the certificate of death of Lorenzo Pou, g) a copy of the purported marriage contract between Fernando Pou and Bessie Kelley, and h) a certification issued by the City Civil Registrar of San Carlos City, Pangasinan, stating that the records of birth in the said office during the period of from 1900 until May 1946 were totally destroyed during World War II. On 23 January 2004, the COMELEC dismissed SPA No. 04-003 for lack of merit. Three days later, or on 26 January 2004, Fornier filed his motion for reconsideration. The motion was denied on 06 February 2004 by the COMELEC en banc. On 10 February 2004, petitioner assailed the decision of the COMELEC before this Court conformably with Rule 64, in relation to Rule 65, of the Revised Rules of Civil Procedure. The petition, docketed G. R. No. 161824, likewise prayed for a temporary restraining order, a writ of preliminary injunction or any other resolution that would stay the finality and/or execution of the COMELEC resolutions. The other petitions, later consolidated with G. R. No. 161824, would include G. R. No. 161434, entitled "Maria Jeanette C. Tecson, and Felix B. Desiderio, Jr., vs. The Commission on Elections, Ronald Allan Kelley Poe (a.k.a. Fernando Poe, Jr.), and Victorino X. Fornier," and the other, docketed G. R. No. 161634, entitled "Zoilo Antonio G. Velez, vs. Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr.," both challenging the jurisdiction of the COMELEC and asserting that, under Article VII, Section 4, paragraph 7, of the 1987 Constitution, only the Supreme Court had original and exclusive jurisdiction to resolve the basic issue on the case. Jurisdiction of the Court In G. R. No. 161824 In seeking the disqualification of the candidacy of FPJ and to have the COMELEC deny due course to or cancel FPJs certificate of candidacy for alleged misrepresentation of a material fact (i.e., that FPJ was a natural-born citizen) before the COMELEC, petitioner Fornier invoked Section 78 of the Omnibus Election Code "Section 78. Petition to deny due course to or cancel a certificate of candidacy. --- A verified petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground that any material representation contained therein as required under Section 74 hereof is false" in consonance with the general powers of COMELEC expressed in Section 52 of the Omnibus Election Code -

"Section 52. Powers and functions of the Commission on Elections. In addition to the powers and functions conferred upon it by the Constitution, the Commission shall have exclusive charge of the enforcement and administration of all laws relative to the conduct of elections for the purpose of ensuring free, orderly and honest elections" and in relation to Article 69 of the Omnibus Election Code which would authorize "any interested party" to file a verified petition to deny or cancel the certificate of candidacy of any nuisance candidate. Decisions of the COMELEC on disqualification cases may be reviewed by the Supreme Court per Rule 642 in an action for certiorari under Rule 653 of the Revised Rules of Civil Procedure. Section 7, Article IX, of the 1987 Constitution also reads "Each Commission shall decide by a majority vote of all its Members any case or matter brought before it within sixty days from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum, required by the rules of the Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof." Additionally, Section 1, Article VIII, of the same Constitution provides that judicial power is vested in one Supreme Court and in such lower courts as may be established by law which power "includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." It is sufficiently clear that the petition brought up in G. R. No. 161824 was aptly elevated to, and could well be taken cognizance of by, this Court. A contrary view could be a gross denial to our people of their fundamental right to be fully informed, and to make a proper choice, on who could or should be elected to occupy the highest government post in the land. In G. R. No. 161434 and G. R. No. 161634 Petitioners Tecson, et al., in G. R. No. 161434, and Velez, in G. R. No. 161634, invoke the provisions of Article VII, Section 4, paragraph 7, of the 1987 Constitution in assailing the jurisdiction of the COMELEC when it took cognizance of SPA No. 04-003 and in urging the Supreme Court to instead take on the petitions they directly instituted before it. The Constitutional provision cited reads: "The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice-President, and may promulgate its rules for the purpose." The provision is an innovation of the 1987 Constitution. The omission in the 1935 and the 1973 Constitution to designate any tribunal to be the sole judge of presidential and vice-presidential contests, has constrained this Court to declare, in Lopez vs. Roxas,4 as "not (being) justiciable" controversies or disputes involving contests on the elections, returns and qualifications of the President or Vice-President. The constitutional lapse prompted Congress, on 21 June 1957, to enact Republic Act No. 1793, "An Act Constituting an Independent Presidential Electoral Tribunal to Try, Hear and Decide Protests Contesting the Election of the President-Elect and the Vice-PresidentElect of the Philippines and Providing for the Manner of Hearing the Same." Republic Act 1793 designated the Chief Justice and the Associate Justices of the Supreme Court to be the members of the tribunal. Although the subsequent adoption of the parliamentary form of government under the 1973 Constitution might have implicitly affected Republic Act No. 1793, the statutory set-up, nonetheless, would now be deemed revived under the present Section 4, paragraph 7, of the 1987 Constitution. Ordinary usage would characterize a "contest" in reference to a post-election scenario. Election contests consist of either an election protest or a quo warranto which, although two distinct remedies, would have one objective in view, i.e., to dislodge the winning candidate from office. A perusal of the phraseology in Rule 12, Rule 13, and Rule 14 of the "Rules of the Presidential Electoral Tribunal," promulgated by the Supreme Court en banc on 18 April 1992, would support this premise -

"Rule 12. Jurisdiction. - The Tribunal shall be the sole judge of all contests relating to the election, returns, and qualifications of the President or Vice-President of the Philippines. "Rule 13. How Initiated. - An election contest is initiated by the filing of an election protest or a petition for quo warranto against the President or Vice-President. An election protest shall not include a petition for quo warranto. A petition for quo warranto shall not include an election protest. "Rule 14. Election Protest. - Only the registered candidate for President or for Vice-President of the Philippines who received the second or third highest number of votes may contest the election of the President or the Vice-President, as the case may be, by filing a verified petition with the Clerk of the Presidential Electoral Tribunal within thirty (30) days after the proclamation of the winner." The rules categorically speak of the jurisdiction of the tribunal over contests relating to the election, returns and qualifications of the "President" or "Vice-President", of the Philippines, and not of "candidates" for President or VicePresident. A quo warranto proceeding is generally defined as being an action against a person who usurps, intrudes into, or unlawfully holds or exercises a public office.5 In such context, the election contest can only contemplate a post-election scenario. In Rule 14, only a registered candidate who would have received either the second or third highest number of votes could file an election protest. This rule again presupposes a post-election scenario. It is fair to conclude that the jurisdiction of the Supreme Court, defined by Section 4, paragraph 7, of the 1987 Constitution, would not include cases directly brought before it, questioning the qualifications of a candidate for the presidency or vice-presidency before the elections are held. Accordingly, G. R. No. 161434, entitled "Maria Jeanette C. Tecson, et al., vs. Commission on Elections et al.," and G. R. No. 161634, entitled "Zoilo Antonio Velez vs. Ronald Allan Kelley Poe a.k.a. Fernando Poe, Jr." would have to be dismissed for want of jurisdiction. The Citizenship Issue Now, to the basic issue; it should be helpful to first give a brief historical background on the concept of citizenship. Perhaps, the earliest understanding of citizenship was that given by Aristotle, who, sometime in 384 to 322 B.C., described the "citizen" to refer to a man who shared in the administration of justice and in the holding of an office.6Aristotle saw its significance if only to determine the constituency of the "State," which he described as being composed of such persons who would be adequate in number to achieve a self-sufficient existence.7 The concept grew to include one who would both govern and be governed, for which qualifications like autonomy, judgment and loyalty could be expected. Citizenship was seen to deal with rights and entitlements, on the one hand, and with concomitant obligations, on the other.8 In its ideal setting, a citizen was active in public life and fundamentally willing to submit his private interests to the general interest of society. The concept of citizenship had undergone changes over the centuries. In the 18th century, the concept was limited, by and large, to civil citizenship, which established the rights necessary for individual freedom, such as rights to property, personal liberty and justice.9 Its meaning expanded during the 19th century to include political citizenship, which encompassed the right to participate in the exercise of political power.10 The 20th century saw the next stage of the development of social citizenship, which laid emphasis on the right of the citizen to economic well-being and social security.11 The idea of citizenship has gained expression in the modern welfare state as it so developed in Western Europe. An ongoing and final stage of development, in keeping with the rapidly shrinking global village, might well be the internationalization of citizenship.12 The Local Setting - from Spanish Times to the Present There was no such term as "Philippine citizens" during the Spanish regime but "subjects of Spain" or "Spanish subjects."13 In church records, the natives were called 'indios', denoting a low regard for the inhabitants of the archipelago. Spanish laws on citizenship became highly codified during the 19th century but their sheer number made it difficult to point to one comprehensive law. Not all of these citizenship laws of Spain however, were made to apply to the Philippine Islands except for those explicitly extended by Royal Decrees.14

Spanish laws on citizenship were traced back to the Novisima Recopilacion, promulgated in Spain on 16 July 1805 but as to whether the law was extended to the Philippines remained to be the subject of differing views among experts;15 however, three royal decrees were undisputably made applicable to Spaniards in the Philippines - the Order de la Regencia of 14 August 1841,16 the Royal Decree of 23 August 1868 specifically defining the political status of children born in the Philippine Islands,17 and finally, the Ley Extranjera de Ultramar of 04 July 1870, which was expressly made applicable to the Philippines by the Royal Decree of 13 July 1870.18 The Spanish Constitution of 1876 was never extended to the Philippine Islands because of the express mandate of its Article 89, according to which the provisions of the Ultramar among which this country was included, would be governed by special laws.19 It was only the Civil Code of Spain, made effective in this jurisdiction on 18 December 1889, which came out with the first categorical enumeration of who were Spanish citizens. "(a) Persons born in Spanish territory, "(b) Children of a Spanish father or mother, even if they were born outside of Spain, "(c) Foreigners who have obtained naturalization papers, "(d) Those who, without such papers, may have become domiciled inhabitants of any town of the Monarchy."20 The year 1898 was another turning point in Philippine history. Already in the state of decline as a superpower, Spain was forced to so cede her sole colony in the East to an upcoming world power, the United States. An accepted principle of international law dictated that a change in sovereignty, while resulting in an abrogation of all political laws then in force, would have no effect on civil laws, which would remain virtually intact. The Treaty of Paris was entered into on 10 December 1898 between Spain and the United States.21 Under Article IX of the treaty, the civil rights and political status of the native inhabitants of the territories ceded to the United States would be determined by its Congress "Spanish subjects, natives of the Peninsula, residing in the territory over which Spain by the present treaty relinquishes or cedes her sovereignty may remain in such territory or may remove therefrom, retaining in either event all their rights of property, including the right to sell or dispose of such property or of its proceeds; and they shall also have the right to carry on their industry, commerce, and professions, being subject in respect thereof to such laws as are applicable to foreigners. In case they remain in the territory they may preserve their allegiance to the Crown of Spain by making, before a court of record, within a year from the date of the exchange of ratifications of this treaty, a declaration of their decision to preserve such allegiance; in default of which declaration they shall be held to have renounced it and to have adopted the nationality of the territory in which they reside. Thus "The civil rights and political status of the native inhabitants of the territories hereby ceded to the United States shall be determined by the Congress."22 Upon the ratification of the treaty, and pending legislation by the United States Congress on the subject, the native inhabitants of the Philippines ceased to be Spanish subjects. Although they did not become American citizens, they, however, also ceased to be "aliens" under American laws and were thus issued passports describing them to be citizens of the Philippines entitled to the protection of the United States. The term "citizens of the Philippine Islands" appeared for the first time in the Philippine Bill of 1902, also commonly referred to as the Philippine Organic Act of 1902, the first comprehensive legislation of the Congress of the United States on the Philippines -

".... that all inhabitants of the Philippine Islands continuing to reside therein, who were Spanish subjects on the 11th day of April, 1891, and then resided in said Islands, and their children born subsequent thereto, shall be deemed and held to be citizens of the Philippine Islands and as such entitled to the protection of the United States, except such as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the provisions of the treaty of peace between the United States and Spain, signed at Paris, December tenth eighteen hundred and ninety eight."23 Under the organic act, a "citizen of the Philippines" was one who was an inhabitant of the Philippines, and a Spanish subject on the 11th day of April 1899. The term "inhabitant" was taken to include 1) a native-born inhabitant, 2) an inhabitant who was a native of Peninsular Spain, and 3) an inhabitant who obtained Spanish papers on or before 11 April 1899.24 Controversy arose on to the status of children born in the Philippines from 11 April 1899 to 01 July 1902, during which period no citizenship law was extant in the Philippines. Weight was given to the view, articulated in jurisprudential writing at the time, that the common law principle of jus soli, otherwise also known as the principle of territoriality, operative in the United States and England, governed those born in the Philippine Archipelago within that period.25 More about this later. In 23 March 1912, the Congress of the United States made the following amendment to the Philippine Bill of 1902 "Provided, That the Philippine Legislature is hereby authorized to provide by law for the acquisition of Philippine citizenship by those natives of the Philippine Islands who do not come within the foregoing provisions, the natives of other insular possession of the United States, and such other persons residing in the Philippine Islands who would become citizens of the United States, under the laws of the United States, if residing therein."26 With the adoption of the Philippine Bill of 1902, the concept of "Philippine citizens" had for the first time crystallized. The word "Filipino" was used by William H. Taft, the first Civil Governor General in the Philippines when he initially made mention of it in his slogan, "The Philippines for the Filipinos." In 1916, the Philippine Autonomy Act, also known as the Jones Law restated virtually the provisions of the Philippine Bill of 1902, as so amended by the Act of Congress in 1912 "That all inhabitants of the Philippine Islands who were Spanish subjects on the eleventh day of April, eighteen hundred and ninety-nine, and then resided in said Islands, and their children born subsequently thereto, shall be deemed and held to be citizens of the Philippine Islands, except such as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the provisions of the treaty of peace between the United States and Spain, signed at Paris December tenth, eighteen hundred and ninety-eight and except such others as have since become citizens of some other country; Provided, That the Philippine Legislature, herein provided for, is hereby authorized to provide for the acquisition of Philippine citizenship by those natives of the Philippine Islands who do not come within the foregoing provisions, the natives of the insular possessions of the United States, and such other persons residing in the Philippine Islands who are citizens of the United States, or who could become citizens of the United States under the laws of the United States, if residing therein." Under the Jones Law, a native-born inhabitant of the Philippines was deemed to be a citizen of the Philippines as of 11 April 1899 if he was 1) a subject of Spain on 11 April 1899, 2) residing in the Philippines on said date, and, 3) since that date, not a citizen of some other country. While there was, at one brief time, divergent views on whether or not jus soli was a mode of acquiring citizenship, the 1935 Constitution brought to an end to any such link with common law, by adopting, once and for all, jus sanguinis or blood relationship as being the basis of Filipino citizenship "Section 1, Article III, 1935 Constitution. The following are citizens of the Philippines "(1) Those who are citizens of the Philippine Islands at the time of the adoption of this Constitution

"(2) Those born in the Philippines Islands of foreign parents who, before the adoption of this Constitution, had been elected to public office in the Philippine Islands. "(3) Those whose fathers are citizens of the Philippines. "(4) Those whose mothers are citizens of the Philippines and upon reaching the age of majority, elect Philippine citizenship. "(5) Those who are naturalized in accordance with law." Subsection (4), Article III, of the 1935 Constitution, taken together with existing civil law provisions at the time, which provided that women would automatically lose their Filipino citizenship and acquire that of their foreign husbands, resulted in discriminatory situations that effectively incapacitated the women from transmitting their Filipino citizenship to their legitimate children and required illegitimate children of Filipino mothers to still elect Filipino citizenship upon reaching the age of majority. Seeking to correct this anomaly, as well as fully cognizant of the newly found status of Filipino women as equals to men, the framers of the 1973 Constitution crafted the provisions of the new Constitution on citizenship to reflect such concerns "Section 1, Article III, 1973 Constitution - The following are citizens of the Philippines: "(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution. "(2) Those whose fathers or mothers are citizens of the Philippines. "(3) Those who elect Philippine citizenship pursuant to the provisions of the Constitution of nineteen hundred and thirty-five. "(4) Those who are naturalized in accordance with law." For good measure, Section 2 of the same article also further provided that "A female citizen of the Philippines who marries an alien retains her Philippine citizenship, unless by her act or omission she is deemed, under the law to have renounced her citizenship." The 1987 Constitution generally adopted the provisions of the 1973 Constitution, except for subsection (3) thereof that aimed to correct the irregular situation generated by the questionable proviso in the 1935 Constitution. Section I, Article IV, 1987 Constitution now provides: "The following are citizens of the Philippines: "(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution. "(2) Those whose fathers or mothers are citizens of the Philippines. "(3) Those born before January 17, 1973 of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and "(4) Those who are naturalized in accordance with law." The Case Of FPJ Section 2, Article VII, of the 1987 Constitution expresses:

"No person may be elected President unless he is a natural-born citizen of the Philippines, a registered voter, able to read and write, at least forty years of age on the day of the election, and a resident of the Philippines for at least ten years immediately preceding such election." The term "natural-born citizens," is defined to include "those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their Philippine citizenship."27 The date, month and year of birth of FPJ appeared to be 20 August 1939 during the regime of the 1935 Constitution. Through its history, four modes of acquiring citizenship - naturalization, jus soli, res judicata and jus sanguinis28 had been in vogue. Only two, i.e., jus soli and jus sanguinis, could qualify a person to being a "natural-born" citizen of the Philippines. Jus soli, per Roa vs. Collector of Customs29 (1912), did not last long. With the adoption of the 1935 Constitution and the reversal of Roa in Tan Chong vs. Secretary of Labor30 (1947), jus sanguinis or blood relationship would now become the primary basis of citizenship by birth. Documentary evidence adduced by petitioner would tend to indicate that the earliest established direct ascendant of FPJ was his paternal grandfather Lorenzo Pou, married to Marta Reyes, the father of Allan F. Poe. While the record of birth of Lorenzo Pou had not been presented in evidence, his death certificate, however, identified him to be a Filipino, a resident of San Carlos, Pangasinan, and 84 years old at the time of his death on 11 September 1954. The certificate of birth of the father of FPJ, Allan F. Poe, showed that he was born on 17 May 1915 to an Espaol father, Lorenzo Pou, and a mestiza Espaol mother, Marta Reyes. Introduced by petitioner was an "uncertified" copy of a supposed certificate of the alleged marriage of Allan F. Poe and Paulita Gomez on 05 July 1936. The marriage certificate of Allan F. Poe and Bessie Kelley reflected the date of their marriage to be on 16 September 1940. In the same certificate, Allan F. Poe was stated to be twenty-five years old, unmarried, and a Filipino citizen, and Bessie Kelley to be twenty-two years old, unmarried, and an American citizen. The birth certificate of FPJ, would disclose that he was born on 20 August 1939 to Allan F. Poe, a Filipino, twenty-four years old, married to Bessie Kelly, an American citizen, twenty-one years old and married. Considering the reservations made by the parties on the veracity of some of the entries on the birth certificate of respondent and the marriage certificate of his parents, the only conclusions that could be drawn with some degree of certainty from the documents would be that 1. The parents of FPJ were Allan F. Poe and Bessie Kelley; 2. FPJ was born to them on 20 August 1939; 3. Allan F. Poe and Bessie Kelley were married to each other on 16 September, 1940; 4. The father of Allan F. Poe was Lorenzo Poe; and 5. At the time of his death on 11 September 1954, Lorenzo Poe was 84 years old. Would the above facts be sufficient or insufficient to establish the fact that FPJ is a natural-born Filipino citizen? The marriage certificate of Allan F. Poe and Bessie Kelley, the birth certificate of FPJ, and the death certificate of Lorenzo Pou are documents of public record in the custody of a public officer. The documents have been submitted in evidence by both contending parties during the proceedings before the COMELEC. The birth certificate of FPJ was marked Exhibit "A" for petitioner and Exhibit "3" for respondent. The marriage certificate of Allan F. Poe to Bessie Kelley was submitted as Exhibit "21" for respondent. The death certificate of Lorenzo Pou was submitted by respondent as his Exhibit "5." While the last two documents were submitted in evidence for respondent, the admissibility thereof, particularly in reference to the facts which they purported to show, i.e., the marriage certificate in relation to the date of marriage of Allan F. Poe to Bessie Kelley and the death certificate relative to the death of Lorenzo Pou on 11 September 1954 in San Carlos, Pangasinan, were all admitted by petitioner, who had utilized those material statements in his argument. All three documents were certified true copies of the originals. Section 3, Rule 130, Rules of Court states that -

"Original document must be produced; exceptions. - When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases: "x x x xxx xxx

"(d) When the original is a public record in the custody of a public office or is recorded in a public office." Being public documents, the death certificate of Lorenzo Pou, the marriage certificate of Allan F. Poe and Bessie Kelly, and the birth certificate of FPJ, constitute prima facie proof of their contents. Section 44, Rule 130, of the Rules of Court provides: "Entries in official records. Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated." The trustworthiness of public documents and the value given to the entries made therein could be grounded on 1) the sense of official duty in the preparation of the statement made, 2) the penalty which is usually affixed to a breach of that duty, 3) the routine and disinterested origin of most such statements, and 4) the publicity of record which makes more likely the prior exposure of such errors as might have occurred.31 The death certificate of Lorenzo Pou would indicate that he died on 11 September 1954, at the age of 84 years, in San Carlos, Pangasinan. It could thus be assumed that Lorenzo Pou was born sometime in the year 1870 when the Philippines was still a colony of Spain. Petitioner would argue that Lorenzo Pou was not in the Philippines during the crucial period of from 1898 to 1902 considering that there was no existing record about such fact in the Records Management and Archives Office. Petitioner, however, likewise failed to show that Lorenzo Pou was at any other place during the same period. In his death certificate, the residence of Lorenzo Pou was stated to be San Carlos, Pangasinan. In the absence of any evidence to the contrary, it should be sound to conclude, or at least to presume, that the place of residence of a person at the time of his death was also his residence before death. It would be extremely doubtful if the Records Management and Archives Office would have had complete records of all residents of the Philippines from 1898 to 1902. Proof of Paternity and Filiation Under Civil Law. Petitioner submits, in any case, that in establishing filiation (relationship or civil status of the child to the father [or mother]) or paternity (relationship or civil status of the father to the child) of an illegitimate child, FPJ evidently being an illegitimate son according to petitioner, the mandatory rules under civil law must be used. Under the Civil Code of Spain, which was in force in the Philippines from 08 December 1889 up until the day prior to 30 August 1950 when the Civil Code of the Philippines took effect, acknowledgment was required to establish filiation or paternity. Acknowledgment was either judicial (compulsory) or voluntary. Judicial or compulsory acknowledgment was possible only if done during the lifetime of the putative parent; voluntary acknowledgment could only be had in a record of birth, a will, or a public document.32 Complementary to the new code was Act No. 3753 or the Civil Registry Law expressing in Section 5 thereof, that "In case of an illegitimate child, the birth certificate shall be signed and sworn to jointly by the parents of the infant or only by the mother if the father refuses. In the latter case, it shall not be permissible to state or reveal in the document the name of the father who refuses to acknowledge the child, or to give therein any information by which such father could be identified." In order that the birth certificate could then be utilized to prove voluntary acknowledgment of filiation or paternity, the certificate was required to be signed or sworn to by the father. The failure of such requirement rendered the same useless as being an authoritative document of recognition.33 In Mendoza vs. Mella,34 the Court ruled -

"Since Rodolfo was born in 1935, after the registry law was enacted, the question here really is whether or not his birth certificate (Exhibit 1), which is merely a certified copy of the registry record, may be relied upon as sufficient proof of his having been voluntarily recognized. No such reliance, in our judgment, may be placed upon it. While it contains the names of both parents, there is no showing that they signed the original, let alone swore to its contents as required in Section 5 of Act No. 3753. For all that might have happened, it was not even they or either of them who furnished the data to be entered in the civil register. Petitioners say that in any event the birth certificate is in the nature of a public document wherein voluntary recognition of a natural child may also be made, according to the same Article 131. True enough, but in such a case, there must be a clear statement in the document that the parent recognizes the child as his or her own." In the birth certificate of respondent FPJ, presented by both parties, nowhere in the document was the signature of Allan F. Poe found. There being no will apparently executed, or at least shown to have been executed, by decedent Allan F. Poe, the only other proof of voluntary recognition remained to be "some other public document." In Pareja vs. Pareja,35 this Court defined what could constitute such a document as proof of voluntary acknowledgment: "Under the Spanish Civil Code there are two classes of public documents, those executed by private individuals which must be authenticated by notaries, and those issued by competent public officials by reason of their office. The public document pointed out in Article 131 as one of the means by which recognition may be made belongs to the first class." Let us leave it at that for the moment. The 1950 Civil Code categorized the acknowledgment or recognition of illegitimate children into voluntary, legal or compulsory. Voluntary recognition was required to be expressedly made in a record of birth, a will, a statement before a court of record or in any authentic writing. Legal acknowledgment took place in favor of full blood brothers and sisters of an illegitimate child who was recognized or judicially declared as natural. Compulsory acknowledgment could be demanded generally in cases when the child had in his favor any evidence to prove filiation. Unlike an action to claim legitimacy which would last during the lifetime of the child, and might pass exceptionally to the heirs of the child, an action to claim acknowledgment, however, could only be brought during the lifetime of the presumed parent. Amicus Curiae Ruben F. Balane defined, during the oral argument, "authentic writing," so as to be an authentic writing for purposes of voluntary recognition, simply as being a genuine or indubitable writing of the father. The term would include a public instrument (one duly acknowledged before a notary public or other competent official) or a private writing admitted by the father to be his. The Family Code has further liberalized the rules; Article 172, Article 173, and Article 175 provide: "Art. 172. The filiation of legitimate children is established by any of the following: "(1) The record of birth appearing in the civil register or a final judgment; or "(2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. "In the absence of the foregoing evidence, the legitimate filiation shall be proved by: "(1) The open and continuous possession of the status of a legitimate child; or "(2) Any other means allowed by the Rules of Court and special laws. "Art. 173. The action to claim legitimacy may be brought by the child during his or her lifetime and shall be transmitted to the heirs should the child die during minority or in a state of insanity. In these cases, the heirs shall have a period of five years within which to institute the action. "The action already commenced by the child shall survive notwithstanding the death of either or both of the parties.

"x x x

xxx

x x x.

"Art. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same, evidence as legitimate children. "The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent." The provisions of the Family Code are retroactively applied; Article 256 of the code reads: "Art. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws." Thus, in Vda. de Sy-Quia vs. Court of Appeals,36 the Court has ruled: "We hold that whether Jose was a voluntarily recognized natural child should be decided under Article 278 of the Civil Code of the Philippines. Article 2260 of that Code provides that 'the voluntary recognition of a natural child shall take place according to this Code, even if the child was born before the effectivity of this body of laws' or before August 30, 1950. Hence, Article 278 may be given retroactive effect." It should be apparent that the growing trend to liberalize the acknowledgment or recognition of illegitimate children is an attempt to break away from the traditional idea of keeping well apart legitimate and non-legitimate relationships within the family in favor of the greater interest and welfare of the child. The provisions are intended to merely govern the private and personal affairs of the family. There is little, if any, to indicate that the legitimate or illegitimate civil status of the individual would also affect his political rights or, in general, his relationship to the State. While, indeed, provisions on "citizenship" could be found in the Civil Code, such provisions must be taken in the context of private relations, the domain of civil law; particularly "Civil Law is that branch of law which has for its double purpose the organization of the family and the regulation of property. It has thus [been] defined as the mass of precepts which determine and regulate the relations of assistance, authority and obedience among members of a family, and those which exist among members of a society for the protection of private interests."37 In Yaez de Barnuevo vs. Fuster,38 the Court has held: "In accordance with Article 9 of the Civil Code of Spain, x x x the laws relating to family rights and duties, or to the status, condition and legal capacity of persons, govern Spaniards although they reside in a foreign country; that, in consequence, 'all questions of a civil nature, such as those dealing with the validity or nullity of the matrimonial bond, the domicile of the husband and wife, their support, as between them, the separation of their properties, the rules governing property, marital authority, division of conjugal property, the classification of their property, legal causes for divorce, the extent of the latter, the authority to decree it, and, in general, the civil effects of marriage and divorce upon the persons and properties of the spouses, are questions that are governed exclusively by the national law of the husband and wife." The relevance of "citizenship" or "nationality" to Civil Law is best exemplified in Article 15 of the Civil Code, stating that "Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad" that explains the need to incorporate in the code a reiteration of the Constitutional provisions on citizenship. Similarly, citizenship is significant in civil relationships found in different parts of the Civil Code,39 such as on successional rights and family relations.40 In adoption, for instance, an adopted child would be considered the child of his adoptive parents and accorded the same rights as their legitimate child but such legal fiction extended only to define his rights under civil law41 and not his political status.

Civil law provisions point to an obvious bias against illegitimacy. This discriminatory attitude may be traced to the Spanish family and property laws, which, while defining proprietary and successional rights of members of the family, provided distinctions in the rights of legitimate and illegitimate children. In the monarchial set-up of old Spain, the distribution and inheritance of titles and wealth were strictly according to bloodlines and the concern to keep these bloodlines uncontaminated by foreign blood was paramount. These distinctions between legitimacy and illegitimacy were codified in the Spanish Civil Code, and the invidious discrimination survived when the Spanish Civil Code became the primary source of our own Civil Code. Such distinction, however, remains and should remain only in the sphere of civil law and not unduly impede or impinge on the domain of political law. The proof of filiation or paternity for purposes of determining his citizenship status should thus be deemed independent from and not inextricably tied up with that prescribed for civil law purposes. The Civil Code or Family Code provisions on proof of filiation or paternity, although good law, do not have preclusive effects on matters alien to personal and family relations. The ordinary rules on evidence could well and should govern. For instance, the matter about pedigree is not necessarily precluded from being applicable by the Civil Code or Family Code provisions. Section 39, Rule 130, of the Rules of Court provides "Act or Declaration about pedigree. The act or declaration of a person deceased, or unable to testify, in respect to the pedigree of another person related to him by birth or marriage, may be received in evidence where it occurred before the controversy, and the relationship between the two persons is shown by evidence other than such act or declaration. The word `pedigree includes relationship, family genealogy, birth, marriage, death, the dates when and the places where these facts occurred, and the names of the relatives. It embraces also facts of family history intimately connected with pedigree." For the above rule to apply, it would be necessary that (a) the declarant is already dead or unable to testify, (b) the pedigree of a person must be at issue, (c) the declarant must be a relative of the person whose pedigree is in question, (d) declaration must be made before the controversy has occurred, and (e) the relationship between the declarant and the person whose pedigree is in question must be shown by evidence other than such act or declaration. Thus, the duly notarized declaration made by Ruby Kelley Mangahas, sister of Bessie Kelley Poe submitted as Exhibit 20 before the COMELEC, might be accepted to prove the acts of Allan F. Poe, recognizing his own paternal relationship with FPJ, i.e, living together with Bessie Kelley and his children (including respondent FPJ) in one house, and as one family "I, Ruby Kelley Mangahas, of legal age and sound mind, presently residing in Stockton, California, U.S.A., after being sworn in accordance with law do hereby declare that: "1. I am the sister of the late Bessie Kelley Poe. "2. Bessie Kelley Poe was the wife of Fernando Poe, Sr. "3. Fernando and Bessie Poe had a son by the name of Ronald Allan Poe, more popularly known in the Philippines as `Fernando Poe, Jr., or `FPJ. "4. Ronald Allan Poe `FPJ was born on August 20, 1939 at St. Luke's Hospital, Magdalena Street, Manila. "x x x xxx xxx

"7. Fernando Poe Sr., and my sister Bessie, met and became engaged while they were students at the University of the Philippines in 1936. I was also introduced to Fernando Poe, Sr., by my sister that same year. "8. Fernando Poe, Sr., and my sister Bessie had their first child in 1938.

"9. Fernando Poe, Sr., my sister Bessie and their first three children, Elizabeth, Ronald, Allan and Fernando II, and myself lived together with our mother at our family's house on Dakota St. (now Jorge Bocobo St.), Malate until the liberation of Manila in 1945, except for some months between 1943-1944. "10. Fernando Poe, Sr., and my sister, Bessie, were blessed with four (4) more children after Ronald Allan Poe. "x x x xxx xxx

"18. I am executing this Declaration to attest to the fact that my nephew, Ronald Allan Poe is a natural born Filipino, and that he is the legitimate child of Fernando Poe, Sr. "Done in City of Stockton, California, U.S.A., this 12th day of January 2004. Ruby Kelley Mangahas Declarant DNA Testing In case proof of filiation or paternity would be unlikely to satisfactorily establish or would be difficult to obtain, DNA testing, which examines genetic codes obtained from body cells of the illegitimate child and any physical residue of the long dead parent could be resorted to. A positive match would clear up filiation or paternity. In Tijing vs. Court of Appeals,42 this Court has acknowledged the strong weight of DNA testing "Parentage will still be resolved using conventional methods unless we adopt the modern and scientific ways available. Fortunately, we have now the facility and expertise in using DNA test for identification and parentage testing. The University of the Philippines Natural Science Research Institute (UP-NSRI) DNA Analysis Laboratory has now the capability to conduct DNA typing using short tandem repeat (STR) analysis. The analysis is based on the fact that the DNA of a child/person has two (2) copies, one copy from the mother and the other from the father. The DNA from the mother, the alleged father and the child are analyzed to establish parentage. Of course, being a novel scientific technique, the use of DNA test as evidence is still open to challenge. Eventually, as the appropriate case comes, courts should not hesitate to rule on the admissibility of DNA evidence. For it was said, that courts should apply the results of science when competently obtained in aid of situations presented, since to reject said result is to deny progress." Petitioners Argument For Jurisprudential Conclusiveness Petitioner would have it that even if Allan F. Poe were a Filipino citizen, he could not have transmitted his citizenship to respondent FPJ, the latter being an illegitimate child. According to petitioner, prior to his marriage to Bessie Kelley, Allan F. Poe, on July 5, 1936, contracted marriage with a certain Paulita Gomez, making his subsequent marriage to Bessie Kelley bigamous and respondent FPJ an illegitimate child. The veracity of the supposed certificate of marriage between Allan F. Poe and Paulita Gomez could be most doubtful at best. But the documentary evidence introduced by no less than respondent himself, consisting of a birth certificate of respondent and a marriage certificate of his parents showed that FPJ was born on 20 August 1939 to a Filipino father and an American mother who were married to each other a year later, or on 16 September 1940. Birth to unmarried parents would make FPJ an illegitimate child. Petitioner contended that as an illegitimate child, FPJ so followed the citizenship of his mother, Bessie Kelley, an American citizen, basing his stand on the ruling of this Court in Morano vs. Vivo,43 citing Chiongbian vs. de Leo44 and Serra vs. Republic.45 On the above score, the disquisition made by amicus curiae Joaquin G. Bernas, SJ, is most convincing; he states "We must analyze these cases and ask what the lis mota was in each of them. If the pronouncement of the Court on jus sanguinis was on the lis mota, the pronouncement would be a decision constituting doctrine under the rule of stare decisis. But if the pronouncement was irrelevant to the lis mota, the pronouncement would not be a decision but a mere obiter dictum which did not establish doctrine. I therefore invite the Court to look closely into these cases. "First, Morano vs. Vivo. The case was not about an illegitimate child of a Filipino father. It was about a stepson of a Filipino, a stepson who was the child of a Chinese mother and a Chinese father. The issue was

whether the stepson followed the naturalization of the stepfather. Nothing about jus sanguinis there. The stepson did not have the blood of the naturalized stepfather. "Second, Chiongbian vs. de Leon. This case was not about the illegitimate son of a Filipino father. It was about a legitimate son of a father who had become Filipino by election to public office before the 1935 Constitution pursuant to Article IV, Section 1(2) of the 1935 Constitution. No one was illegitimate here. "Third, Serra vs. Republic. The case was not about the illegitimate son of a Filipino father. Serra was an illegitimate child of a Chinese father and a Filipino mother. The issue was whether one who was already a Filipino because of his mother who still needed to be naturalized. There is nothing there about invidious jus sanguinis. "Finally, Paa vs. Chan.46 This is a more complicated case. The case was about the citizenship of Quintin Chan who was the son of Leoncio Chan. Quintin Chan claimed that his father, Leoncio, was the illegitimate son of a Chinese father and a Filipino mother. Quintin therefore argued that he got his citizenship from Leoncio, his father. But the Supreme Court said that there was no valid proof that Leoncio was in fact the son of a Filipina mother. The Court therefore concluded that Leoncio was not Filipino. If Leoncio was not Filipino, neither was his son Quintin. Quintin therefore was not only not a natural-born Filipino but was not even a Filipino. "The Court should have stopped there. But instead it followed with an obiter dictum. The Court said obiter that even if Leoncio, Quintin's father, were Filipino, Quintin would not be Filipino because Quintin was illegitimate. This statement about Quintin, based on a contrary to fact assumption, was absolutely unnecessary for the case. x x x It was obiter dictum, pure and simple, simply repeating the obiter dictum in Morano vs. Vivo. "x x x xxx xxx

"Aside from the fact that such a pronouncement would have no textual foundation in the Constitution, it would also violate the equal protection clause of the Constitution not once but twice. First, it would make an illegitimate distinction between a legitimate child and an illegitimate child, and second, it would make an illegitimate distinction between the illegitimate child of a Filipino father and the illegitimate child of a Filipino mother. "The doctrine on constitutionally allowable distinctions was established long ago by People vs. Cayat.47 I would grant that the distinction between legitimate children and illegitimate children rests on real differences. x x x But real differences alone do not justify invidious distinction. Real differences may justify distinction for one purpose but not for another purpose. "x x x What is the relevance of legitimacy or illegitimacy to elective public service? What possible state interest can there be for disqualifying an illegitimate child from becoming a public officer. It was not the fault of the child that his parents had illicit liaison. Why deprive the child of the fullness of political rights for no fault of his own? To disqualify an illegitimate child from holding an important public office is to punish him for the indiscretion of his parents. There is neither justice nor rationality in that. And if there is neither justice nor rationality in the distinction, then the distinction transgresses the equal protection clause and must be reprobated." The other amici curiae, Mr. Justice Vicente Mendoza (a former member of this Court), Professor Ruben Balane and Dean Martin Magallona, at bottom, have expressed similar views. The thesis of petitioner, unfortunately hinging solely on pure obiter dicta, should indeed fail. Where jurisprudence regarded an illegitimate child as taking after the citizenship of its mother, it did so for the benefit the child. It was to ensure a Filipino nationality for the illegitimate child of an alien father in line with the assumption that the mother had custody, would exercise parental authority and had the duty to support her illegitimate child. It was to help the child, not to prejudice or discriminate against him.

