When plaintiff returned to Jeddah a few days later, several SAUDIA
officials interrogated her about the Jakarta incident. They then requested
FIRST DIVISION
[G.R. No. 122191. October 8, 1998.]
1. 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.
DECISION
QUISUMBING, J p:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set
aside the Resolution 1 dated 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: dctai
"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 Al-Gazzawi, the latter as an accomplice.
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. LLphil
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
Miniewy, 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 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. 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. Cdpr
 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. LLpr
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. LLpr
On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and
Khaled Al-Balawi ("Al-Balawi"), 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). cdrep
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 plaintiff's
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. prLL
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). cdphil
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 30 dated 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 31 dated 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. LLjur
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. prcd
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 15-day 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.
Q-93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI
ARABIAN AIRLINES". cdrep
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. prcd
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 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. Cdpr
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 manager, Aslam Saleemi, that the investigation was routinary and
that it posed no danger to her. Cdpr
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. prLL
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 Philippine 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. llcd
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." cdtai
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:
"Section 1.Section 19 of Batas Pambansa Blg. 129, otherwise known as
the "Judiciary Reorganization Act of 1980", is hereby amended to read as
follows: cda
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 cost 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). . .
(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." llcd
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 plaintiff's 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. Cdpr
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. LLpr
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. LibLex
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-of-law 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; prcd
(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 cdll
(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. cdtai
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 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. LibLex
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commisi,
modem 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. cdll
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. cdphil
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.
EN BANC
[G.R. No. L-16749. January 31, 1963.]
2. IN THE MATTER OF THE TESTATE ESTATE OF EDWARD
E. CHRISTENSEN, DECEASED. ADOLFO C. AZNAR, Executor
 and LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-
appellees, vs. HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
DECISION
LABRADOR, J p:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N.
Cusi, Jr., presiding, in Special Proceeding No. 622 of said court, dated September 14,
1949, approving among other things the final accounts of the executor, directing the
executor to reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen
Christensen Garcia as her legacy, and declaring Maria Lucy Christensen entitled to the
residue of the property to be enjoyed during her lifetime, and in case of death without
issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in
accordance with the provisions of the will of the testator Edward E. Christensen. The will
was executed in Manila on March 5, 1951 and contains the following provisions:
"3.I declare . . . that I have but one (1) child, named Maria Lucy
Christensen (now Mrs. Bernard Daney), who was born in the Philippines
about twenty-eight years ago, and who is now residing at No. 665 Rodger
Young Village, Los Angeles, California, U.S.A.
"4.I further declare that I now have no living ascendants, and no
descendents except my above named daughter, Maria Lucy Christensen
Daney.
xxx xxx xxx
"7.I give, devise and bequeath unto Maria Helen Christensen, now
married to Eduardo Garcia, about eighteen years of age and who,
notwithstanding the fact that she was baptized Christensen, is not in any
way related to me, nor has she been at any time adopted by me, and who,
from all information I have now resides in Egpit, Digos, Davao,
Philippines, the sum of Three Thousand Six Hundred Pesos (P3,600.00),
Philippine Currency, the same to be deposited in trust for the said Maria
Helen Christensen with the Davao Branch of the Philippine National
Bank, and paid to her at the rate of One Hundred Pesos (P100.00),
Philippine Currency per month until the principal thereof as well as any
interest which may have accrued thereon, is exhausted.
xxx xxx xxx
"12.I hereby give devise and bequeath unto my well-beloved daughter,
the said Maris Lucy Christensen Daney (Mrs. Bernard Daney), now
residing as aforesaid at No. 665 Rodger Young Village, Los Angeles,
California, U.S.A., all the income from the rest, remainder, and residue of
my property and estate, real, personal and/or mixed, of whatsoever kind
or character, and wheresoever situated, of which I may be possessed at
my death and which may have come to me from any source whatsoever,
during her lifetime: . . ."
It is in accordance with the above-quoted provisions that the executor in his final account
and project partition ratified the payment of only P3,600 to Helen Christensen Garcia and
proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen
Garcia, insofar as it deprives her (Helen) of her legitime as an acknowledged natural child,
she having been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child
of the deceased Edward E. Christensen. The legal grounds of opposition are (a) that the
distribution should be governed by the laws of the Philippines, and (b) that said order of
distribution is contrary thereto insofar as it denies to Helen Christensen, one of two
acknowledged natural children, one-half of the estate in full ownership. In amplification of
the above grounds it was alleged that the law that should govern the estate of the deceased
Christensen should not be the internal law of California alone, but the entire law thereof
because several foreign elements are involved, that the forum is the Philippines and even if
the case were decided in California, Section 946 of the California Civil Code, which
requires that the domicile of the decedent apply, should be applicable. It was also alleged
that Maria Helen Christensen having been declared an acknowledged natural child of the
decedent, she is deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and
of the State of California at the time of his death, the successional rights and intrinsic
validity of the provisions in his will are to be governed by the law of California, in
accordance with which a testator has the right to dispose of his property in the way he
desires, because the right of absolute dominion over his property is sacred and inviolable
(In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117
Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but these were
denied. Hence this appeal.
The most important assignments of error are as follows:
I of his death he was domiciled in the Philippines, as witness the following facts admitted
THE LOWER COURT ERRED IN IGNORING THE DECISION OF
THE HONORABLE SUPREME COURT THAT HELEN IS THE
ACKNOWLEDGED NATURAL CHILD OF EDWARD E.
CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF
HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR
FAILING TO RECOGNIZE THE EXISTENCE OF SEVERAL
FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR
THE APPLICATION OF INTERNATIONAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT
UNDER INTERNATIONAL LAW, PARTICULARLY UNDER THE
RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE
TESTAMENTARY DISPOSITION OR THE DISTRIBUTION OF THE
ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE
SCHEDULE OF DISTRIBUTION SUBMITTED BY THE EXECUTOR
IS CONTRARY TO THE PHILIPPINE LAWS.
V herein) which he executed at his lawyers' offices in Manila on March 5,
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER
THE PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS
ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL
OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of
the State of California at the time of his death. But there is also no question that at the time
by the executor himself in appellee's brief:
"In the proceedings for admission of the will to probate, the facts of
record show that the deceased Edward E. Christensen was born on
November 29, 1875, in New York City, N. Y., U.S.A.; his first arrival in
the Philippines, as an appointed school teacher, was on July 1, 1901, on
board the U.S. Army Transport 'Sheridan' with Port of Embarkation as the
City of San Francisco, in the State of California, U.S.A. He stayed in the
Philippines until 1904.
"In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time he
resided in, and was teaching school in Sacramento, California.
"Mr. Christensen's next arrival in the Philippines was in July of the year
1913. However, in 1928, he again departed the Philippines for the United
States and came back here the following year, 1929. Some nine years
later, in 1938, he again returned to his own country, and came back to the
Philippines the following year, 1939.
"Being an American citizen, Mr. Christensen was interned by the
Japanese Military Forces in the Philippines during World War II. Upon
liberation, in April 1945, he left for the United States but returned to the
Philippines in December, 1945. Appellees' Collective Exhibits '6', CFI
Davao, Sp. Proc. 622. as Exhibits 'AA', 'BB' and 'CC-Daney'; Exhs. 'MM',
'MM-1', 'MM-2-Daney', and p. 473, t.s.n., July 21, 1953.
"In April, 1951, Edward E. Christensen returned once more to California
shortly after the making of his last will and testament (now in question
 1951. He died at the St. Luke's Hospital in the City of Manila on April 30,
1953." (Pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are
persuaded by the fact that he was born in New York, migrated to California and resided
there for nine years, and since he came to the Philippines in 1913 he returned to California
very rarely and only for short visits (perhaps to relatives), and considering that he appears
never to have owned or acquired a home or properties in that state, which would indicate
that he would ultimately abandon the Philippines and make home in the State of
California.
"Sec. 16.Residence is a term used with many shades of meaning from
mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical
presence." (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, we find that the citizenship that he acquired in California
when he resided in Sacramento, California from 1904 to 1913, was never lost by his stay
in the Philippines, for the latter was a territory of the United States (not a state) until 1946
and the deceased appears to have considered himself as a citizen of California by the fact
that when he executed his will in 1951 he declared that he was a citizen of that State; so
that he appears never to have intended to abandon his California citizenship by acquiring
another. This conclusion is in accordance with the following principle expounded by
Goodrich in his Conflict of Laws.