The fact of the matter perhaps the most significant consideration is that the 1935 Constitution, the fundamental law prevailing on the day, month and year of birth of respondent FPJ, can never be more explicit than it is. Providing neither conditions nor distinctions, the Constitution states that among the citizens of the Philippines are "those whose fathers are citizens of the Philippines." There utterly is no cogent justification to prescribe conditions or distinctions where there clearly are none provided. In Sum (1) The Court, in the exercise of its power of judicial review, possesses jurisdiction over the petition in G. R. No. 161824, filed under Rule 64, in relation to Rule 65, of the Revised Rules of Civil Procedure. G.R. No. 161824 assails the resolution of the COMELEC for alleged grave abuse of discretion in dismissing, for lack of merit, the petition in SPA No. 04-003 which has prayed for the disqualification of respondent FPJ from running for the position of President in the 10th May 2004 national elections on the contention that FPJ has committed material representation in his certificate of candidacy by representing himself to be a natural-born citizen of the Philippines. (2) The Court must dismiss, for lack of jurisdiction and prematurity, the petitions in G. R. No. 161434 and No. 161634 both having been directly elevated to this Court in the latters capacity as the only tribunal to resolve a presidential and vice-presidential election contest under the Constitution. Evidently, the primary jurisdiction of the Court can directly be invoked only after, not before, the elections are held. (3) In ascertaining, in G.R. No. 161824, whether grave abuse of discretion has been committed by the COMELEC, it is necessary to take on the matter of whether or not respondent FPJ is a natural-born citizen, which, in turn, depended on whether or not the father of respondent, Allan F. Poe, would have himself been a Filipino citizen and, in the affirmative, whether or not the alleged illegitimacy of respondent prevents him from taking after the Filipino citizenship of his putative father. Any conclusion on the Filipino citizenship of Lorenzo Pou could only be drawn from the presumption that having died in 1954 at 84 years old, Lorenzo would have been born sometime in the year 1870, when the Philippines was under Spanish rule, and that San Carlos, Pangasinan, his place of residence upon his death in 1954, in the absence of any other evidence, could have well been his place of residence before death, such that Lorenzo Pou would have benefited from the "en masse Filipinization" that the Philippine Bill had effected in 1902. That citizenship (of Lorenzo Pou), if acquired, would thereby extend to his son, Allan F. Poe, father of respondent FPJ. The 1935 Constitution, during which regime respondent FPJ has seen first light, confers citizenship to all persons whose fathers are Filipino citizens regardless of whether such children are legitimate or illegitimate. (4) But while the totality of the evidence may not establish conclusively that respondent FPJ is a natural-born citizen of the Philippines, the evidence on hand still would preponderate in his favor enough to hold that he cannot be held guilty of having made a material misrepresentation in his certificate of candidacy in violation of Section 78, in relation to Section 74, of the Omnibus Election Code. Petitioner has utterly failed to substantiate his case before the Court, notwithstanding the ample opportunity given to the parties to present their position and evidence, and to prove whether or not there has been material misrepresentation, which, as so ruled in Romualdez-Marcos vs. COMELEC,48 must not only be material, but also deliberate and willful. WHEREFORE, the Court RESOLVES to DISMISS 1. G. R. No. 161434, entitled "Maria Jeanette C. Tecson and Felix B. Desiderio, Jr., Petitioners, versus Commission on Elections, Ronald Allan Kelley Poe (a.k.a. "Fernando Poe, Jr.,) and Victorino X. Fornier, Respondents," and G. R. No. 161634, entitled "Zoilo Antonio Velez, Petitioner, versus Ronald Allan Kelley Poe, a.k.a. Fernando Poe, Jr., Respondent," for want of jurisdiction. 2. G. R. No. 161824, entitled "Victorino X. Fornier, Petitioner, versus Hon. Commission on Elections and Ronald Allan Kelley Poe, also known as Fernando Poe, Jr.," for failure to show grave abuse of discretion on the part of respondent Commission on Elections in dismissing the petition in SPA No. 04-003. No Costs. SO ORDERED.

Davide, Jr., C.J., see separate opinion, concurring. Puno, J., on leave but was allowed to vote; see separate opinion. Panganiban, J., on official leave; allowed to vote but did not send his vote on the matter. Quisumbing, J., joins the dissent of Justices Tinga and Morales; case should have been remanded. Ynares-Santiago, J., concurs and also with J. Punos separate opinion. Sandoval-Gutierrez, J., concurs, please see separate opinion. Carpio, J., see dissenting opinion. Austria-Martinez, J., concurs, please see separate opinion. Corona, J., joins the dissenting opinion of Justice Morales. Carpio-Morales, J., see dissenting opinion. Callejo, Sr., J., please see concurring opinion. Azcuna, J., concurs in a separate opinion. Tinga, J., dissents per separate opinion.

SEPARATE OPINION DAVIDE, JR. C.J.: The procedural and factual antecedents of these consolidated cases are as follows: On 9 January 2004, petitioner Victorino X. Fornier filed with public respondent Commission on Elections (COMELEC) a petition to disqualify private respondent Fernando Poe, Jr. (FPJ) and to deny due course to or cancel his certificate of candidacy for the position of President in the forthcoming 10 May 2004 presidential elections. As a ground therefore, he averred that FPJ committed falsity in a material representation in his certificate of candidacy in declaring that he is a natural-born Filipino citizen when in truth and in fact he is not, since he is the illegitimate son of Bessie Kelley, an American citizen, and Allan Poe, a Spanish national. The case was docketed as COMELEC Case SPA No. 04-003 and assigned to the COMELECs First Division. At the hearing before the First Division of the COMELEC, petitioner Fornier offered FPJs record of birth to prove that FPJ was born on 20 August 1939 to Bessie Kelley, an American citizen, and Allan Poe, who was then married to Paulita Gomez. Upon the other hand, FPJ tried to establish that his father was a Filipino citizen whose parents, although Spanish nationals, were Filipino citizens. He adduced in evidence a copy of the marriage contract of Allan Poe and Bessie Kelley, showing that they were married on 16 September 1940 in Manila. In its Resolution of 23 January 2004, the First Division of the COMELEC dismissed COMELEC Case SPA No. 04003 for lack of merit. It declared that COMELECs jurisdiction is limited to all matters relating to election, returns and qualifications of all elective regional, provincial and city officials, but not those of national officials like the President. It has, however, jurisdiction to pass upon the issue of citizenship of national officials under Section 78 of the Omnibus Election Code on petitions to deny due course or cancel certificates of candidacy on the ground that any material representation contained therein is false. It found that the evidence adduced by petitioner Fornier is not substantial, and that FPJ did not commit any falsehood in material representation when he stated in his certificate of candidacy that he is a natural-born Filipino citizen. His motion for reconsideration filed before the COMELEC en banc having been denied, petitioner Fornier filed a petition with this Court, which was docketed as G.R. No. 161824. Meanwhile, petitioners Maria Jeanette C. Tecson and Felix B. Desiderio, Jr. came to this Court via a special civil action for certiorari under Rule 65 of the Rules of Court, docketed as G.R. No. 161434, to challenge the jurisdiction of the COMELEC over the issue of the citizenship of FPJ. They assert that only this Court has jurisdiction over the issue in light of the last paragraph of Section 4 of Article VII of the Constitution, which provides: The Supreme Court, sitting en banc, shall be the sole judge of all contests relating to the election returns, and qualifications of the President or Vice-President, and may promulgate its rules for the purpose.

On 29 January 2004 petitioner Velez filed a similar petition, which was docketed as G.R. No. 161634. The core issues in these consolidated cases, as defined by the Court during the oral argument, are as follows: (1) Whether the COMELEC has jurisdiction over petitions to deny due course to or cancel certificates of candidacy of Presidential candidates; (2) Whether the Supreme Court has jurisdiction over the petitions of (a) Tecson, et al., (b) Velez, and (c) Fornier; and (3) Whether respondent FPJ is a Filipino citizen, and if so, whether he is a natural-born Filipino citizen. These consolidated petitions must be dismissed. Both the petitions of Tecson and Velez invoke the jurisdiction of this Court as provided for in the last paragraph of Section 4 of Article VII of the Constitution, and raise the issue of the ineligibility of a candidate for President on the ground that he is not a natural-born citizen of the Philippines. The actions contemplated in the said provision of the Constitution are post-election remedies, namely, regular election contests and quo warranto. The petitioner should have, instead, resorted to pre-election remedies, such as those prescribed in Section 68 (Disqualifications), in relation to Section 72; Section 69 (Nuisance candidates); and Section 78 (Petition to deny course to or cancel a certificate of candidacy), in relation to Section 74, of the Omnibus Election Code, which are implemented in Rules 23, 24 and 25 of the COMELEC Rules of Procedure. These pre-election remedies or actions do not, however, fall within the original jurisdiction of this Court. Under the Omnibus Election Code and the COMELEC Rules of Procedure, the COMELEC has the original jurisdiction to determine in an appropriate proceeding whether a candidate for an elective office is eligible for the office for which he filed his certificate of candidacy or is disqualified to be a candidate or to continue such candidacy because of any of the recognized grounds for disqualification. Its jurisdiction over COMELEC SPA No. 04-003 is, therefore, beyond question. Upon the other hand, this Court has jurisdiction over Forniers petition (G.R. No. 161824) under Section 7 of Article IX-A of the Constitution, which provides: Section 7. Each Commission shall decide by a majority vote of all its Members any case or matter brought before it within sixty days from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. This Court can also take cognizance of the issue of whether the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the challenged resolution in COMELEC SPA No. 04-003 by virtue of Section 1 of Article VIII of the Constitution, which reads as follows: Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of nay branch or instrumentality of the Government. On the issue of whether private respondent FPJ is a natural-born Filipino citizen, the following facts have been established by a weighty preponderance of evidence either in the pleadings and the documents attached thereto or from the admissions of the parties, through their counsels, during the oral arguments: 1. FPJ was born on 20 August 1939 in Manila, Philippines.

2. FPJ was born to Allan Poe and Bessie Kelley. 3. Bessie Kelley and Allan Poe were married on 16 September 1940. 4. Allan Poe was a Filipino because his father, Lorenzo Poe, albeit a Spanish subject, was not shown to have declared his allegiance to Spain by virtue of the Treaty of Paris and the Philippine Bill of 1902. From the foregoing it is clear that respondent FPJ was born before the marriage of his parents. Thus, pursuant to the Civil Code then in force, he could either be (a) a natural child if both his parents had no legal impediments to marry each other; or (b) an illegitimate child if, indeed, Allan Poe was married to another woman who was still alive at the time FPJ was born. Petitioner Fornier never alleged that Allan Poe was not the father of FPJ. By revolving his case around the illegitimacy of FPJ, Fornier effectively conceded paternity or filiation as a non-issue. For purposes of the citizenship of an illegitimate child whose father is a Filipino and whose mother is an alien, proof of paternity or filiation is enough for the child to follow the citizenship of his putative father, as advanced by Fr. Joaquin Bernas, one of the amici curiae. Since paternity or filiation is in fact admitted by petitioner Fornier, the COMELEC committed no grave abuse of discretion in holding that FPJ is a Filipino citizen, pursuant to paragraph 3 of Section 1 of Article IV of the 1935 Constitution, which reads: Section 1. The following are citizens of the Philippines: (3) Those whose fathers are citizens of the Philippines. I agree with the amici curiae that this provision makes no distinction between legitimate and illegitimate children of Filipino fathers. It is enough that filiation is established or that the child is acknowledged or recognized by the father. DISSENTING OPINION CARPIO, J.: I dissent from the majority opinion. The Antecedent Proceedings Petitioner Fornier filed before the Commission on Elections ("Comelec") a "Petition for Disqualification of Presidential Candidate Ronald Allan Kelley Poe a.k.a. Fernando Poe, Jr." on the ground that Fernando Poe, Jr. ("FPJ") is not a natural-born Philippine citizen. The Comelec First Division dismissed the petition, ruling that petitioner failed to present substantial evidence that FPJ committed "any material misrepresentation when he stated in his Certificate of Candidacy that he is a natural-born citizen." On motion for reconsideration, the Comelec En Banc affirmed the ruling of the First Division. Petitioner Fornier now assails the Comelec En Banc resolution under Rule 64 in relation to Rule 65 of the Rules of Court. The Undisputed Facts The undisputed facts are based on two documents and the admission of FPJ. The first document is the Birth Certificate of FPJ, showing he was born on 20 August 1939. The Birth Certificate is an evidence of FPJ.[1] The second document is the Marriage Certificate of Allan F. Poe and Bessie Kelley, showing that their marriage took place on 16 September 1940. The Marriage Certificate is also an evidence of FPJ.[2] Moreover, FPJ admits that his mother Bessie Kelley was an American citizen.[3] Based on these two documents and admission, the undisputed facts are: (1) FPJ was born out of wedlock and therefore illegitimate,[4] and (2) the mother of FPJ was an American citizen.

The Issues The issues raised in Forniers petition are: (a) Whether the Court has jurisdiction over the petition to disqualify FPJ as a candidate for President on the ground that FPJ is not a natural-born Philippine citizen; (b) Whether FPJ is a natural-born citizen of the Philippines. Jurisdiction The Comelec has jurisdiction to determine initially the qualifications of all candidates. Under Section 2(1), Article IXC of the Constitution, the Comelec has the power and function to "[E]nforce and administer all laws and regulations relative to the conduct of an election." The initial determination of who are qualified to file certificates of candidacies with the Comelec clearly falls within this all-encompassing constitutional mandate of the Comelec. The conduct of an election necessarily includes the initial determination of who are qualified under existing laws to run for public office in an election. Otherwise, the Comelecs certified list of candidates will be cluttered with unqualified candidates making the conduct of elections unmanageable. For this reason, the Comelec weeds out every presidential election dozens of candidates for president who are deemed nuisance candidates by the Comelec.[5] Section 2(3), Article IX-C of the Constitution also empowers the Comelec to "[D]ecide, except those involving the right to vote, all questions affecting elections x x x." The power to decide "all questions affecting elections" necessarily includes the power to decide whether a candidate possesses the qualifications required by law for election to public office. This broad constitutional power and function vested in the Comelec is designed precisely to avoid any situation where a dispute affecting elections is left without any legal remedy. If one who is obviously not a natural-born Philippine citizen, like Arnold Schwarzenneger, runs for President, the Comelec is certainly not powerless to cancel the certificate of candidacy of such candidate. There is no need to wait until after the elections before such candidate may be disqualified. Under Rule 25 on "Disqualification of Candidates" of the Comelec Rules of Procedure, a voter may question before the Comelec the qualifications of any candidate for public office. Thus, Rule 25 provides: Section 1. Grounds for Disqualification. Any candidate who does not possess all the qualifications of a candidate as provided for by the Constitution or by existing law or who commits any act declared by law to be grounds for disqualification may be disqualified from continuing as a candidate. Section 2. Who May File Petition for Disqualification. Any citizen of voting age, or duly registered political party, organization or coalition of political parties may file with the Law Department of the Commission a petition to disqualify a candidate on grounds provided by law. (Emphasis supplied) The Comelec adopted its Rules of Procedure pursuant to its constitutional power to promulgate its own rules of procedure[6] to expedite the disposition of cases or controversies falling within its jurisdiction. The Comelec has ruled upon the qualifications of candidates, even if the Constitution provides that some other body shall be the "sole judge" of the qualifications of the holders of the public offices involved. The Court has upheld the jurisdiction of Comelec to issue such rulings,[7] even when the issue is the citizenship of a candidate.[8] Thus, the Comelec has jurisdiction to determine initially if FPJ meets the citizenship qualification to run for President. However, the Comelec En Banc, in its scanty resolution, failed to state the factual bases of its ruling. The Comelec En Banc also failed to rule conclusively on the issue presented whether FPJ is a natural-born Philippine citizen. The Comelec En Banc affirmed the First Division ruling that "[W]e feel we are not at liberty to finally declare whether or not the respondent is a natural-born citizen." In short, the Comelec En Banc allowed a candidate for President to run in the coming elections without being convinced that the candidate is a natural-born Philippine citizen. Clearly, the Comelec En Banc acted with grave abuse of discretion. Under Section 1, Article VIII, as well as Section 5, Article VIII, of the Constitution, the Court has jurisdiction to hear and decide the issue in a petition for certiorari under Rule 64 in relation to Rule 65.