"The terms 'residence' and 'domicile' might well be taken to mean the
same thing, a place of permanent abode. But domicile, as has been
shown, has acquired a technical meaning. Thus one may be domiciled in
a place where he has never been. And he may reside in a place where he
has no domicile. The man with two homes, between which he divides his
time, certainly resides in each one, while living in it. But if he went on
business which would require his presence for several weeks or months,
he might properly be said to have sufficient connection with the place to
be called a resident. It is clear, however, that, if he treated his settlement
as continuing only for the particular business in hand, not giving up his
former "home," he could not be a domiciled New Yorker. Acquisition of
a domicile of choice requires the exercise of intention as well as physical
presence. Residence simply requires bodily presence as an inhabitant in a
given place, while domicile requires bodily presence in that place and
also an intention to make it one's domicile.' Residence, however, is a term
used with many shades of meaning, from the merest temporary presence
to the most permanent abode, and it is not safe to insist that any one use is
the only proper one." (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16
of the Civil Code of the Philippines, which is as follows:
"ART. 16.Real property as well as personal property is subject to the law
of the country where it is situated.
"However, intestate and testamentary successions, both with respect to
the order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
wherein said property may be found."
The application of this article in the case at bar requires the determination of the meaning
of the term "national law" as used therein.
There is no single American law governing the validity of testamentary provisions in the
United States, each state of the Union having its own private law applicable to its citizens
only and in force only within the state. The "national law" indicated in Article 16 of the
Civil Code above quoted can not, therefore, possibly mean or apply to any general
American law. So it can refer to no other than the private law of the state of which the
decedent is a citizen, in the case at bar, the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal
property? The decision of the court below, sustains the contention of the executor-appellee
that under the California Probate Code, a testator may dispose of his property by will in
the form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d
877, 176 P. 2d 952. But appellant invokes the provisions of Article 946 of the Civil Code
of California, which is as follows:
"If there is no law to the contrary, in the place where personal property is
situated, it is deemed to follow the person of its owner, and is governed
by the law of his domicile."
The existence of this provision is alleged in appellant's opposition and is not denied.
We have checked it in the California Civil Code and it is there. Appellee, on the other
hand, relies on the case cited in the decision and testified to by a witness. (Only the
case Kaufman is correctly cited.) It is argued on executor's behalf that as the deceased
 Christensen was a citizen of the State of California, the internal law thereof, which is
that given in the above-cited case, should govern the determination of the validity of
the testamentary provisions of Christensen's will, such law being in force in the State
of California of which Christensen was a citizen. Appellant, on the other hand, insists
that Article 946 should be applicable, and in accordance therewith and following the
doctrine of renvoi, the question of the validity of the testamentary provision in
question should be referred back to the law of the decedent's domicile, which is the
Philippines.
The theory or doctrine of renvoi has been defined by various authors, thus:
"The problem has been stated in this way: 'When the Conflict of Laws
rule of the forum refers a jural matter to a foreign law for decision, is the
reference to the corresponding rule of the Conflict of Law of that foreign
law, or is the reference to the purely internal rules of law of the foreign
system; i.e., to the totality of the foreign law, minus its Conflict of Laws
rules?
"On logic, the solution is not an easy one. The Michigan court chose to
accept the renvoi, that is, applied the Conflict of Laws rule of Illinois
which referred the matter back to Michigan law. But once having
determined that the Conflict of Laws principle is the rule looked to, it is
difficult to see why the reference back should not have been to Michigan
Conflict of Laws. This would have resulted in the 'endless chain of
references' which has so often been criticized by legal writers. The
opponents of the renvoi would have looked merely to the internal law of
Illinois, thus rejecting therenvoi or the reference back. Yet there seems no
compelling logical reason why the original reference should be to the
internal law rather than to the Conflict of Laws rule. It is true that such a
solution avoids going on a merry-go-round, but those who have accepted
the renvoi theory avoid this inextricabilis circulas by getting off at the
second reference and at that point applying internal law. Perhaps the
opponents of the renvoi are a bit more consistent for they look always to
internal law as the rule of reference.
"Strangely enough, both the advocates for and the objectors to
the renvoi plead that greater uniformity will result from adoption of their
respective views. And still more strange is the fact that the only way to
achieve uniformity in this choice-of-law problem is if in the dispute the
two states whose laws form the legal basis of the litigation disagree as to
whether the renvoi should be accepted. If both reject, or both accept the
doctrine, the result of the litigation will vary with the choice of the forum.
In the case stated above, had the Michigan court rejected the renvoi,
judgment would have been against the woman; if the suit had been
brought in the Illinois courts, and they too rejected the renvoi, judgment
would be for the woman. The same result would happen, though the
courts would switch with respect to which would hold liability, if both
courts accepted the renvoi.