To hold that the Court acquires jurisdiction to determine the qualification of a candidate for President only after the elections would lead to an absurd situation. The Court would have to wait for an alien to be elected on election day before he could be disqualified to run for President. If the case is not decided immediately after the election, an alien who wins the election may even assume office as President before he is finally disqualified. Certainly, this is not what the Constitution says when it provides that "[N]o person may be elected President unless he is a natural-born citizen of the Philippines."[9] The clear and specific language of the Constitution prohibits the election of one who is not a natural-born citizen. Thus, the issue of whether a candidate for President is a natural-born Philippine citizen must be decided before the election. Governing Laws Since FPJ was born on 20 August 1939, his citizenship at the time of his birth depends on the Constitution and statutes in force at the time of his birth.[10] FPJs citizenship at the time of his birth in 1939, applying the laws in force in 1939, determines whether he is a natural-born Philippine citizen. Natural-born Philippine citizens are "those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their Philippine citizenship."[11] If a person has to perform an act, such as proving in an administrative or judicial proceeding, that an event subsequent to his birth transpired thus entitling him to Philippine citizenship, such person is not a natural born citizen.[12] The 1935 Constitution and the Spanish Civil Code, the laws in force in 1939, are the governing laws that determine whether a person born in 1939 is a Philippine citizen at the time of his birth in 1939. Any subsequent legislation cannot change the citizenship at birth of a person born in 1939 because such legislation would violate the constitutional definition of a natural-born citizen as one who is a Philippine citizen from birth. In short, one who is not a Philippine citizen at birth in 1939 cannot be declared by subsequent legislation a natural-born citizen. General Principles A legitimate child of a Filipino father follows the citizenship of the father. A child born within wedlock is presumed to be the son of the father[13] and thus carries the blood of the father. Under the doctrine of jus sanguinis, as provided for in Section 1(3), Article III of the 1935 Constitution, a legitimate child, by the fact of legitimacy, automatically follows the citizenship of the Filipino father. An illegitimate child, however, enjoys no presumption at birth of blood relation to any father unless the father acknowledges the child at birth.[14] The law has always required that "in all cases of illegitimate children, their filiation must be duly proved."[15] The only legally known parent of an illegitimate child, by the fact of illegitimacy, is the mother of the child who conclusively carries the blood of the mother. Thus, unless the father acknowledges the illegitimate child at birth, the illegitimate child can only acquire the citizenship of the only legally known parent - the mother. However, if the Filipino father is legally known because the filiation (blood relation of illegitimate child to the father) of the child to the Filipino father is established in accordance with law, the child follows the citizenship of the Filipino father. This gives effect, without discrimination between legitimate and illegitimate children, to the provision of the 1935 Constitution that "[T]hose whose fathers are citizens of the Philippines"[16] are Philippine citizens. Nature of Citizenship If the Filipino father acknowledges the illegitimate child at birth, the child is a natural-born Philippine citizen because no other act after his birth is required to acquire or perfect his Philippine citizenship. The child possesses all the qualifications to be a Philippine citizen at birth. If the Filipino father acknowledges the child after birth, the child is a Philippine citizen as of the time of the acknowledgment. In this case, the child does not possess all the qualifications to be a Philippine citizen at birth because an act - the acknowledgement of the Filipino father - is required for the child to acquire or perfect his Philippine citizenship. Statutory provisions on retroactivity of acknowledgment cannot be given effect because they would be contrary to the constitutional definition of natural- born citizens as those who are Philippine citizens at birth without having to perform any act to acquire or perfect their Philippine citizenship.

If the illegitimacy of a child is established, there is no presumption that the child has the blood of any man who is supposed to be the father. There is only a conclusive presumption that the child has the blood of the mother. If an illegitimate child claims to have the blood of a man who is supposed to be the childs father, such blood relation must be established in accordance with proof of filiation as required by law. Where the illegitimate child of an alien mother claims to follow the citizenship of the putative father, the burden is on the illegitimate child to establish a blood relation to the putative Filipino father since there is no presumption that an illegitimate child has the blood of the putative father. Even if the putative father admits paternity after the birth of the illegitimate child, there must be an administrative or judicial approval that such blood relation exists upon proof of paternity as required by law. Citizenship, being a matter of public and State interest, cannot be conferred on an illegitimate child of an alien mother on the mere say so of the putative Filipino father. The State has a right to examine the veracity of the claim of paternity. Otherwise, the grant of Philippine citizenship to an illegitimate child of an alien mother is left to the sole discretion of the putative Filipino father. For example, a Philippine citizen of Chinese descent can simply claim that he has several illegitimate children in China. The State cannot be required to grant Philippine passports to these supposed illegitimate children born in China of Chinese mothers just because the putative Filipino father acknowledges paternity of these illegitimate children. There must be either an administrative or judicial determination that the claim of the putative Filipino father is true. The case of the illegitimate Vietnamese children, born in Vietnam of Vietnamese mothers and allegedly of Filipino fathers, is illustrative. These children grew up in Vietnam, many of them studying there until high school. These children grew up knowing they were Vietnamese citizens. In 1975, a Philippine Navy vessel brought them, together with their Vietnamese mothers, to the Philippines as Saigon fell to the communists. The mothers of these children became stateless when the Republic of (South) Vietnam ceased to exist in 1975. The Department of Justice rendered Opinion No. 49 dated 3 May 1995 that being children of Filipino fathers, these Vietnamese children, even if illegitimate, are Philippine citizens under Section 1(3), Article IV of the 1935 Constitution and Section 1(2), Article III of the 1973 Constitution. This Opinion is cited by FPJ as basis for his claim of being a natural-born Philippine citizen.[17] However, this Opinion categorically stated that before the illegitimate Vietnamese children may be considered Filipino citizens "it is necessary in every case referred to that such paternity be established by sufficient and convincing documentary evidence."[18] In short, the illegitimate child must prove to the proper administrative or judicial authority the paternity of the alleged Filipino father by "sufficient and convincing documentary evidence." Clearly, an administrative or judicial act is necessary to confer on the illegitimate Vietnamese children Philippine citizenship. The mere claim of the illegitimate child of filiation to a Filipino father, or the mere acknowledgment of the alleged Filipino father, does not automatically confer Philippine citizenship on the child. The State must be convinced of the veracity of such claim and approve the same. Since the illegitimate Vietnamese children need to perform an act to acquire or perfect Philippine citizenship, they are not natural-born Philippine citizens. They become Philippine citizens only from the moment the proper administrative or judicial authority approve and recognize their filiation to their alleged Filipino fathers. The rationale behind requiring that only natural-born citizens may hold certain high public offices[19] is to insure that the holders of these high public offices grew up knowing they were at birth citizens of the Philippines. In their formative years they knew they owed from birth their allegiance to the Philippines. In case any other country claims their allegiance, they would be faithful and loyal to the Philippines of which they were citizens from birth. This is particularly true to the President who is the commander-in-chief of the armed forces.[20] The President of the Philippines must owe, from birth, allegiance to the Philippines and must have grown up knowing that he was a citizen of the Philippines at birth. The constitutional definition of a natural-born Philippine citizen would lose its meaning and efficacy if one who was at birth recognized by law as an alien were declared forty years later[21] a natural-born Philippine citizen just because his alleged Filipino father subsequently admitted his paternity. Proof of Filiation Article 131[22] of the Spanish Civil Code, the law in force in 1939, recognized only the following as proof of filiation of a natural child: a. acknowledgment in a record of birth;

b. acknowledgment in a will; c. acknowledgment in some other public document. To establish his Philippine citizenship at birth, FPJ must present either an acknowledgement in a record of birth, or an acknowledgment in some other public document executed at the time of his birth. An acknowledgment executed after birth does not make one a citizen at birth but a citizen from the time of such acknowledgment since the acknowledgment is an act done after birth to acquire or perfect Philippine citizenship. After the birth of one who is not a natural-born Philippine citizen, a subsequent legislation liberalizing proof of filiation cannot apply to such person to make him a natural-born citizen. A natural-born Philippine citizen is expressly defined in the Constitution as one who is a citizen at birth. If a person is not a citizen at birth, no subsequent legislation can retroactively declare him a citizen at birth since it would violate the constitutional definition of a natural-born citizen. Burden of Proof Any person who claims to be a citizen of the Philippines has the burden of proving his Philippine citizenship. Any person who claims to be qualified to run for President because he is, among others, a natural-born Philippine citizen, has the burden of proving he is a natural-born citizen. Any doubt whether or not he is natural-born citizen is resolved against him. The constitutional requirement of a natural-born citizen, being an express qualification for election as President, must be complied with strictly as defined in the Constitution. As the Court ruled in Paa v. Chan: [23] It is incumbent upon a person who claims Philippine citizenship to prove to the satisfaction of the Court that he is really a Filipino. No presumption can be indulged in favor of the claimant of Philippine citizenship, and any doubt regarding citizenship must be resolved in favor of the State. Since the undisputed facts show that FPJ is an illegitimate child, having been born out of wedlock, the burden is on FPJ to prove his blood relation to his alleged Filipino father. An illegitimate child enjoys no presumption of blood relation to any father. Such blood relationship must be established in the appropriate proceedings in accordance with law. Private party litigants cannot stipulate on the Philippine citizenship of a person because citizenship is not a private right or property, but a matter of public and State interest. Even if petitioner Fornier admits that FPJ, although illegitimate, is the son of Allan F. Poe, such admission cannot bind the State for the purpose of conferring on FPJ the status of a natural-born Philippine citizen or even of a naturalized citizen. Certainly, the Court will not recognize a person as a natural-born Philippine citizen just because the private party litigants have admitted or stipulated on such a status. In the present case, the Solicitor General, as representative of the Government, is strongly disputing the status of FPJ as a natural-born Philippine citizen. Legitimation Under Article 123[24] of the Spanish Civil Code, legitimation took effect as of the date of marriage. There was no retroactivity of the effects of legitimation on the rights of the legitimated child. Thus, a legitimated child acquired the rights of a legitimate child only as of the date of marriage of the natural parents. Allan F. Poe and Bessie Kelley were married on 16 September 1940 while FPJ was born more than one year earlier on 20 August 1939. Assuming that Allan F. Poe was FPJs natural father, the effects of legitimation did not retroact to the birth of FPJ on 20 August 1939. Besides, legitimation vests only civil, not political rights, to the legitimated child. As the Court held in Ching Leng:[25] The framers of the Civil Code had no intention whatsoever to regulate therein political questions. Hence, apart from reproducing the provisions of the Constitution on citizenship, the Code contains no precept thereon except that which refers all matters of "naturalization", as well as those related to the "loss and reacquisition of citizenship" to "special laws." Consistently with this policy, our Civil Code does not include therein any rule analogous to Articles 18 to 28 of the Civil Code of Spain, regulating citizenship. (Underscoring in the original)

Clearly, even assuming that the marriage of Allan F. Poe and Bessie Kelley legitimated FPJ, such legitimation did not vest retroactively any civil or political rights to FPJ. Treaty of Paris of 1898 and Philippine Bill of 1902 FPJ admits that his grandfather, Lorenzo Pou, was a Spanish citizen who came to the Philippines from Spain.[26] To benefit from the mass naturalization under the Treaty of Paris of 1898 and the Philippine Bill of 1902, FPJ must prove that Lorenzo Pou was an inhabitant and resident of the Philippines on 11 April 1899. Once it is established that Lorenzo Pou was an inhabitant and resident of the Philippines on 11 April 1899, then he is presumed to have acquired Philippine citizenship under the Treaty of Paris of 1898 and the Philippine Bill of 1902.[27] Being an inhabitant and resident of the Philippines on 11 April 1899 is the determinative fact to fall under the coverage of the Treaty of Paris of 1898 and the Philippine Bill of 1902.[28] There is, however, no evidence on record that Lorenzo Pou was a Philippine inhabitant and resident on 11 April 1899. The date of arrival of Lorenzo Pou in the Philippines is not known. If he arrived in the Philippines after 11 April 1899, then he could not benefit from the mass naturalization under the Treaty of Paris of 1898 and the Philippine Bill of 1902. There is also no evidence that Lorenzo Pou was naturalized as a Philippine citizen after 11 April 1899. Thus, there can be no presumption that Lorenzo Pou was a Philippine citizen. There is also no evidence on record that Allan F. Poe, the son of Lorenzo Pou and the alleged father of FPJ, was naturalized as a Philippine citizen. Thus, based on the evidence adduced there is no legal basis for claiming that Allan F. Poe is a Philippine citizen. Nevertheless, there is no need to delve further into this issue since the Court can decide this case without determining the citizenship of Lorenzo Pou and Allan F. Poe. Whether or not Lorenzo Pou and Allan F. Poe were Philippine citizens is not material in resolving whether FPJ is a natural-born Philippine citizen. Convention on the Rights of the Child The Philippines signed the Convention on the Rights of the Child on 26 January 1990 and ratified the same on 21 August 1990. The Convention defines a child to mean "every human being below the age of eighteen years unless, under the law applicable to the child, majority is attained earlier." Obviously, FPJ cannot invoke the Convention since he is not a child as defined in the Convention, and he was born half a century before the Convention came into existence. FPJs citizenship at birth in 1939 could not in any way be affected by the Convention which entered into force only on 2 September 1990. The Convention has the status of a municipal law[29] and its ratification by the Philippines could not have amended the express requirement in the Constitution that only natural-born citizens of Philippines are qualified to be President. While the Constitution apparently favors natural-born citizens over those who are not, that is the explicit requirement of the Constitution which neither the Executive Department nor the Legislature, in ratifying a treaty, could amend. In short, the Convention cannot amend the definition in the Constitution that natural-born citizens are "those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their Philippine citizenship." In any event, the Convention guarantees a child "the right to acquire a nationality,"[30] and requires States Parties to "ensure the implementation" of this right, "in particular where the child would otherwise be stateless."[31] Thus, as far as nationality or citizenship is concerned, the Convention guarantees the right of the child to acquire a nationality so that he may not be stateless. The Convention does not guarantee a child a citizenship at birth, but merely "the right to acquire a nationality" in accordance with municipal law. When FPJ was born in 1939, he was apparently under United States law an American citizen at birth.[32] After his birth FPJ also had the right to acquire Philippine citizenship by proving his filiation to his alleged Filipino father in accordance with Philippine law. At no point in time was FPJ in danger of being stateless. Clearly, FPJ cannot invoke the Convention to claim he is a natural-born Philippine citizen. The Doctrine in Ching Leng v. Galang The prevailing doctrine today is that an illegitimate child of a Filipino father and an alien mother follows the citizenship of the alien mother as the only legally known parent. The illegitimate child, even if acknowledged and legally adopted by the Filipino father, cannot acquire the citizenship of the father. The Court made this definitive doctrinal ruling in Ching Leng v. Galang,[33] which involved the illegitimate minor children of a naturalized Filipino of

Chinese descent with a Chinese woman, Sy An. The illegitimate children were later on jointly adopted by the naturalized Filipino and his legal wife, So Buan Ty. The facts in Ching Leng as quoted by the Court from the trial courts decision are as follows: After the petitioner Ching Leng Alias Ching Ban Lee obtained judgment in this Court dated May 2, 1950 granting his petition for naturalization, he together with his wife So Buan Ty filed another petition also in this Court in Special Proc. No. 1216 for the adoption of Ching Tiong Seng, Ching Liong Ding, Victoria Ching Liong Yam, Sydney Ching and Ching Tiong An, all minors and admittedly the illegitimate children of petitioner Ching Leng with one Sy An, a Chinese citizen. Finding the petition for adoption proper, this Court granted the same in a decision dated September 12, 1950, declaring the said minors free from all legal obligations of obedience and maintenance with respect to their mother Sy An and to all legal intents and purposes the children of the adopter Ching Leng alias Ching Ban Lee and So Buan Ty with all the legal rights and obligations provided by law. On September 29, 1955, Ching Leng took his oath of allegiance and became therefore a full pledge (sic) Filipino citizen. Believing now that his adopted illegitimate children became Filipino citizens by virtue of his naturalization, petitioner Ching Leng addressed a communication to the respondent Commissioner of Immigration requesting that the alien certificate of registration of the said minors be cancelled. (Bold underscoring supplied) In Ching Leng, the Court made a definitive ruling on the meaning of "minor child or children" in Section 15 of the Naturalization Law,[34] as well as the meaning of children "whose parents are citizens of the Philippines" under the Constitution. The Court categorically ruled that these children refer to legitimate children only, and not to illegitimate children. Thus, the Court held: It is claimed that the phrases "minor children" and "minor child", used in these provisions, include adopted children. The argument is predicated upon the theory that an adopted child is, for all intents and purposes, a legitimate child. Whenever, the word "children" or "child" is used in statutes, it is generally understood, however, to refer to legitimate children, unless the context of the law and its spirit indicate clearly the contrary. Thus, for instance, when the Constitution provides that "those whose parents are citizens of the Philippines, "and "those whose mothers are citizens of the Philippines," who shall elect Philippine citizenship "upon reaching the age of majority", are citizens of the Philippines (Article IV, Section 1, subdivisions 3 and 4), our fundamental law clearly refers to legitimate children (Chiong Bian vs. De Leon, 46 Off. Gaz., 3652-3654; Serra v. Republic, L-4223, May 12, 1952). Similarly, the children alluded to in said section 15 are those begotten in lawful wedlock, when the adopter, at least is the father. In fact, illegitimate children are under the parental authority of the mother and follow her nationality, not that of the illegitimate father (U.S. vs. Ong Tianse, 29 Phil. 332, 335-336; Santos Co vs. Govt of the Philippines, 52 Phil. 543, 544; Serra v. Republic, supra; Gallofin v. Ordoez, 70 Phil. 287; Quimsuan vs. Republic, L-4693, Feb. 16, 1953). Although, adoption gives "to the adopted person the same rights and duties as if he were a legitimate child of the adopter", pursuant to said Article 341 of our Civil Code, we have already seen that the rights therein alluded to are merely those enumerated in Article 264, and do not include the acquisition of the nationality of the adopter. Moreover, as used in said section 15 of the Naturalization Law, the term "children" could not possibly refer to those whose relation to the naturalized person is one created by legal fiction, as, for instance, by adoption, for, otherwise, the place and time of birth of the child would be immaterial. The fact that the adopted persons involved in the case at bar are illegitimate children of appellant Ching Leng does not affect substantially the legal situation before us, for, by legal fiction, they are now being sought to be given the status of legitimate children of said appellant, despite the circumstance that the Civil Code of the Philippine does not permit their legitimation. (Bold underscoring supplied) Ching Leng, penned by Justice Roberto Concepcion in October 1958, was a unanimous decision of the Court En Banc. Subsequent Court decisions, including Paa v. Chan[35] and Morano et al. v. Vivo,[36] have cited the doctrine laid down in Ching Leng that the provision in the 1935 Constitution stating "those whose fathers are citizens of the Philippines" refers only to legitimate children. When the 1973 and 1987 Constitutions were drafted, the framers did not attempt to change the intent of this provision, even as they were presumably aware of the Ching Leng doctrine. Nevertheless, I believe that it is now time to abandon the Ching Leng doctrine. The inexorable direction of the law, both international and domestic in the last 100 years, is to eliminate all forms of discrimination between legitimate and illegitimate children. Where the Constitution does not distinguish between legitimate and illegitimate children, we should not also distinguish, especially when private rights are not involved as in questions of citizenship.

Abandoning the Ching Leng doctrine upholds the equal protection clause of the Constitution. Abandoning the Ching Leng doctrine is also in compliance with our treaty obligation under the Covenant on the Rights of Children mandating States Parties to eliminate all forms of discrimination based on the status of children, save of course those distinctions prescribed in the Constitution itself like the reservation of certain high public offices to natural-born citizens. Abandoning the Ching Leng doctrine does not mean, however, that an illegitimate child of a Filipino father and an alien mother automatically becomes a Philippine citizen at birth. We have repeatedly ruled that an illegitimate child does not enjoy any presumption of blood relation to the alleged father until filiation or blood relation is proved as provided by law.[37] Article 887 of the Civil Code expressly provides that "[I]n all cases of illegitimate children, their filiation must be duly proved." The illegitimate child becomes a Philippine citizen only from the time he establishes his blood relation to the Filipino father. If the blood relation is established after the birth of the illegitimate child, then the child is not a natural-born Philippine citizen since an act is required after birth to acquire or perfect his Philippine citizenship. Conclusion In conclusion, private respondent Fernando Poe, Jr. is not a natural-born Philippine citizen since there is no showing that his alleged Filipino father Allan F. Poe acknowledged him at birth. The Constitution defines a natural-born citizen as a Philippine citizen "from birth without having to perform any act to acquire or perfect" his Philippine citizenship. Private respondent Fernando Poe, Jr. does not meet this citizenship qualification. Therefore, I vote to grant the petition of Victorino X. Fornier. However, I vote to dismiss the petitions of Maria Jeanette C. Tecson, Felix B. Desiderio, Jr. and Zoilo Antonio Velez on the ground that their direct petitions invoking the jurisdiction of the Court under Section 4, paragraph 7, Article VII of the Constitution are premature, there being no election contest in this case.

9 G.R. No. 136804 February 19, 2003

MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent. DECISION CARPIO, J.: The Case This is a petition for review under Rule 45 of the Rules of Court to set aside the Court of Appeals 1 Decision of August 24, 1998 and Resolution of December 14, 1998 in CA-G.R. SP No. 423102 affirming the trial courts denial of petitioners motion for partial summary judgment. The Antecedents On May 17, 1994, respondent Rafael Ma. Guerrero ("Guerrero" for brevity) filed a complaint for damages against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank ("the Bank" for brevity) with the Regional Trial Court of Manila ("RTC" for brevity). Guerrero sought payment of damages allegedly for (1) illegally withheld taxes charged against interests on his checking account with the Bank; (2) a returned check worth US$18,000.00 due to signature verification problems; and (3) unauthorized conversion of his account. Guerrero amended his complaint on April 18, 1995. On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by stipulation Guerreros account is governed by New York law and this law does not permit any of Guerreros claims except actual damages. Subsequently, the Bank filed a Motion for Partial Summary Judgment seeking the dismissal of Guerreros claims for consequential, nominal, temperate, moral and exemplary damages as well as attorneys fees on the same ground alleged in its Answer. The Bank contended that the trial should be limited to the issue of actual damages. Guerrero opposed the motion. The affidavit of Alyssa Walden, a New York attorney, supported the Banks Motion for Partial Summary Judgment. Alyssa Waldens affidavit ("Walden affidavit" for brevity) stated that Guerreros New York bank account stipulated that the governing law is New York law and that this law bars all of Guerreros claims except actual damages. The Philippine Consular Office in New York authenticated the Walden affidavit. The RTC denied the Banks Motion for Partial Summary Judgment and its motion for reconsideration on March 6, 1996 and July 17, 1996, respectively. The Bank filed a petition for certiorari and prohibition with the Court of Appeals assailing the RTC Orders. In its Decision dated August 24, 1998, the Court of Appeals dismissed the petition. On December 14, 1998, the Court of Appeals denied the Banks motion for reconsideration. Hence, the instant petition. The Ruling of the Court of Appeals The Court of Appeals sustained the RTC orders denying the motion for partial summary judgment. The Court of Appeals ruled that the Walden affidavit does not serve as proof of the New York law and jurisprudence relied on by the Bank to support its motion. The Court of Appeals considered the New York law and jurisprudence as public documents defined in Section 19, Rule 132 of the Rules on Evidence, as follows: "SEC. 19. Classes of Documents. For the purpose of their presentation in evidence, documents are either public or private. Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country; x x x." The Court of Appeals opined that the following procedure outlined in Section 24, Rule 132 should be followed in proving foreign law: "SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office." The Court of Appeals likewise rejected the Banks argument that Section 2, Rule 34 of the old Rules of Court allows the Bank to move with the supporting Walden affidavit for partial summary judgment in its favor. The Court of Appeals clarified that the Walden affidavit is not the supporting affidavit referred to in Section 2, Rule 34 that would prove the lack of genuine issue between the parties. The Court of Appeals concluded that even if the Walden affidavit is used for purposes of summary judgment, the Bank must still comply with the procedure prescribed by the Rules to prove the foreign law. The Issues The Bank contends that the Court of Appeals committed reversible error in "x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TO SUPPORT ITS MOTION FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT; x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES FOREIGN LAW AS A FACT, IS "HEARSAY" AND THEREBY CANNOT SERVE AS PROOF OF THE NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR SUMMARY JUDGMENT x x x."3 First, the Bank argues that in moving for partial summary judgment, it was entitled to use the Walden affidavit to prove that the stipulated foreign law bars the claims for consequential, moral, temperate, nominal and exemplary damages and attorneys fees. Consequently, outright dismissal by summary judgment of these claims is warranted. Second, the Bank claims that the Court of Appeals mixed up the requirements of Rule 35 on summary judgments and those of a trial on the merits in considering the Walden affidavit as "hearsay." The Bank points out that the Walden affidavit is not hearsay since Rule 35 expressly permits the use of affidavits. Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit to refute the facts contained in the Walden affidavit, he failed to show the need for a trial on his claims for damages other than actual. The Courts Ruling The petition is devoid of merit. The Bank filed its motion for partial summary judgment pursuant to Section 2, Rule 34 of the old Rules of Court which reads: "Section 2. Summary judgment for defending party. A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits for a summary judgment in his favor as to all or any part thereof."

A court may grant a summary judgment to settle expeditiously a case if, on motion of either party, there appears from the pleadings, depositions, admissions, and affidavits that no important issues of fact are involved, except the amount of damages. In such event, the moving party is entitled to a judgment as a matter of law.4 In a motion for summary judgment, the crucial question is: are the issues raised in the pleadings genuine, shamor fictitious, as shown by affidavits, depositions or admissions accompanying the motion?5 A genuine issue means an issue of fact which calls for the presentation of evidence as distinguished from an issue which is fictitious or contrived so as not to constitute a genuine issue for trial.6 A perusal of the parties respective pleadings would show that there are genuine issues of fact that necessitate formal trial. Guerreros complaint before the RTC contains a statement of the ultimate facts on which he relies for his claim for damages. He is seeking damages for what he asserts as "illegally withheld taxes charged against interests on his checking account with the Bank, a returned check worth US$18,000.00 due to signature verification problems, and unauthorized conversion of his account." In its Answer, the Bank set up its defense that the agreed foreign law to govern their contractual relation bars the recovery of damages other than actual. Apparently, facts are asserted in Guerreros complaint while specific denials and affirmative defenses are set out in the Banks answer. True, the court can determine whether there are genuine issues in a case based merely on the affidavits or counteraffidavits submitted by the parties to the court. However, as correctly ruled by the Court of Appeals, the Banks motion for partial summary judgment as supported by the Walden affidavit does not demonstrate that Guerreros claims are sham, fictitious or contrived. On the contrary, the Walden affidavit shows that the facts and material allegations as pleaded by the parties are disputed and there are substantial triable issues necessitating a formal trial. There can be no summary judgment where questions of fact are in issue or where material allegations of the pleadings are in dispute.7 The resolution of whether a foreign law allows only the recovery of actual damages is a question of fact as far as the trial court is concerned since foreign laws do not prove themselves in our courts.8Foreign laws are not a matter of judicial notice.9 Like any other fact, they must be alleged and proven. Certainly, the conflicting allegations as to whether New York law or Philippine law applies to Guerreros claims present a clear dispute on material allegations which can be resolved only by a trial on the merits. Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody thereof. Such official publication or copy must be accompanied, if the record is not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof. The certificate may be issued by any of the authorized Philippine embassy or consular officials stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer. Certain exceptions to this rule were recognized in Asiavest Limited v. Court of Appeals10 which held that: "x x x: Although it is desirable that foreign law be proved in accordance with the above rule, however, the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the presentation of other competent evidence to prove the existence of a foreign law. In that case, the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law.Accordingly, in line with this view, the Supreme Court in the Collector of Internal Revenue v. Fisher et al., upheld the Tax Court in considering the pertinent law of California as proved by the respondents witness. In that case,the counsel for respondent "testified that as an active member of the California Bar since 1951, he is familiar with the revenue and taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derrings California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited section was offered in evidence by

respondents." Likewise, in several naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written proof offered." Thus, in a number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate General of Manila was held to be competent proof of that law." (Emphasis supplied) The Bank, however, cannot rely on Willamette Iron and Steel Works v. Muzzal or Collector of Internal Revenue v. Fisher to support its cause. These cases involved attorneys testifying in open court during the trial in the Philippines and quoting the particular foreign laws sought to be established. On the other hand, the Walden affidavit was taken abroad ex parte and the affiant never testified in open court. The Walden affidavit cannot be considered as proof of New York law on damages not only because it is self-serving but also because it does not state the specific New York law on damages. We reproduce portions of the Walden affidavit as follows:
1a\^/phi 1.net

"3. In New York, "[n]ominal damages are damages in name only, trivial sums such as six cents or $1. Such damages are awarded both in tort and contract cases when the plaintiff establishes a cause of action against the defendant, but is unable to prove" actual damages. Dobbs, Law of Remedies, 3.32 at 294 (1993). Since Guerrero is claiming for actual damages, he cannot ask for nominal damages. 4. There is no concept of temperate damages in New York law. I have reviewed Dobbs, a well-respected treatise, which does not use the phrase "temperate damages" in its index. I have also done a computerized search for the phrase in all published New York cases, and have found no cases that use it. I have never heard the phrase used in American law. 5. The Uniform Commercial Code ("UCC") governs many aspects of a Banks relationship with its depositors. In this case, it governs Guerreros claim arising out of the non-payment of the $18,000 check. Guerrero claims that this was a wrongful dishonor. However, the UCC states that "justifiable refusal to pay or accept" as opposed to dishonor, occurs when a bank refuses to pay a check for reasons such as a missing indorsement, a missing or illegible signature or a forgery, 3-510, Official Comment 2. .. to the Complaint, MHT returned the check because it had no signature card on . and could not verify Guerreros signature. In my opinion, consistent with the UCC, that is a legitimate and justifiable reason not to pay. 6. Consequential damages are not available in the ordinary case of a justifiable refusal to pay. UCC 1-106 provides that "neither consequential or special or punitive damages may be had except as specifically provided in the Act or by other rule of law". UCC 4-103 further provides that consequential damages can be recovered only where there is bad faith. This is more restrictive than the New York common law, which may allow consequential damages in a breach of contract case (as does the UCC where there is a wrongful dishonor). 7. Under New York law, requests for lost profits, damage to reputation and mental distress are considered consequential damages. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d 868, 869-70 (4th Dept 1975) damage to reputation); Dobbs, Law of Remedies 12.4(1) at 63 (emotional distress). 8. As a matter of New York law, a claim for emotional distress cannot be recovered for a breach of contract.Geler v. National Westminster Bank U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540 N.Y.S.2d 387, 390 (3d Dept 1989) Martin v. Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dept 1976). Damage to reputation is also not recoverable for a contract. Motif Construction Corp. v. Buffalo Savings Bank, 374 N.Y.S.2d at 869-70.
1a\^/phi1.net

9. In cases where the issue is the breach of a contract to purchase stock, New York courts will not take into consideration the performance of the stock after the breach. Rather, damages will be based on the value of the stock at the time of the breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th Dept 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023 (1983). 10. Under New York law, a party can only get consequential damages if they were the type that would naturally arise from the breach and if they were "brought within the contemplation of parties as the probable

result of the breach at the time of or prior to contracting." Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo, 223 N.Y. 32, 36 (1918). 11. Under New York law, a plaintiff is not entitled to attorneys fees unless they are provided by contract or statute. E.g., Geler v. National Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept 1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dept 1991). There is no statute that permits attorneys fees in a case of this type. 12. Exemplary, or punitive damages are not allowed for a breach of contract, even where the plaintiff claims the defendant acted with malice. Geler v. National Westminster Bank, 770 F.Supp. 210, 215 (S.D.N.Y. 1991); Catalogue Service of chester11_v. Insurance Co. of North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637 (2d Dept 1980); Senior v. Manufacturers Hanover Trust Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dept 1985). 13. Exemplary or punitive damages may be recovered only where it is alleged and proven that the wrong supposedly committed by defendant amounts to a fraud aimed at the public generally and involves a high moral culpability. Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961). 14. Furthermore, it has been consistently held under New York law that exemplary damages are not available for a mere breach of contract for in such a case, as a matter of law, only a private wrong and not a public right is involved. Thaler v. The North Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dept 1978)."12 The Walden affidavit states conclusions from the affiants personal interpretation and opinion of the facts of the case vis a vis the alleged laws and jurisprudence without citing any law in particular. The citations in the Walden affidavit of various U.S. court decisions do not constitute proof of the official records or decisions of the U.S. courts. While the Bank attached copies of some of the U.S. court decisions cited in the Walden affidavit, these copies do not comply with Section 24 of Rule 132 on proof of official records or decisions of foreign courts. The Banks intention in presenting the Walden affidavit is to prove New York law and jurisprudence. However, because of the failure to comply with Section 24 of Rule 132 on how to prove a foreign law and decisions of foreign courts, the Walden affidavit did not prove the current state of New York law and jurisprudence. Thus, the Bank has only alleged, but has not proved, what New York law and jurisprudence are on the matters at issue. Next, the Bank makes much of Guerreros failure to submit an opposing affidavit to the Walden affidavit. However, the pertinent provision of Section 3, Rule 35 of the old Rules of Court did not make the submission of an opposing affidavit mandatory, thus: "SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days before the time specified for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleadings, depositions and admissions on file, together with the affidavits, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Emphasis supplied) It is axiomatic that the term "may" as used in remedial law, is only permissive and not mandatory.13 Guerrero cannot be said to have admitted the averments in the Banks motion for partial summary judgment and the Walden affidavit just because he failed to file an opposing affidavit. Guerrero opposed the motion for partial summary judgment, although he did not present an opposing affidavit. Guerrero may not have presented an opposing affidavit, as there was no need for one, because the Walden affidavit did not establish what the Bank intended to prove. Certainly, Guerrero did not admit, expressly or impliedly, the veracity of the statements in the Walden affidavit. The Bank still had the burden of proving New York law and jurisprudence even if Guerrero did not present an opposing affidavit. As the party moving for summary judgment, the Bank has the burden of clearly demonstrating the absence of any genuine issue of fact and that any doubt as to the existence of such issue is resolved against the movant.14

Moreover, it would have been redundant and pointless for Guerrero to submit an opposing affidavit considering that what the Bank seeks to be opposed is the very subject matter of the complaint. Guerrero need not file an opposing affidavit to the Walden affidavit because his complaint itself controverts the matters set forth in the Banks motion and the Walden affidavit. A party should not be made to deny matters already averred in his complaint. There being substantial triable issues between the parties, the courts a quo correctly denied the Banks motion for partial summary judgment. There is a need to determine by presentation of evidence in a regular trial if the Bank is guilty of any wrongdoing and if it is liable for damages under the applicable laws. This case has been delayed long enough by the Banks resort to a motion for partial summary judgment. Ironically, the Bank has successfully defeated the very purpose for which summary judgments were devised in our rules, which is, to aid parties in avoiding the expense and loss of time involved in a trial. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 24, 1998 and the Resolution dated December 14, 1998 of the Court of Appeals in CA-G.R. SP No. 42310 is AFFIRMED. SO ORDERED.

13 G.R. No. L-30587 October 28, 1977 NORTHERN MOTORS, INC., petitioner, vs. WORKMEN'S COMPENSATION COMMISSION and TERESITA VILLAPANIA, respondents. Sycip, Salazar, Feliciano, Hernandez & Castillo for petitioner. Jesus Santos for private respondent. This is a petition for review of the decision dated March 19, 1969 1 and the Resolution of the WCC en banc dated May 21, 1969 2 in WC Case No. R04-91439 entitled "Teresita Villapania, et al., vs. Northern Motors, Inc. and Detective and Protective Bureau, Inc." The private respondent, Teresita Villapania, in her behalf and in behalf of her minor children, Emilio, Enrique, Ernesto, Elias, Orlando and Jesus, all surnamed Bautista, filed a compensation claim against Northern Motors, Inc., (hereinafter called NMI for short) for the accidental death on July 13, 1965 of her husband. Emilio S. Bautista, an employee of the respondent DPBI but assigned as watchman of the respondent, NMI, before the Workmen's Compensation Unit, Regional Office No. 4; that respondent DPBI submitted its employer's report admitting that the deceased Emilio S. Bautista was its employee and was injured in regular occupation and signified its intention to controvert the claim but without stating any ground or reason for such controversion; that the other respondent, NMI, did not controvert the claim; that in their contract, the DPBI assumed all responsibility for the proper performance of the duties of all the security guards and agreed to hold NMI free from any liability under the Workmen's Compensation Act; that the DPBI executed a bond in favor of the NMI in the amount of P10,000.00 to secure full performance by DPBI of its obligations under the contract; that the Acting Referee of Region 4 rendered an award the dispositive portion of which reads:
+.wph!1

AWARD therefore, is hereby rendered and the respondents Northern Motors Inc. and Detective & Protective Bureau, Inc., are ordered jointly and severally to pay: 1. The claimant, thru this office , the total sum of FIVE THOUSAND ONE HUNDRED EIGHT FIVE PESOS and 60/100(P5,185.60), as compensation and reimbursement of burial expenses; and 2. This Office, the sum of FIFTY PESOS (P 50.00) as fee, pursuant to the provisions of Section 55 of the Act, Bill No. W-1163-65 is attached. SO ORDERED Manila, June 17, 1966.
+.w ph!1

(Sgd.) ATANACIO A. MARDO Acting Chief Referee Chief of Section

Upon denial of both respondents' Motions to lift Order of Award and to Set the case for hearing and trial, the case was elevated to the Workmen's Compensation Commission. A decision dated March 19, 1969 was rendered by Associate Commissioner Pagano C. Villavieja the dispositive portion of which reads:
+.wph!1

In view of all the foregoing, the award sought to be reconsidered should be, as it is hereby modified and the respondent, the NMI is hereby ordered to pay the claimants, through this Commission, the total amount of FIVE THOUSAND ONE HUNDRED AND EIGHTY-FIVE PESOS and 60/100 to pay to the Workmen's Compensation is Cost pursuant to Section 55 of the said Act, the total sum (P55.00), which includes the P5.00 fees for his review. WHEREFORE, as above modified in part, the award under should be, as it is hereby affirmed. SO ORDERED.