"The Restatement accepts the renvoi theory in two instances: where the
title to land is in question, and where the validity of a decree of divorce is
challenged. In these cases, the Conflict of Laws rule of the situs of the
land, or the domicile of the parties in the divorce case, is applied by the
forum, but any further reference goes only to the internal law. Thus, a
person's title to land, recognized by the situs, will be recognized by every
court; and every divorce, valid by the domicile of the parties, will be valid
everywhere." (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
"X, a citizen of Massachusetts, dies intestate, domiciled in France,
leaving movable property in Massachusetts, England, and France. The
question arises as to how this property is to be distributed among X's next
of kin.
"Assume (1) that this question arises in a Massachusetts court. There the
rule of the conflict of laws as to intestate succession to movables calls for
an application of the law of the deceased's last domicile. Since by
hypothesis X's last domicile was France, the natural thing for the
Massachusetts court to do would be to turn to French statute of
distributions, or whatever corresponds thereto in French law, and decree a
distribution accordingly. An examination of French law, however, would
show that if a French court were called upon to determine how this
property should be distributed, it would refer the distribution to the
national law of the deceased, thus applying the Massachusetts state of
distributions. So on the surface of things the Massachusetts court has
open to it alternative course of action: (a) either to apply the French laws
as to intestate succession, or (b) to resolve itself into a French court and
apply the Massachusetts statute of distributions, on the assumption that
this is what a French court would do. If it accepts the so-
called renvoi doctrine, it will follow the latter course, thus applying its
own law.
 "This is one type of renvoi. A jural matter is presented which the conflict-
of-laws rule of the forum refers to a foreign law, the conflict-of-laws rule
of which, in turn refers the matter back again to the law of the forum.
This is renvoi in the narrower sense. The German term for this judicial
process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-
571.)
"After a decision has been arrived at that a foreign law is to be resorted to
as governing a particular case, the further question may arise: Are the
rules as to the conflict of laws contained in such foreign law also to be
resorted to? This is a question which, while it has been considered by the
courts in but a few instances, has been the subject of frequent discussion
by textwriters and essayists; and the doctrine involved has been
descriptively designated by them as the 'Renvoyer' to send back, or the
Ruchversweisung', or the 'Weiterverweisung', since an affirmative answer
to the question postulated and the operation of the adoption of the foreign
law in toto would in many cases result in returning the main controversy
to be decided according to the law of the forum . . . (15 C.J.S. 872.)
"Another theory, known as the 'doctrine of renvoi', has been advanced.
The theory of the doctrine of renvoi is that the court of the forum, in
determining the question before it, must take into account the whole law
of the other jurisdiction, but also its rules as to conflict of laws, and then
apply the law to the actual question which the rules of the other
jurisdiction prescribe. This may be the law of the forum. The doctrine of
therenvoi has generally been repudiated by the American authorities." (2
Am. Jur. 296.)
The scope of the theory of renvoi has also been defined and the reasons for its application
in a country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27,
1917-1918, pp. 509-531. The pertinent parts of the article are quoted herein below:
"The recognition of the renvoi theory implies that the rules of the conflict
of laws are to be understood as incorporating not only the ordinary or
internal law of the foreign state or country, but its rules of the conflict of
laws as well. According to this theory 'the law of a country' means the
whole of its law.
xxx xxx xxx
"Von Bar presented his views at the meeting of the institute of
International Law, at Neuchatel, in 1900, in the form of the following
theses:
"(1)Every court shall observe the law of its country as regards the
application of foreign laws.
"(2)Provided that no express provision to the contrary exists, the court
shall respect:
"(a)The provisions of a foreign law which disclaims the right to bind its
nationals abroad as regards their personal statute, and desires that said
personal statute shall be determined by law of the domicile, or even by
the law of the place where the act in question occurred.
"(b)The decision of two or more foreign systems of law, provided it be
certain that one of them is necessarily competent, which agree in
attributing the determination of a question to the same system of law.
xxx xxx xxx
"If, for example, the English Law directs its judge to distribute the
personal estate of an Englishman who has died domiciled in Belgium in
accordance with the law of his domicile, he must first inquire whether the
law of Belgium would distribute personal property upon death in
accordance with the law of domicile, and if he finds that the Belgian law
would make the distribution in accordance with the law of nationality
that is the English law, he must accept this reference back to his own
law."
We note that Article 946 of the California Civil Code as its conflict of laws rule, while the
rule applied in In re Kaufman, supra, its internal law. If the law on succession and the
conflict of law rules of California are to be enforced jointly, each in its own intended and
appropriate sphere, the principle cited In re Kaufman should apply to citizens living in the
State, but Article 946 should apply to such of its citizens as are not domiciled in California
but in other jurisdictions. The rule laid down of resorting to the law of the domicile in the
determination of matters with foreign element involved is in accord with the general
principle of American law that the domiciliary law should govern in most matters or rights
which follow the person of the owner.