Quezon City, Philippines, March 19, 1969. (Sgd.) PACIANO C. VILLAVIEJA

Associate Commissioner 4

The NMI filed a petition for reconsideration of said decision. The Workmen's Compensation Commission in a resolution en banc dated July 21, 1969, 5 denied the petition for reconsideration. This Court issued a resolution dated July 8, 1969 denying the petition. 6 Upon considering the motion for reconsideration filed by petitioner and the respondents' comment thereon, this Court gave due course to the petition for review in a resolution dated September 3, 1969. 7 The petitioner assigns the following errors:
+.w ph!1

I THE WORKMEN'S COMPENSATION COMMISSION EN BANC (WCC) ERRED IN DEPRIVING PETITIONER OF THE RIGHT TO A HEARING ON THE CONTROVERTED COMPENSATION CLAIM. II THE WCC ERRED IN NOT HOLDING THAT THE DETECTIVE & PROTECTIVE BUREAU, INC. (DPBI) IS A BONA FIDE INDEPENDENT CONTRACTOR AND EXCLUSIVE EMPLOYER OF THE DECEASED EMILIO S. BAUTISTA. III THE WCC ERRED IN HOLDING THAT PETITIONER WAS THE STATUTORY EMPLOYER OF THE DECEASED EMILIO S. BAUTISTA. IV
THE WCC ERRED IN ORDERING PETITIONER TO PAY P5,185.60 TO RESPONDENT TERESITA VILLAPANIA AND P55.00 TO THE WORKMEN'S COMPENSATION FUND. 8

To support its contention that it is not liable for the compensation award, the petitioner invokes the Contract of Service, (Annex "E-2") executed by it with DPBI, the pertinent provisions of which are:
+.wph!1

(c) THE AGENCY hereby assumes and undertakes any and all responsibilities for the proper performance of the duties of all the security guards furnished by it; THE AGENCY further holds and binds itself to answer for all losses and damages, which through any commission or omission of duties by such security guards, may be the cause or reason of the losses and damages to THE COMPANY; and by way of guarantee for his obligator, THE AGENCY hereby furnishes a Surety Bond of TEN THOUSAND PESOS (P10,000.00), Philippine Currency, payable to THE COMPANY herein above mentioned. (d) The said guards shall directly hired by THE AGENCY, and this con tract of employment shall not be between THE COMPANY and any of the guards hired or taken by THE AGENCY, but merely as a contract covering conditions of the employment of THE AGENCY, it being clearly understood and agreed upon that this contract is solely between THE COMPANY and THE AGENCY. (e) THE AGENCY hereby undertakes to pay the wages of said security guards in accordance with the provisions of the Minimum Wage Law (Republic Act No. 602) and of the rules and regulations

issued by the Wage Administration Service implementing the same, assuming all responsibilities therefor.
(f) THE AGENCY also agrees to hold THE COMPANY free from any liability, cause or causes of action, claim or claims, which may be filed by any of its security guards by reason of their employment under this contract or under the provisions of the Minimum Wage Law, and any other law or laws which are now in effect or which may hereafter be enacted. 9

The applicable provision of the Workmen's Compensation Act is Sec. 39 (a) which reads:

+.w ph!1

Employer' includes every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer. It includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for the reason that there is an independent contractor in the same, or for any other reason, is not the direct, employer of laborers employed there." This Court, in a case 10 with facts similar to the facts in the case at bar, ruled:
+.w ph!1

There is no question that 'the main business of the petitioner is the milling and manufacture of various corn products,' while the security guards were furnished by the International Watchman Agency to guard and protect the petitioner's warehouses, materials, machineries, and buildings. Specifically, Hearing Referee made the following findings regarding the nature of work performed by the deceased Ricardo Ramos: 'As such security guard, the deceased's work consisted in guarding the premises of the respondent company, conducting inspections on outgoing and incoming trucks and persons. While in the performance of his work as such security guard, he was closely under the supervision of the proper authorities of the respondent company. The security guards were not provided with arms by respondent company; they, however, were provided with patches on their uniforms bearing the emblem of the company as well as that of the security agency.' Furthermore, the respondent Commission found that the petitioner 'indispensably needed the services of the security guards, .. to protect its business interest ' t under the foregoing circumstances, it is evident that the work of the deceased was part of the usual business of the petitioner. Consequently even if the petitioner was not the direct employer of the deceased Ricardo Ramos in view of the intervention of an independent contractor, it was still the statutory employer and therefore liable for the compensation claimed. (Ibid., pp. 54 -51) In the recent case of Aboitiz Co., Inc. vs. Workmen's Compensation Commission, et al., 11 this Court reiterated the statutory employer liability of the company furnished with security guards by the agency as independent contractor but upheld the terms embodied in their contract of service whereby the company upon payment of the award to the claimant, has the right of reimbursement from the agency by virtue of such contract of security guard service. The pertinent portion of the decision reads:
+.wph!1

Petitioner has valid cause for complaint. Under its contract for security guard service with respondent security agency, the latter had expressly assumed sole responsibility for all liabilities under the labor laws including the Workmen's Compensation Act that may be claimed by the guard, as follows:
+.w ph!1

h) The AGENCY shall solely assume all responsibilities and liabilities for any claim or demand by or against the guard arising tinder all Philippine Labor Laws, including overtime pay, extra compensation on Sundays and legal holidays, liability under the Workmen's Compensation Act, Social Security Act. xxx xxx xxx
While petitioner was statutorily liable for the death compensation for purposes of the Workmen's Compensation Act, still the security agency should be held ultimately liable as the direct employer who employed and furnished the security guard in pursuance of its business of providing business establishments with the services of security guards, Furthermore, as already indicated, the security

agency was contractually liable to hold petitioner safe and harmless form any such claims by virtue of the agency's express contractual undertaking to assume sole and ultimate liability therefor. 12

In the present case, the DPBI has agreed to hold the NMI free from any liability for claims under the labor laws that may be filed by the security guards. WHEREFORE, the decision and resolution of the Workmen's Compensation Commission sought to be reviewed are hereby affirmed with the modification that the amounts to be paid shall be P6,000.00 as death compensation, P200.00 as reimbursement for burial expenses, P600.00 as attorney's fees and P61.00 as administrative costs and that the Detective & Protective Bureau, Inc. shall reimburse the petitioner, Northern Motors, Inc., whatever amount the latter shall pay on the award in favor of the claimants represented by the private respondent, Teresita Villapania and the fees, without costs. SO ORDERED.

13 G.R. No. L-30587 December 4, 1929 SABINA REYES, ET AL., plaintiffs-appellees, vs. E.C. WELLS as Administrator of the Estate of John Northcott, deceased, ET AL., defendants. E. C. WELLS, appellant. J. W. Ferrier for appellant. Iigo R. Bitanga and Ignacio P. Santos for appellees.

VILLAMOR, J.: On June 7, 1923, the plaintiffs filed their original complaint against John E. Rader and John Northcott, the original defendants in this cause. Several demurrers were interposed, and in consequence the complaint was amended several times. The seventh amended complaint was filed on June 11, 1925, and was admitted by the trial court in August the same year. In the meantime the defendants Rader and Northcott died, and in said seventh complaint they have been substituted by their respective administrators, E. C. Wells, administrator of the estate of John Northcott and Alberto Suguitan, administrator of the estate of John E. Rader. The complaint prays that the promissory notes and deeds executed by the plaintiffs in favor of said Rader and Northcott, as well as their record in the registry of deeds of Ilocos Norte, be cancelled, and that the defendants, as administrators, be ordered to pay the damages set forth in paragraph 7 of the complaint, with costs. It is alleged in the complaint: (1) That said J. E. Rader and J. Northcott had installed a maguey stripping machine in the municipality of Burgos, Ilocos Norte, and an International truck in a shed on a lot; that J. E. Rader told plaintiff Saturnino R. Guerrero that he had purchased said articles from Macleod & Co., for the sum of P23,600, and offered to sell them to said plaintiff for P23,000 payable in installments, but that Guerrero replied that he could not do so for lack of money to operate the machine; (2) that said J. E. Rader promised to furnish said plaintiff with the amount of P12,000 for that purpose, and delivered to the latter of P400 "in advance" to commence the exploitation of said machine; (3) that after said sum was delivered, the same plaintiff was required to make out two promissory notes; one for P7,000 and the other for P5,000 in favor of said Rader "guaranteed by a mortgage on certain property sufficient to cover said sum of P12,000;" that said mortgage shall be endorsed to some business houses in the City of Manila; that Saturnino Guerrero executed two mortgage deeds, attached to the complaint, signed by Saturnino R. Guerrero, his mother and his brothers, coowners pro indiviso of the real property mortgaged; that said mortgage deeds were recorded in the registry of deeds of this province (Ilocos Norte); (4) that J. E. Rader and Saturnino R. Guerrero went to J. Northcott, and on June 29, 1922 the former endorsed the mortgage deed for the amount of P5,000; (5) that neither said amount of P5,000 nor any part thereof was delivered to Saturnino R. Guerrero or to any of his coplaintiffs; and the aforementioned Rader and Northcott promised to pay when the latter (Northcott) received some money he had asked for from a certain firm in San Francisco, California; and in consideration of said promise, Saturnino R. Guerrero "obligated himself to pay to Macleod & Co. in installments, the price of said property, machinery truck, shed, and lot where they are installed," the aforesaid Rader having stated that he had not yet paid Macleod & Co. for said property; (6) that in the month of October, 1922, Saturnino R. Guerrero demanded payment of said sum of P5,000 from J. E. Rader, because the periods stipulated by Macleod & Co. fell due, and both of them again repaired to the aforesaid Northcott to discuss the P12,000 secured by the two mortgage deeds; the latter told them that he had not yet received the agreed amount; and he again promised, for the second time, that he would pay it "as soon as he received the amount owed, from the West Coast Life Insurance Co.; " and at the same time, he asked that Saturnino R. Guerrero, in his own behalf and in behalf of his mother and brothers, renew the other mortgage deed for P7,000 executed in favor of said Northcott, which the plaintiff Guerrero "blindly" did, whereupon Northcott gave him a check for P98 wherewith to pay the land tax; and (7) that due to the failure of J. E. Rader and J. Northcott to pay said amount of P12,000, the plaintiff sustained damages in the amount of P23,600, which is the value of the machinery and other property "attached by Macleod & Co." for default in the payment of the installments due, besides P10,000 which is the market value of the property of Saturnino R. Guerrero attached by a writ of the

Court of First Instance of Manila in the cause instituted by said Macleod & Co. for foreclosure of mortgage; and the amount of P2,000 "for filing and prosecuting the complaint." The administrator of the estate of the deceased J. E. Rader filed an answer denying generally and specifically each and every allegation of the complaint. The other defendant, E. C. Wells, administrator of J. Northcott's intestate estate, generally and specifically denies the allegations contained in paragraphs 2 to 8 of said complaint, and by way of special defense sets up as a counterclaim and cross-complaint that: (a) The mortgage executed in favor of J. Northcott, deceased, on October 23, 1922, made a part of the last amended complaint, for P7,000 has fallen due and none of the plaintiff-mortgagors has paid said amount, in whole or in part, nor the interest stipulated in the mortgage deed, "nor the additional sum equal to 20 per cent of the total due as attorney's fees in case of litigation;" (b) that by the violation of the terms and conditions contained in the mortgage deed, which is also a part of the aforesaid complaint for the sum of P5,000, executed by said plaintiffs on June 14, 1992 in favor of J. E. Rader, and by the latter assigned on June 29, 1922, the mortgage has fallen due and the mortgagors therein have failed to pay the amount or any part thereof and the interest thereon; (c) that in said mortgage of June 14, 1922, the mortgagors bound themselves to pay to said J. Northcott, deceased, an additional sum equal to 20 per cent of the amount fue as attorney's fees in case of litigation, and the conditions of the mortgage deed not having been complied with, the mortgage should be foreclosed. Evidence having been adduced by both parties, the trial court, after a careful examination thereof reached the conclusion that the two sums of P5,000 and P7,000 were never delivered to the plaintiffs by J. E. Rader or J. Northcott either before or after their death, and therefore held that the two realty mortgage deeds, one of which was assigned by J. E. Rader to J. Northcott, must be cancelled, being null and void, and, in consequence, the counterclaim and cross-complaint set up by administrator Wells are untenable and must be dismissed. Wherefore, the trial court ordered the cancellation in the registry of deeds of the mortgage credit of P5,000 on the real property assigned by J. E. Rader in favor of Northcott, and the cancellation of the other mortgage deed for P7,000 executed by the plaintiffs in favor of J. Northcott. And the court dismissed the claim for damages against the defendants, as well and the counterclaim and crosscomplaint of the administrator of J. Northcott's intestate estate. From this judgment, administrator E. C. Wells appealed. We find from the record that Dr. John E. Rader, deceased, was a resident of the municipality of Laoag, Ilocos Norte, about the year 1922, and owned in the municipality of Burgos, of said province, a maguey stripping machine, an International truck, a shed, and a lot. In order to get rid of them, he persuaded the plaintiffs, particularly Saturnino R. Guerrero, to buy them; and as the latter pretended that he had money with which the purchase it and exploit the business, the former proposed to lend him P12,000 with understanding that Guerrero would execute two promissory notes for P5,000 and P7,000 in his favor, securing said notes by two mortgage deeds upon realty property. In view of this proposal, the plaintiffs subscribed a promissory note for P5,000 dated June 14, 1922, and another in the amount of P7,000 also dated June 14, 1922. These two promissory notes were guaranteed by two mortgage deeds exhibited herein as X, both drawn in favor of John E. Rader. These two mortgage deeds were recorded in the registry of deeds of the Province of Ilocos Norte. After the execution of these two mortgages, it appears that John E. Rader was only able to deliver P400 to Saturnino Guerrero, saying that they could obtain the remainder as a loan from John Northcott. For this purpose, they came to Manila in the month of June, 1922, to solicit the money and also to arrange for the purchase of the machine from Macleod & Co. Saturnino Guerrero was presented by Rader to the manager of Macleod & Co. as the purchaser of the machine in question, and to this end Guerrero signed a promissory note for P20,000 payable according to the periods and conditions set forth therein. Putting aside for the moment Saturnino Guerrero's contract with Macleod & Co. for the purchase of the machine in question, it appears that Rader and Guerrero went to the office of the West Coast Life Insurance Company in order to ask Northcott for the money promised by Rader. But Northcott could not deliver to Guerrero more than P98 with which to pay the land tax, promising that as soon as he received the money he had asked for from San Francisco, California, he would deliver to Guerrero the P12,000 covered by the first two promissory notes subscribed by Guerrero and secured by the two above-mentioned mortgages. The plaintiffs allege that with the exception of the two amounts of P400 and P98 already mentioned, the sums in question in the promissory notes secured with mortgages have not been paid either by Rader or by

Northcott, and therefore pray for the cancellation of the promissory notes and mortgage deeds executed by the plaintiffs in favor of said Rader and Northcott, and of their record in the registry of deeds of Ilocos Norte. The main contention of the appellant in this case is that the plaintiff-appellees' allegation that the promissory notes in question have not been paid, is not supported by the evidence, inasmuch as the only witness who testified upon this point, that is, Saturnino Guerrero, is incompetent to testify upon transactions had between himself and the deceased John E. Rader and John Northcott, in accordance with section 383 of the Code of Civil Procedure. It is true that Saturnino Guerrero, as an interested party in the case, is incompetent to testify upon transactions had between himself and the deceased Rader and Northcott but the record shows that there is another witness, Eduardo Bustamante, who has no interest in this case, and who testified that he witnessed and heard the conversations between Guerrero and Rader, and Northcott, respecting the delivery of the money represented by the promissory notes in question, and his testimony appears to be corroborated, in so far as it refers to the conversations between Guerrero and Rader, by Marcelino Benito and Apolinar Pasion. The testimony of said witness Eduardo Bustamante is admissible to prove that the defendants never delivered the money which was the consideration of said promissory notes. In 28 R. C. L., 499, it is stated: "By the weight of authority statutes rendering a party to or person interested in the event of an action against the estate of a decedent or a lunatic, incompetent to testify concerning a personal transaction had with the latter, do not disqualify such party or person from testifying to communications or transactions between a deceased and a third person had in his presence or within his hearing, if he took no active part therein himself. Unless the transactions or communications are personal, and had with the deceased by the witness, either literally or in practical effect, as by participating in or influencing them, they do not fall under the prohibition of the statute." In Mallow vs. Walker (115 Iowa, 238), the court said: "Code, section 4604, declares that no party to an action nor one interested in the event shall be examined as a witness as to any transaction between him and one deceased against the executor, administrator, heir, next of kin, assignee, legatee, devisee, or survivor. Held, that the statute does not prevent a witness from testifying as to a conversation between deceased and another in the presence of the witness, in which the witness took no part." And in Mollison vs. Rittgers (140 Iowa., 365), the same court said: "The interest which disqualifies a witness from testifying to a transaction with a decedent is that which relates to the event of the particular suit and not merely to the subject of the controversy." Section 4604 of the Code of Iowa provides: "No party to any action or proceeding, nor any person interest in the event thereof, nor any person from, through or under whom any such party or interested person derives any interest or title by assignment or otherwise, and no husband or wife of any said party or person, shall be examined as a witness in regard to any personal transaction or communication between such witness and a person at the commencement of such examination deceased, insane or lunatic, against the executor, administrator, heir at law, next of kin, assignee, legatee, devisee or survivor of such deceased person, or the assignee or guardian of such insane person or lunatic. But this prohibition shall not extend to any transaction or communication as to which any such executor, administrator, heir at law, next of kin, assignee, legatee, devisee, survivor or guardian shall be examined on his own behalf, or as to which the testimony of such deceased or insane person or lunatic shall be given in evidence." The prohibition contained in said law against a witness' testifying upon any transaction or communication between himself and a deceased person, is substantially the same as that contained in section 383, No. 7, of our Code of Civil Procedure, as amended by Act No. 2252. And therefore, we believe that the construction placed upon it by the court in the cases cited is applicable to the case at bar. Among the evidence adduced by the plaintiffs to prove that the two sums of P5,000 and P7,000 promised have not been received by said plaintiffs, is Exhibit F, signed with the name of John E. Rader, reading as follows: MANILA, P. I., May 20, 1923 Mr. SATURNINO GUERRERO

Laoag, Ilocos Norte, P. I. DEAR SIR: I acknowledge the receipt of your letter dated the tenth instant. I immediately showed it to Mr. Northcott and he told me that you please wait for a short time as the money he borrow from the West Coast Life Insurance Co. in San Francisco, California, is now on its way according to the cablegram received by him recently. After we receive it, therefore, we shall send you the sum of P12,000 so as to cover the two mortgage debts of P5,000 and P7,000 due you which, hitherto, remain unpaid. I went to Macleod & Co. and asked for the withdrawal of the complaint against you inasmuch as you will soon have sufficient amount to pay the Co. in the sum P4,000 corresponding to that which is due on November, 1922, after receiving the P12,000. I was told that Mr. Forst will see to it that the complaint shall be dropped. Yours truly, (Sgd.) JOHN E. RADER "En/s" The parties discussed the genuineness of this letter, Exhibit F, at great length, each presenting the report of its handwriting expert, the one employed by the plaintiffs maintaining that the signature on said letter is the genuine signature of the deceased John E. Rader, while that of the defendants contends the opposite. The trial court, in turn, after examining the undisputed signatures of John E. Rader contained on Exhibits G and H of the plaintiffs and the other Exhibits 1 to 6 of the defendants, found dissimilarities between the signature on Exhibit F and that of said exhibits of both parties, as there are in those not disputed and that of Exhibit 6, which is acknowledged to be genuine by the defendants; and the court concluded with the statement "that it is difficult to make sure that the disputed signature , Exhibit F, was not written by John E. Rader, and considering that said exhibit is a reply written in Manila to a letter of Saturnino Guerrero's as to the straits in which the latter was, and his frequent insistence that the money promised by the writer of said letter and John Northcott be delivered, it is more than likely that the letter, Exhibit F, was written and signed by John E. Rader." We have carefully examined the signature Exhibit F, comparing it with the genuine signatures admitted by both parties, and we have found dissimilarities between the signature Exhibit F and the genuine signatures, Exhibits G and H, and between said signature and the genuine signatures, Exhibits 1 to 6. But on pages 30 and 59 of his brief, the appellant, after denying that the signature Exhibit F was written by John E. Rader, suggests that the signatures on Exhibits 15, 16 and 17 indicate the probability that the signature on Exhibit F was written, not by the deceased John E. Rader, but by John E. Rader, jr. We are inclined to accept the conclusion reached by the court below; but admitting the probability suggested by the appellant that said signature Exhibit F was written by John E. Rader, jr., we believe that if John E. Rader, jr., really signed said letter in question, he must have done it with the knowledge of his father, the deceased John E. Rader in which case the contents of said letter must be given the same effect as if it had been written by the said John E. Rader. Aside from this, the record contains something which, we believe, strongly upholds the plaintiffs' contention that the money promised by John E. Rader and John Northcott, which was the consideration of the aforementioned promissory notes has not been delivered by them to Saturnino R. Guerrero, except the P400 and P98 already mentioned; the mortgage, signed by Saturnino R. Guerrero in favor of Macleod & Co. to secure the payment of the maguey stripping machine, was foreclosed by Macleod & Co. by virtue of a writ of execution issued by the Court of First Instance of Manila on October 11, 1923, as a result of the complaint filed by Macleod & Co., Inc., against Saturnino R. Guerrero on March 10, 1923, for default in the payment of the first installment of said promissory note. The attached property of Saturnino R. Guerrero, valued at P47,430, was sold at public auction for only P3,862.84. We believe that Saturnino R. Guerrero, in the ordinary course of business, would not have abandoned the execution of his property for an amount relatively small, had he at that time the money which he expected to receive from Rader or Northcott.

But the appellant insists that during his lifetime, the deceased Northcott delivered to John E. Rader the sum of P5,000, on account of the P5,000 promissory note, secured by Guerrero's mortgage. To prove this, the appellant presented Exhibit 14, and the testimony of R. P. Flood and S. H. Deebel. flood testified that on June 30, 1922, he lent Northcott P2,000 which was paid directly to Rader by means of a check, upon the former's request. On the other hand witness S. H. Deebel, on direct examination, testified: "On or about June 1, 1922, Mr. Northcott called me and told me that he knew somebody who would borrow money from me. Mr. Northcott told me that he had to wait until Mr. Rader arrived, because Mr. Rader was the one who would receive the mortgage money. Mr. Rader then came to Manila between June 25, and July 1, 1922, and I met him at Mr. Northcott's office in Manila. I made out a check for two thousand seven hundred pesos in favor of Mr. Northcott. Mr. Northcott wished me to deliver said money to Mr. Rader with interest at twelve per centum, but I told him I would rather give it to him at ten per centum, and that he could charge Mr. Rader twelve per centum . . . Mr. Rader was present, and when Mr. Northcott got the check, he told Mr. Rader: "Here is the check," and gave him the check." But on cross-examination, this witness said: ". . . I gave the check to Mr. Northcott who told Mr. Rader: "Here is Deebel's check for the money." I don't know what Mr. Northcott did with the check, but as it was in Mr. Northcott's name, it was he who had to cash it. I don't know whether Mr. Northcott endorsed the check to Mr. Rader, and whether Mr. Rader cashed it or not, or whether Mr. Northcott cashed it." Exhibit 14 is an unsigned document, apparently a statement of account between Rader and Northcott, which mentions the names Guerrero, Flood and Deebel. In view of the evidence adduced by the defendants, the trial court held that "it is probable that John Northcott gave John Rader the sum of P2,000 in July 1922, loaned by R. P. Flood for the P5,000 promissory note given to the former; and we do not know whether the other sum of P2,700 was given to J. E. Rader. And it held, furthermore, that John Northcott could not legally give Rader the sum of P2,000 on account of the P5,000 requested of him, because said sum of P2,000 was owed to the plaintiffs on account of the P5,000 promissory note given and executed with the understanding that the money would be given after the execution." We are of the opinion that these conclusions reached by the court below are supported by the evidence, and we are equally of the opinion that supposing John Northcott gave Rader the P2,000 loaned to the latter by Flood, the delivery of said amount to Rader did not destroy Guerrero's right to claim the delivery of the money which is the consideration of the P5,000 promissory note endorsed by Rader to Northcott, for the reason that when Rader endorsed said note to Northcott on June 29, 1922, the latter knew positively that the money represented by the endorsed note had not been actually delivered to Guerrero. His personal knowledge that the money of said note had not been delivered to Guerrero is sufficient to destroy the presumptions of section 334, Nos. 17, 19 and 36, of the Code of Civil Procedure, invoked by the appellant. The same may be said of the P7,000 promissory note. The appellant does not maintain that the deceased Northcott delivered to Guerrero the money of this note, but only argues that, as Guerrero executed the mortgage deed securing the payment of P7,000 in favor of Northcott on October 20, 1922, it is presumed that there was sufficient consideration. It is to be noted that this mortgage was originally executed on June 14, 1922 in favor of Rader, but that on October 23, 1922 the latter asked the registrar of deeds of Ilocos Norte to cancel said mortgage, saying that he had received from Guerrero the amount guaranteed, which seems strange, because in such cases, it is not the mortgagee but the mortgagor who is interested in asking that the record of the mortgage be cancelled once the debt is paid. It is hard to conceive how Guerrero could consent to pay Rader the P7,000 of the promissory note, when he complains that he never received said sum. And it is observed that the cancellation of the mortgage by Rader is prior to the alleged mortgage in favor of Northcott. On the other hand, what good would it have done Guerrero to receive the P7,000 from Northcott in order to give it to Rader, when he himself wanted to use the money represented by the promissory note and secured by the mortgage? What advantage would Guerrero have derived from a change of mortgage creditors? All of which indicates that the execution of the mortgage deed in favor of Northcott was probably suggested by Rader as a part of the plan to unite in Northcott the rights, if any, arising from his agreements with Guerrero. Wherefore, the judgment appealed from must be, as it is hereby, affirmed, with costs against the appellant. So ordered. Avancea, C.J., Street, Romualdez and Villa-Real, JJ., concur.

Separate Opinions

JOHNSON, J., dissenting: This action was commenced on June 7, 1923, in the Court of First Instance of Ilocos Norte against John Northcott and John E. Rader as original defendants. After much delay cause by demurrers, amended complaints, motions, etc., and said Northcott and Rader having died in the meantime, the action was prosecuted against the abovenamed administrators of their estate. The record does not disclose the date when Northcott and Rader died. The last amended complaint was filed against said administrators on June 11, 1925. Upon demurrer of E. C. Wells, Rufino R. Guerrero was included as plaintiff. The purpose of the action was to secure the cancellation of two promissory notes and the two mortgages given as security, executed by the plaintiffs in favor of said Rader and Northcott, for the sums of P5,000 and P7,000. The plaintiffs alleged that they did not receive the value of said promissory notes and the consideration named in the said mortgages, except the sum of P400 which they received from Rader and the sum of P98 from Northcott. They prayed for the cancellation of said notes and motgages, and for damages in the sum of P35,600, and costs. Said notes and mortgages were attached to, and made a part of the complaint. The defendant Alberto Suguitan answered, denying generally each and every allegations of the complaint. The defendant E. C. Wells answered, denying generally and specifically each and every allegation of the complaint. As a special defense this defendant alleged (1) that the deceased John Northcott had paid the sum of P5,000 to John E. Rader in consideration of the assignment to him by the latter of the mortgage for P5,000 executed in favor of said Rader by the plaintiffs; that the claim for damages not having been presented before the committee on claims and appraisals of the estate of Northcott, the plaintiffs did not have any right to recover them in this action. The defendant E. C. Wells also presented a counterclaim and cross-complaint, alleging (1) that the mortgage for the sum of P7,000 executed by the plaintiffs in favor of John Northcott was long due and unpaid; (2) that the mortgage for P5,000 which had been assigned by John E. Rader to John Northcott was also overdue and unpaid; and (3) that the terms and conditions of said mortgages had been violated by the plaintiffs for their failure to pay the amounts thereof at the time stipulated. Said defendant prayed that he be absolved from all liability under the complaint, and that a judgment be rendered in his favor and against the plaintiffs, ordering them to pay to him jointly and severally the following amounts of said mortgages: (a) Seven thousand pesos, with 12 per cent interest from October 20, 1922, until paid; (b) Five thousand pesos with 12 per cent interest from June 14, 1922, until paid; (c) Twenty per cent of said amounts as attorney's fees; (c) And costs. Upon the issue thus presented, the cause was brought on for trial. After hearing the evidence adduced by both parties, and on May 25, 1928, the Honorable Fermin Mariano, judge, arrived at the following conclusions: (1) That the plaintiffs had not received the value of the promissory notes and the consideration of the mortgages in question; (2) that John E. Rader having made an assignment to John Northcott of the mortgage for P5,000, every juridical relation between him and the plaintiffs had ceased; (3) that the promissory note and mortgage for P7,000 originally executed by the plaintiffs in favor of John E. Rader having been cancelled, and said instruments having been later executed by the plaintiffs in favor of John Northcott, every juridical relation between John E. Rader and the plaintiffs

as to said note and mortgage had also ceased; and (4) that the plaintiffs not having presented their claim for damages before the committee on claims and appraisal of the estate of John Northcott, their right to recover the same had prescribed. In harmony with the foregoing conclusions, a judgment was rendered in favor of the plaintiffs and against the defendant E. C. Wells, as administrator of the estate of John Northcott, ordering the cancellation of the mortgages in question. Plaintiffs' claim for damages was dismissed, as well as the counterclaim and cross-complaint of the defendant E. C. Wells. Each party to pay one-half part of the costs. From that judgment the defendant E. C. Wells appealed. The appellant now makes nineteen assignments of error relating to questions of both fact and law. However, only a few of said alleged errors are material in this appeal, and the same may be condensed as follows: The lower court erred: 1. In admitting certain testimony of one of the plaintiffs over the objection of the defendant-appellant, contrary to the provisions of section 383, paragraph 7 of Act No. 190; 2. In finding that there was no consideration for the two promissory notes and mortgages of P5,000 and P7,000, and in ordering the cancellation of said mortgages; 3. In dismissing the counterclaim and cross-complaint of the appellant; 4. In not rendering a judgment in favor of the defendant-appellant and against the plaintiffs for the payment of P5,000 and P7,000, the value and consideration of the promissory notes and mortgages, with interest and attorney's fees, as stipulated in said notes and mortgages; and 5. In finding that the signature "John E. Rader" appearing at the bottom of Exhibit F, is the true and genuine signature of said John E. Rader. A careful examination of the evidence shows the following undisputed facts: (1) On the 14th day of June, 1922, the plaintiffs, with the exception of Rufino R. Guerrero, executed two promissory notes in favor of John E. Rader for the sums of P5,000 and P7,000, secured by two mortgages of the same date on several parcels of land situated in Ilocos Norte. Said promissory notes were payable within one year from the date thereof, or not later than June 14, 1923, with interest at 12 per cent, and also 20 per cent as attorney's fees in case of plaintiffs' failure to pay the same at maturity. (Exhibit X.) The note for P5,000 reads as follows: P5,000.00. LAOAG, I. F., junio 14, 1922 En o antes de dia 14 de 1923, por valor recibido nos comprometemos a pagar a la orden del Dr. John E. Rader la suma de cinco mil pesos (P5,000), moneda filipina, con intereses sobre dicha suma en igual moneda, desde esta fecha hasta que se pague, a razon de doce por ciento (12%) anual. Este pagare esta garantizado por una hipoteca, a favor del Dr. John E. Rader, sobre bienes immuebles en Dingras Ilocos Norte, I. Filipinas. Se estipula ademas, que en caso de falta de pago del capital o de los intereses de este pagare, como y cuando venza y sea pagadero, una suma adicional igual al veinte por ciento (20%) de la suma total que entonces sea pagadera sobre el mismo, se pagara al tenedor o a los tenedores de este pagare para honorarios de abogados y de cobro." (Exhibit 9.) The promissory note for P7,000 contains the same terms and conditions. (Exhibit X.)

(2) On the 29th day of June, 1922, John E. Rader, with the conformity of the plaintiffs, assigned to John Northcott the mortgage for P5,000, "in consideration of the sum of five thousand pesos Philippine currency to him in hand paid by John Northcott" (Exhibit X). The corresponding promissory note of P5,000 was on the same date (June 29, 1922) indorsed by John E. Rader to John Northcott. (Exhibit 9.) (3) On October 21, 1922, John E. Rader addressed a letter to the register of deeds of Ilocos Norte, asking for the cancellation of the mortgage of P7,000 executed in his favor by the plaintiffs, with the exception of Rufino R. Guerrero, on June 14, 1922, as above stated. In said letter John E. Rader stated that he had received from the plaintiffs the sum of P7,000 the consideration of said mortgage. The register of deeds made an entry of said cancellation on November 17, 1922. (Exhibit X.) (4) On October 20, 1922, the plaintiffs executed a promissory note for P7,000 in favor of John Northcott, payable on or before June 14, 1923, secured by a mortgage of the same date, executed by the plaintiffs in favor of said John Northcott. (Exhibits 10 and 11.) The foregoing statement of facts clearly shows that all the rights and obligations between John E. Rader and the plaintiffs arising from the two promissory notes and mortgages had ceased (a) by virtue of the assignment of the mortgage for P5,000 to John Northcott, and (b) by virtue of the cancellation of the mortgage for P7,000. Therefore, the questions for determination in this appeal are: (1) What rights and obligations exist between the plaintiffs and John Northcott, arising from the assignment of the mortgage of P5,000 made by John E. Rader to Northcott? (2) What rights and obligations exist between the plaintiffs and John Northcott, arising from the promissory note and mortgage for P7,000, executed by the former in favor of the latter on October 20, 1922? With reference to the first question, it may be said that John Northcott, as assignee of the mortgage and holder, by indorsement, of the note for P5,000, is entitled under the terms and conditions of said mortgage to recover from the plaintiffs, with the exception of Rufino R. Guerrero, the amount thereof together with interest and attorney's fees as expressly stipulated in said note and mortgage. The assignment was made with the written conformity of the plaintiffs. John Northcott paid to his assignor John E. Rader the sum of P5,000, as expressly stated in the deed of assignment (Exhibit 13). This payment is corroborated by the testimony of Raymon P. Flood and Samuel H. Deebel, from whom Northcott borrowed the money which he paid to Rader. Northcott paid the consideration of the mortgage and the value of the note, and his rights as such mortgagee and holder of the note for value, should be enforced in accordance with the law and the terms and conditions of said mortgage. Said note and mortgage for P5,000 fell due on June 14, 1923. The appellant E. C. Wells, as administrator of the estate of John Northcott, is entitled to receive from the plaintiffs, with the exception of Rufino R. Guerrero, the amount thereof, together with interest at 12 per cent and attorney's fees equal to 20 per cent of the full amount due. The appellant's counterclaim and cross-complaint for this amount should have been sustained by the lower court. The second question, as above stated, relates to the rights and obligations existing between the plaintiffs and John Northcott, arising from the promissory note and mortgage for P7,000 executed by them in his favor on October 20, 1922. We agree with the lower court in its conclusion that the plaintiffs have not received the value and consideration of said note and mortgage. A preponderance of the evidence shows that the value of said note and the consideration named in the mortgage were not delivered to the plaintiffs; that Northcott promised to pay them the value of said note (P7,000) as soon as he had raised the required amount; that the note and mortgage were delivered to him with that understanding, and that up to the time of his death he had been unable to pay said note, with the exception of the sum of P98 which he paid to the plaintiffs at or about the time of its execution. There is sufficient proof to overcome the presumption that Northcott became the holder of said note for value and that he paid to the plaintiffs the consideration named in the mortgage. In arriving at this conclusion we have disregarded the testimony of the plaintiff Saturnino R. Guerrero because he is prohibited by law from testifying as to any matter of fact occurring before the death of Northcott and Rader. (Sec. 383, par. 7, C. C. P.) We have also disregarded Exhibit F, because it is irrelevant and because the signature appearing thereon is not that of John E. Rader. Therefore, the consideration in the sum of P7,000 of said mortgage not having been delivered to the plaintiffs, the lower court committed no error in ordering its cancellation.