 "When a man dies leaving personal property in one or more estates, and
leaves a will directing the manner of distribution of the property, the law
of the state where he was domiciled at the time of his death will be looked
to in deciding legal questions about the will, almost as completely as the
law of the situs is consulted in questions about the devise of land. It is
logical that, since the domiciliary rules control devolution of the personal
estate in case of intestate succession, the same rules should determine the
validity of an attempted testamentary disposition of the property. Here,
also, it is not that the domiciliary has effect beyond the borders of the
domiciliary state. The rules of the domicile are recognized as controlling
by the Conflict of Laws rules at the situs of the property, and the reason
for the recognition as in the case of intestate succession, is the general
convenience of the doctrine. The New York court has said on the point;
'The general principle that a disposition of personal property valid at the
domicile of the owner, is valid everywhere, is one of universal
application. It had its origin in that international comity which was one of
the first fruits of civilization, and in this age, when business intercourse
and the process of accumulating property take but little notice of
boundary lines, the practical wisdom and justice of the rule is more
apparent than ever.'" (Goodrich, Conflict of Laws, Sec. 164, pp. 442-
443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as
the national law is the internal law of California. But as above explained the laws of
California have prescribed two sets of laws for its citizens, one for residents therein and
another for those domiciled in other jurisdictions. Reason demands that We should enforce
the California internal law prescribed for its citizens residing therein, and enforce the
conflict of law rules law for the citizens domiciled abroad. If we must enforce the law of
California as in comity we are bound to do, as so declared in Article 16 of our Civil Code,
then we must enforce the law of California in accordance with the express mandate thereof
and as above explained, i.e., apply the internal law for residents therein, and its conflict of
laws rule for those domiciled abroad.
It is argued on appellees behalf that the clause "if there is no law to the contrary in the
place where the property is situated" in Sec. 946 of the California Civil Code refers to
Article 16 of the Civil Code of the Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 thatthe national of the deceased should
govern. This contention can not be sustained. As explained in the various authorities cited
above the national law mentioned in Article 16 of our Civil Code is the law on conflict of
laws in the California Civil Code, i.e., Article 946, which authorizes the reference or
return of the question to the law of the testator's domicile. The conflict of law rule in
California, Article 946, Civil Code, precisely refers back the case, when a decedent is not
domiciled in California, to the law of his domicile, the Philippines in the case at bar. The
court of the domicile can not and should not refer the case back to California; such action
would leave the issue incapable of determination because the case will then be like a
football, tossed back and forth between the two states, between the country of which the
decedent was a citizen and the country of his domicile. The Philippine court must apply its
own law as directed in the conflict of law rule of the state of the decedent, if the question
has to be decided, especially as the application of the internal law of California provides
no legitime for children while the Philippine law, Arts. 887 (4) and 894, Civil Code of the
Philippines, makes natural children legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In Re Estate of Johnson, 39 Phil., 156; Riera vs. Palmaroli, 40 Phil.,
105; Miciano vs. Brimo, 50 Phil., 867; Babcock Templeton vs. Rider Babcock, 52 Phil.,
130; and Gibbs vs. Government, 59 Phil., 293.) cited by appellees to support the decision
can not possibly apply in the case at bar, for two important reasons, i.e., the subject in each
case does not appear to be a citizen of a state in the United States but with domicile in the
Philippines, and it does not appear in each case that there exists in the state of which the
subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California,
is the Philippines, the validity of the provisions of his will depriving his acknowledged
natural child, the appellant, should be governed by the Philippine law, the domicile,
pursuant to Art. 946 of the Civil Code of California, not by the internal law of California.
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the
lower court with instructions that the partition be made as the Philippine law on succession
provides. Judgment reversed, with costs against appellees.
Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
EN BANC
[G.R. No. 35694. December 23, 1933.]
 3. ALLISON D. GIBBS, petitioner-appellee, vs. THE
GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositor-
appellant. THE REGISTER OF DEEDS OF THE CITY OF
MANILA, respondent-appellant.
Solicitor-General Hilado for appellants.
Allison D. Gibbs in his own behalf.
DECISION
BUTTE, J p:
This is an appeal from a final order of the Court of First Instance of Manila,
requiring the register of deeds of the City of Manila to cancel certificates of title Nos.
20880, 28336 and 28331, covering lands located in the City of Manila, Philippine
Islands, and issue in lieu thereof new certificates of transfer of title in favor of Allison
D. Gibbs without requiring him to present any document showing that the succession
tax due under Article XI of Chapter 40 of the Administrative Code has been paid.