The foregoing discussion of fact and law answers all of the assignments of error above noted and also disposes of the two questions presented in this appeal. In harmony with all of the foregoing the judgment appealed from should be modified. The promissory note and mortgage for P5,000 in favor of John Northcott should be held valid and subsisting; and the plaintiffs, with the exception of Rufino R. Guerrero, should be ordered to pay jointly and severally said sum to the defendant-appellant E. C. Wells, as administrator of the estate of John Northcott, together with interest and attorney's fees; and in case of their failure to pay said amount within three months from the date hereof, the lands give in security should be ordered sold and the proceeds applied to the payment of said mortgage. The plaintiffs should also be ordered to pay to the defendant-appellant the sum of P98 which was paid to them by Northcott sometime after the execution of the note and mortgage for P7,000. That part of the judgment of the lower court ordering the cancellation of the mortgage for P7,000 should be affirmed. As modified in accordance herewith, the judgment appealed from should be affirmed, with one-half of the costs against each party.

17 G.R. No. L-68385 May 12, 1989 ILDEFONSO O. ELEGADO, as Ancillary Administrator of the Testate Estate of the late WARREN TAYLOR GRAHAM, petitioner vs. HON. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE respondents. Agrava, Lucero & Gineta for petitioners. The Office of the Solictor General for public respondents.

CRUZ, J.: What the petitioner presents as a rather complicated problem is in reality a very simple question from the viewpoint of the Solicitor General. We agree with the latter. There is actually only one issue to be resolved in this action. That issue is whether or not the respondent Court of Tax Appeals erred in dismissing the petitioner's appeal on grounds of jurisdiction and lack of a cause of action. Appeal from what? That indeed is the question. But first the facts. On March 14, 1976, Warren Taylor Graham, an American national formerly resident in the Philippines, died in Oregon, U.S.A. 1 As he left certain shares of stock in the Philippines, his son, Ward Graham, filed an estate tax return on September 16, 1976, with the Philippine Revenue Representative in San Francisco, U.S.A. 2 On the basis of this return, the respondent Commissioner of Internal Revenue assessed the decedent's estate an estate tax in the amount of P96,509.35 on February 9, 1978. 3 This assessment was protested on March 7, 1978, by the law firm of Bump, Young and Walker on behalf of the estate . 4 The protest was denied by the Commissioner on July 7, 1978. 5 No further action was taken by the estate in pursuit of that protest. Meanwhile, on January 18, 1977, the decedent's will had been admitted to probate in the Circuit Court of Oregon 6Ward Graham, the designated executor, then appointed Ildefonso Elegado, the herein petitioner, as his attorney-in-fact for the allowance of the will in the Philippines. 7 Pursuant to such authority, the petitioner commenced probate proceedings in the Court of First Instance of Rizal. 8The will was allowed on December 18, 1978, with the petitioner as ancillary administrator. 9 As such, he filed a second estate tax return with the Bureau of Internal Revenue on June 4, 1980. 10 On the basis of this second return, the Commissioner imposed an assessment on the estate in the amount of P72,948.87. 11 This was protested on behalf of the estate by the Agrava, Lucero and Gineta Law Office on August 13, 1980. 12 While this protest was pending, the Commissioner filed in the probate proceedings a motion for the allowance of the basic estate tax of P96,509.35 as assessed on February 9, 1978. 13 He said that this liability had not yet been paid although the assessment had long become final and executory. The petitioner regarded this motion as an implied denial of the protest filed on August 13, 1980, against the second assessment of P72,948.87. 14 On this understanding, he filed on September 15, 1981, a petition for review with the Court of Tax Appeals challenging the said assessment. 15

The Commissioner did not immediately answer (in fact, as the petitioner stressed, no answer was filed during a delay of 195 days) and in the end instead cancelled the protested assessment in a letter to the decedent's estate dated March 31, 1982. 16 This cancellation was notified to the Court of Tax Appeals in a motion to dismiss on the ground that the protest had become moot and academic. 17 The motion was granted and the petition dismissed on April 25, 1984. 18 The petitioner then came to this Court oncertiorari under Rule 45 of the Rules of Court. The petitioner raises three basic questions, to wit, (1) whether the shares of stocks left by the decedent should be treated as his exclusive, and not conjugal, property; (2) whether the said stocks should be assessed as of the time of the owner's death or six months thereafter; and (3) whether the appeal filed with the respondent court should be considered moot and academic. We deal first with the third issue as it is decisive of this case. In the letter to the decedent's estate dated March 31, 1982, the Commissioner of Internal Revenue wrote as follows: Estate of WARREN T. GRAHAM c/o Mr. ILDEFENSO O. ELEGADO Ancillary Administrator Philex Building cor. Brixton & Fairlane Sts. Pasig, Metro Manila Sir: This is with regard to the estate of the late WARREN TAYLOR GRAHAM, who died a resident of Oregon, U.S.A. on March 14, 1976. It appears that two (2) letters of demand were issued by this Bureau. One is for the amount of P96,509.35 based on the first return filed, and the other in the amount of P72,948.87, based on the second return filed. It appears that the first assessment of P96,509.35 was issued on February 9, 1978 on the basis of the estate tax return filed on September 16, 1976. The said assessment was, however, protested in a letter dated March 7, 1978 but was denied on July 7, 1978. Since no appeal was made within the regulatory period, the same has become final. In view thereof, it is requested that you settle the aforesaid assessment for P96,509.35 within fifteen (15) days upon receipt hereof to the Receivable Accounts Division, this Bureau, BIR National Office Building, Diliman, Quezon City. The assessment for P72,949.57 dated July 3, 1980, referred to above is hereby cancelled. Very truly yours,
(SGD.) RUBEN B. ANCHETA Acting Commissioner 19

It is obvious from the express cancellation of the second assessment for P72,948.87 that the petitioner had been deprived of a cause of action as it was precisely from this assessment that he was appealing. In its decision, the Court of Tax Appeals said that the petition questioning the assessment of July 3, 1980, was "premature" since the protest to the assessment had not yet been resolved. 20 As a matter of fact it had: the said assessment had been cancelled by virtue of the above-quoted letter. The respondent court was on surer ground, however, when it followed with the finding that the said cancellation had rendered the petition moot and academic. There was really no more assessment to review. The petitioner argues that the issuance of the second assessment on July 3, 1980, had the effect of canceling the first assessment of February 9, 1978, and that the subsequent cancellation of the second assessment did not have the effect of automatically reviving the first. Moreover, the first assessment is not binding on him because it was based on a return filed by foreign lawyers who had no knowledge of our tax laws or access to the Court of Tax Appeals. The petitioner is clutching at straws.

It is noted that in the letter of July 3, 1980, imposing the second assessment of P72,948.87, the Commissioner made it clear that "the aforesaid amount is considered provisional only based on the estate tax return filed subject to investigation by this Office for final determination of the correct estate tax due from the estate. Any amount that may be found due after said investigation will be assessed and collected later." 21 It is illogical to suggest that aprovisional assessment can supersede an earlier assessment which had clearly become final and executory. The second contention is no less flimsy. The petitioner cannot be serious when he argues that the first assessment was invalid because the foreign lawyers who filed the return on which it was based were not familiar with our tax laws and procedure. Is the petitioner suggesting that they are excused from compliance therewith because of their ignorance? If our own lawyers and taxpayers cannot claim a similar preference because they are not allowed to claim a like ignorance, it stands to reason that foreigners cannot be any less bound by our own laws in our own country. A more obvious and shallow discrimination than that suggested by the petitioner is indeed difficult to find. But the most compelling consideration in this case is the fact that the first assessment is already final and executory and can no longer be questioned at this late hour. The assessment was made on February 9, 1978. It was protested on March 7, 1978. The protest was denied on July 7, 1978. As no further action was taken thereon by the decedent's estate, there is no question that the assessment has become final and executory. In fact, the law firm that had lodged the protest appears to have accepted its denial. In his motion with the probate court, the respondent Commissioner stressed that "in a letter dated January 29, 1980, the Estate of Warren Taylor Graham thru the aforesaid foreign law firm informed claimant that they have paid said tax liability thru the Agrava, Velarde, Lucero and Puno, Philippine law firm of 313 Buendia Avenue Ext., Makati, Metro Manila that initiated the instant ancillary proceedings" although he added that such payment had not yet been received. 22 This letter was an acknowledgment by the estate of the validity and finality of the first assessment. Significantly, it has not been denied by the petitioner. In view of the finality of the first assessment, the petitioner cannot now raise the question of its validity before this Court any more than he could have done so before the Court of Tax Appeals. What the estate of the decedent should have done earlier, following the denial of its protest on July 7, 1978, was to appeal to the Court of Tax Appeals within the reglementary period of 30 days after it received notice of said denial. It was in such appeal that the petitioner could then have raised the first two issues he now raises without basis in the present petition. The question of whether or not the shares of stock left by the decedent should be considered conjugal property or belonging to him alone is immaterial in these proceedings. So too is the time at which the assessment of these shares of stock should have been made by the BIR. These questions were not resolved by the Court of Tax Appeals because it had no jurisdiction to act on the petitioner's appeal from an assessment that had already been cancelled. The assessment being no longer controversial or reviewable, there was no justification for the respondent court to rule on the petition except to dismiss it. If indeed the Commissioner of Internal Revenue committed an error in the computation of the estate tax, as the petitioner insists, that error can no longer be rectified because the original assessment has long become final and executory. If that assessment was not challenged on time and in accordance with the prescribed procedure, that error for error it was was committed not by the respondents but by the decedent's estate itself which the petitioner represents. So how can he now complain. WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered,

18 G.R. No. L-68470 October 8, 1985 ALICE REYES VAN DORN, petitioner, vs. HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of the National Capital Region Pasay City and RICHARD UPTON respondents.

MELENCIO-HERRERA, J.:\ In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion for Reconsideration of the Dismissal Order, respectively. The basic background facts are that petitioner is a citizen of the Philippines while private respondent is a citizen of the United States; that they were married in Hongkong in 1972; that, after the marriage, they established their residence in the Philippines; that they begot two children born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn. Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be ordered to render an accounting of that business, and that private respondent be declared with right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause of action is barred by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and petitioner had "no community property" as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the subject of this certiorari proceeding. Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal. certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of the trial Court. However, when a grave abuse of discretion was patently committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this case within the exception, and we have given it due course. For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines. Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property because of the representation he made in the divorce proceedings before the American Court that they had no community of property; that the Galleon Shop was not established through conjugal funds, and that respondent's claim is barred by prior judgment. For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over the prohibitive laws of the Philippines and its declared national policy; that the acts and declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction. For the resolution of this case, it is not necessary to determine whether the property relations between petitioner and private respondent, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon any other regime. The pivotal fact in this case is the Nevada divorce of the parties.

The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private respondent who, giving his address as No. 381 Bush Street, San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground of incompatibility in the understanding that there were neither community property nor community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings: xxx xxx xxx You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do an things necessary and proper to represent me, without further contesting, subject to the following: 1. That my spouse seeks a divorce on the ground of incompatibility. 2. That there is no community of property to be adjudicated by the Court. 3. 'I'hat there are no community obligations to be adjudicated by the court.
xxx xxx xxx 4

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local law and public policy. It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public police and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799: The purpose and effect of a decree of divorce from the bond of matrimony by a court of competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty. that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage. Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint filed in Civil Case No. 1075-P of his Court. Without costs.

SO ORDERED.

19 G.R. No. 80116 June 30, 1989 IMELDA MANALAYSAY PILAPIL, petitioner, vs. HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING, respondents.

REGALADO, J.: An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question. On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough, and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1 Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a separation de facto between them. After about three and a half years of marriage, such connubial disharmony eventuated in private respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local Court in January, 1983. He claimed that there was failure of their marriage and that they had been living apart since April, 1982. 2 Petitioner, on the other hand, filed an action for legal separation, support and separation of property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still pending as Civil Case No. 83-15866. 3 On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the child was granted to petitioner. The records show that under German law said court was locally and internationally competent for the divorce proceeding and that the dissolution of said marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4 On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8, 1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William Chia", docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7 On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city fiscal to inform the Department of Justice "if the

accused have already been arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his office for review. 9 Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case No. 8752434. On the other hand, respondent judge merely reset the date of the arraignment in Criminal Case No. 8752435 to April 6, 1987. Before such scheduled date, petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 87-52435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated September 8, 1987. The same order also directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by respondent judge as direct contempt, she and her counsel were fined and the former was ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14 On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final divorce decree under his national law prior to his filing the criminal complaint." 15 On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16 We find this petition meritorious. The writs prayed for shall accordingly issue. Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try the case. Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is authorized by law to initiate the action therefor. Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or petition. The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the same requirement and rationale would not apply. Understandably, it may not have been found necessary since criminal actions are generally and fundamentally commenced by the State, through the People of the Philippines, the offended party being merely the complaining witness therein. However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the present prosecution for adultery is of such genre, the offended

spouse assumes a more predominant role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his power and option. This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence since the raison d'etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21 In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence the action be definitely established and, as already demonstrated, such status or capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action would be determined by his status before or subsequent to the commencement thereof, where such capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at the time of, the institution of the case. We would thereby have the anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to do so. To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to when precisely the status of a complainant as an offended spouse must exist where a criminal prosecution can be commenced only by one who in law can be categorized as possessed of such status. Stated differently and with reference to the present case, the inquiry ;would be whether it is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant and the accused be unsevered and existing at the time of the institution of the action by the former against the latter. American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to institute proceedings against the offenders where the statute provides that the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the criminal proceedings to a conclusion. 22 In the cited Loftus case, the Supreme Court of Iowa held that 'No prosecution for adultery can be commenced except on the complaint of the husband or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense is said to have been committed, he had ceased to be such when the prosecution was begun; and appellant insists that his status was not such as to entitle him to make the complaint. We have repeatedly said that the offense is against the unoffending spouse, as well as the state, in explaining the reason for this provision in the statute; and we are of the opinion that the unoffending spouse must be such when the prosecution is commenced. (Emphasis supplied.) We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory law and jural policy on the matter. We are convinced that in cases of such nature, the status of the complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing of the complaint. In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the matter of status of persons. Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a trial court here alleging that her business concern was conjugal property and praying that she be ordered to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error of such stance, thus:

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. ... It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. ...
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. ...25

Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit. The allegation of private respondent that he could not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger of introducing spurious heirs into the family, which is said to be one of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other. The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code, which punished adultery "although the marriage be afterwards declared void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital vows, even though it should be made to appear that she is entitled to have her marriage contract declared null and void, until and unless she actually secures a formal judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never existed. There being no marriage from the beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently contemplated and within the purview of the decision in said case is the situation where the criminal action for adultery was filed before the termination of the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would necessarily apply where the termination of the marriage was effected, as in this case, by a valid foreign divorce. Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the one at bar or any issue determinative of the controversy herein. WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one enteredDISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made permanent. SO ORDERED. Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Separate Opinions

PARAS, J., concurring: It is my considered opinion that regardless of whether We consider the German absolute divorce as valid also in the Philippines, the fact is that the husband in the instant case, by the very act of his obtaining an absolute divorce in Germany can no longer be considered as the offended party in case his former wife actually has carnal knowledge with another, because in divorcing her, he already implicitly authorized the woman to have sexual relations with others. A contrary ruling would be less than fair for a man, who is free to have sex will be allowed to deprive the woman of the same privilege. In the case of Recto v. Harden (100 Phil. 427 [1956]), the Supreme Court considered the absolute divorce between the American husband and his American wife as valid and binding in the Philippines on the theory that their status and capacity are governed by their National law, namely, American law. There is no decision yet of the Supreme Court regarding the validity of such a divorce if one of the parties, say an American, is married to a Filipino wife, for then two (2) different nationalities would be involved. In the book of Senate President Jovito Salonga entitled Private International Law and precisely because of theNational law doctrine, he considers the absolute divorce as valid insofar as the American husband is concerned but void insofar as the Filipino wife is involved. This results in what he calls a "socially grotesque situation," where a Filipino woman is still married to a man who is no longer her husband. It is the opinion however, of the undersigned that very likely the opposite expresses the correct view. While under the national law of the husband the absolute divorce will be valid, still one of the exceptions to the application of the proper foreign law (one of the exceptions to comity) is when the foreign law will work an injustice or injury to the people or residents of the forum. Consequently since to recognize the absolute divorce as valid on the part of the husband would be injurious or prejudicial to the Filipino wife whose marriage would be still valid under her national law, it would seem that under our law existing before the new Family Code (which took effect on August 3, 1988) the divorce should be considered void both with respect to the American husband and the Filipino wife. The recent case of Van Dorn v. Romillo, Jr. (139 SCRA [1985]) cannot apply despite the fact that the husband was an American can with a Filipino wife because in said case the validity of the divorce insofar as the Filipino wife is concerned was NEVER put in issue.

Separate Opinions PARAS, J., concurring: It is my considered opinion that regardless of whether We consider the German absolute divorce as valid also in the Philippines, the fact is that the husband in the instant case, by the very act of his obtaining an absolute divorce in Germany can no longer be considered as the offended party in case his former wife actually has carnal knowledge with another, because in divorcing her, he already implicitly authorized the woman to have sexual relations with others. A contrary ruling would be less than fair for a man, who is free to have sex will be allowed to deprive the woman of the same privilege. In the case of Recto v. Harden (100 Phil. 427 [1956]), the Supreme Court considered the absolute divorce between the American husband and his American wife as valid and binding in the Philippines on the theory that their status and capacity are governed by their National law, namely, American law. There is no decision yet of the Supreme Court regarding the validity of such a divorce if one of the parties, say an American, is married to a Filipino wife, for then two (2) different nationalities would be involved. In the book of Senate President Jovito Salonga entitled Private International Law and precisely because of theNational law doctrine, he considers the absolute divorce as valid insofar as the American husband is concerned but void insofar as the Filipino wife is involved. This results in what he calls a "socially grotesque situation," where a

Filipino woman is still married to a man who is no longer her husband. It is the opinion however, of the undersigned that very likely the opposite expresses the correct view. While under the national law of the husband the absolute divorce will be valid, still one of the exceptions to the application of the proper foreign law (one of the exceptions to comity) is when the foreign law will work an injustice or injury to the people or residents of the forum. Consequently since to recognize the absolute divorce as valid on the part of the husband would be injurious or prejudicial to the Filipino wife whose marriage would be still valid under her national law, it would seem that under our law existing before the new Family Code (which took effect on August 3, 1988) the divorce should be considered void both with respect to the American husband and the Filipino wife. The recent case of Van Dorn v. Romillo, Jr. (139 SCRA [1985]) cannot apply despite the fact that the husband was an American can with a Filipino wife because in said case the validity of the divorce insofar as the Filipino wife is concerned was NEVER put in issue.