The said order of court of March 10, 1931, recites that the parcels of land
covered by said certificates of title formerly belonged to the conjugal partnership of
Allison D. Gibbs and Eva Johnson Gibbs; that the latter died intestate in Palo Alto,
California, on November 28, 1929; that at the time of her death she and her husband
were citizens of the State of California and domiciled therein.
It appears further from said order that Allison D. Gibbs was appointed
administrator of the estate of his said deceased wife in case No. 36795 in the same
court, entitled "In the Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased";
that in said intestate proceedings, the said Allison D. Gibbs, on September 22, 1930,
filed an ex parte petition in which he alleged "that the parcels of land hereunder
described belong to the conjugal partnership of your petitioner and his wife, Eva
Johnson Gibbs", describing in detail the three tracts here involved; and further alleging
that his said wife, Eva Johnson Gibbs", describing in detail the three tracts here
involved; and further alleging that his said wife, a citizen and resident of California,
died on November 28, 1929; that in accordance with the law of California, the
community property of spouses who are citizens of California, upon the death of the
wife previous to that of the husband, belongs absolutely to the surviving husband
without administration; that the conjugal partnership of Allison D. Gibbs and Eva
Johnson Gibbs, deceased, has no obligations or debts and no one will be prejudiced by
adjudicating said parcels of land (and seventeen others not here involved) to be the
absolute property of the said Allison D. Gibbs as sole owner. The court granted said
petition and on September 22, 1930, entered a decree adjudicating the said Allison D.
Gibbs to be the sole and absolute owner of said lands, applying section 1401 of the
Civil Code of California. Gibbs presented this decree to the register of deeds of Manila
and demanded that the latter issue to him a "transfer certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code provides
in part that:
"Registers of deeds shall not register in the registry of property
any document transferring real property or real rights therein or any
chattel mortgage, by way of gifts mortis causa, legacy or inheritance,
unless the payment of the tax fixed in this article and actually due thereon
shall be shown. And they shall immediately notify the Collector of
Internal Revenue or the corresponding provincial treasurer of the
nonpayment of the tax discovered by them. . . ."
Acting upon the authority of said section, the register of deeds of the City of
Manila, declined to accept as binding said decree of court of September 22, 1930, and
refused to register the transfer of title of the said conjugal property to Allison D.
Gibbs, on the ground that the corresponding inheritance tax had not been paid.
Thereupon, under date of December 26, 1930, Allison D. Gibbs filed in the said court
a petition for an order requiring the said register of deeds "to issue the corresponding
titles" to the petitioner without requiring previous payment of any inheritance tax.
After due hearing of the parties, the court reaffirmed said order of September 22, 1930,
and entered the order of March 10, 1931, which is under review on this appeal.
On January 3, 1933, this court remanded the case to the court of origin for new
trial upon additional evidence in regard to the pertinent law of California in force at the
time of the death of Mrs. Gibbs, also authorizing the introduction of evidence with
reference to the dates of the acquisition of the property involved in this suit and with
reference to the California law in force at the time of such acquisition. The case is now
before us with the supplementary evidence.
For the purposes of this case, we shall consider the following facts as
established by the evidence or the admissions of the parties: Allison D. Gibbs has been
continuously, since the year 1902, a citizen of the State of California and domiciled
therein; that he and Eva Johnson Gibbs were married at Columbus, Ohio, in July,
1906; that there was no antenuptial marriage contract between the parties; that during
the existence of said marriage, the spouses acquired the following lands, among others,
in the Philippine Islands, as conjugal property:
 1.A parcel of land in the City of Manila, represented by transfer certificate of
title No. 20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs
casado con Eva Johnson Gibbs".
2.A parcel of land in the City of Manila, represented by transfer certificate of
title No. 28336, dated May 14, 1927, in which it is certified "that the spouses Allison
D. Gibbs and Eva Johnson Gibbs are the owners in fee simple" of the land therein
described.
3.A parcel of land in the City of Manila, represented by transfer certificate of
title No. 28331, dated April 6, 1927, which states "that Allison D. Gibbs married to
Eva Johnson Gibbs" is the owner of the land described therein; that said Eva Johnson
Gibbs died intestate on November 28, 1929, leaving surviving her husband, the
appellee, and two sons, Allison D. Gibbs, now aged 25, and Finley J. Gibbs, now aged
22, as her sole heirs at law.
Article XI of Chapter 40 of the Administrative Code entitled "Tax on
inheritances, legacies, and other acquisitions mortis causa" provides in section 1536
that "Every transmission by virtue of inheritance . . . of real property . . . shall be
subject to the following tax." It results that the question for determination in this case
is as follows: Was Eva Johnson Gibbs at the time of her death the owner of a
descendible interest in the Philippine lands above-mentioned?
The appellee contends that the law of California should determine the nature
and extend of the title, if any, that vested in Eva Johnson Gibbs under the three
certificates of title Nos. 20880, 28336 and 28331 above referred to, citing article 9 of
the Civil Code. But that, even if the nature and extent of her title under said certificates
be governed by the law of the Philippine Islands, the laws of California govern the
succession to such title, citing the second paragraph of article 10 of the Civil Code.
Article 9 of the Civil Code is as follows:
"The laws relating to family rights and duties, or to the status,
condition, and legal capacity of persons, are binding upon Spaniards even
though they reside in a foreign country." It is argued that the conjugal
right of the California wife in community real estate in the Philippine
Islands is a personal right and must, therefore, be settled by the law
governing her personal status, that is, the law of California. But our
attention has not been called to any law of California that incapacitates a
married woman from acquiring or holding land in a foreign jurisdiction in
accordance with the lex rei sit. There is not the slightest doubt that a
California married woman can acquire title to land in a common law
jurisdiction like the State of Illinois or the District of Columbia, subject to
the common-law estate by the courtesy which would vest in her husband.
Nor is there any doubt that if a California husband acquired land in such a
jurisdiction his wife would be vested with the common law right of
dower, the prerequisite conditions obtaining. Article 9 of the Civil Code
treats of purely personal relations and status and capacity for juristic acts,
the rules relating to property, both personal and real, being governed by
article 10 of the Civil Code. Furthermore, article 9, by its very terms, is
applicable only to "Spaniards" (now, by construction, to citizens of the
Philippine Islands).
The Organic Act of the Philippine Islands (Act of Congress, August 29, 1916,
known as the "Jones Law") as regards the determination of private rights, grants
practical autonomy to the Government of the Philippine Islands. This Government,
therefore, may apply the principles and rules of private international law (conflict of
laws) on the same footing as an organized territory or state of the United States. We
should, therefore, resort to the law of California, the nationality and domicile of Mrs.
Gibbs, to ascertain the norm which would be applied here as law were there any
question as to her status.
But the appellant's chief argument and the sole basis of the lower court's
decision rests upon the second paragraph of article 10 of the Civil Code which is as
follows:
"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."
In construing the above language we are met at the outset with some difficulty
by the expression "the national law of the person whose succession is in question", by
reason of the rather anomalous political status of the Philippine Islands. (Cf. Manresa,
vol. 1, Codigo Civil, pp. 103, 104.) We encountered no difficulty in applying article 10
in the case of a citizen of Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to
the practical autonomy of the Philippine Islands, as above stated, we have concluded
that if article 10 is applicable and the estate in question is that of a deceased American
citizen, the succession shall be regulated in accordance with the norms of the State of
his domicile in the United States. (Cf. Babcock Templeton vs. Rider Babcock, 52 Phil;,
130, 137; In re Estate of Johnson, 39 Phil., 156, 166.)
The trial court found that under the law of California, upon the death of the
wife, the entire community property without administration belongs to the surviving
husband; that he is the absolute owner of all the community property from the moment
of the death of his wife, not by virtue of succession or by virtue of her death, but by
virtue of the fact that when the death of the wife precedes that of the husband he
acquires the community property, not as an heir or as the beneficiary of his deceased
wife, but because she never had more than an inchoate interest or expectancy which is
extinguished upon her death. Quoting the case of Estate of Klumpke (167 Cal., 415,
419), the court said: "The decisions under this section (1401 Civil Code of California)
are uniform to the effect that the husband does not take the community property upon
the death of the wife by succession, but that he holds it all from the moment of her
death as though acquired by himself. . . . It never belonged to the estate of the deceased
wife."
The argument of the appellee apparently leads to this dilemma: If he takes
nothing by succession from his deceased wife, how can the second paragraph of article
10 be invoked? Can the appellee be heard to say that there is a legal succession under
the law of California? It seems clear that the second paragraph of article 10 applies
only when a legal or testamentary succession has taken place in the Philippines in
accordance with the law of the Philippine Islands and no legal succession under the
law of California? It seems clear that the second paragraph of article 10 applies only
when a legal or testamentary succession has taken place in the Philippines in
accordance with the law of the Philippine Islands; and the foreign law is consulted
only in regard to the order of succession or the extent of the successional rights; in
other words, the second paragraph of article 10 can be invoked only when the deceased
was vested with a descendible interest in property within the jurisdiction of the
Philippine Islands.
In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law. ed., 1028, 1031),
the court said:
"It is a principle firmly established that to the law of the state in
which the land is situated we must look for the rules which govern its
descent, alienation, and transfer, and for the effect and construction of
wills and other conveyances. (United States vs. Crosby, 7 Cranch, 115; 3
L. ed., 287; Clark vs. Graham, 6 Wheat., 577; 5 L. ed., 334;
McGoon vs. Scales, 9 Wall., 23; 19 L. ed., 545; Brine vs. Hartford F. Ins.
Co., 96 U. S., 627; 24 L. ed., 858.)" (See also Estate of Lloyd, 175 Cal.,
704, 705.) This fundamental principle is stated in the first paragraph of
article 10 of our Civil Code as follows: "Personal property is subject to
the laws of the nation of the owner thereof; real property to the laws of
the country in which it is situated."
It is stated in 5 Cal. Jur., 478:
"In accord with the rule that real property is subject to the lex rei
sit, the respective rights of husband and wife in such property, in the
absence of an antenuptial contract, are determined by the law of the place
where the property is situated, irrespective of the domicile of the parties
or of the place where the marriage was celebrated." (See also Saul vs. His
Creditors, 5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.];
Heidenheimer vs. Loring, 26 S. W., 99 [Texas].)
Under this broad principle, the nature and extent of the title which vested in
Mrs. Gibbs at the time of the acquisition of the community lands here in question must
be determined in accordance with the lex rei sit.
It is admitted that the Philippine lands here in question were acquired as
community property of the conjugal partnership of the appellee and his wife. Under the
law of the Philippine Islands, she was vested of a title equal to that of her husband.
Article 1407 of the Civil Code provides:
"All the property of the spouses shall be deemed partnership
property in the absence of proof that it belongs exclusively to the husband
or to the wife." Article 1395 provides:
"The conjugal partnership shall be governed by the rules of law
applicable to the contract of partnership in all matters in which such rules
do not conflict with the express provisions of this chapter." Article 1414
provides that "the husband may dispose by will of his half only of the
property of the conjugal partnership." Article 1426 provides that upon
dissolution of the conjugal partnership and after inventory and
liquidation, "the net remainder of the partnership property shall be
divided share and share alike between the husband and wife, or their
respective heirs." Under the provisions of the Civil Code and the
jurisprudence prevailing here, the wife, upon the acquisition of any
conjugal property, becomes immediately vested with an interest and title
therein equal to that of her husband, subject to the power of management
and disposition which the law vests in the husband. Immediately upon her
death, if there are no obligations of the decedent, as is true in the present
case, her share in the conjugal property is transmitted to her heirs by
succession. (Articles 657, 659, 661, Civil Code; cf. also Coronel vs. Ona,
33 Phil., 456, 469.)
It results that the wife of the appellee was, by the law of the Philippine Islands,
vested of a descendible interest, equal to that of her husband, in the Philippine lands
covered by certificates of title Nos. 20880, 28336 and 28331, from the date of their
acquisition to the date of her death. That appellee himself believed that his wife was
vested of such a title and interest is manifest from the second of said certificates, No.
28336, dated May 14, 1927, introduced by him in evidence, in which it is certified that
"the spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners in fee simple of
the conjugal lands therein described."
 The descendible interest of Eva Johnson Gibbs in the lands aforesaid was BIENVENIDO M. CADALIN, ET AL., petitioners, vs. HON.
transmitted to her heirs by virtue of inheritance and this transmission plainly falls NATIONAL LABOR RELATIONS COMMISSION, BROWN &
within the inheritance and this transmission plainly falls within the language of section ROOT INTERNATIONAL, INC. and/or ASIA INTERNATIONAL
1536 of Article XI of Chapter 40 of the Administrative Code which levies a tax on BUILDERS CORPORATION, respondents.
inheritances. (Cf. Re Estate of Majot, 199 N. Y., 29; 92 N. E., 402; 29 L. R. A. [N. S.],
780.) It is unnecessary in this proceeding to determine the "order of succession" or the
"extent of the successional rights" (article 10, Civil Code, supra) which would be [G.R. Nos. 105029-32. December 5, 1994.]
regulated by section 1386 of the Civil Code of California which was in effect at the
time of the death of Mrs. Gibbs. ASIA INTERNATIONAL BUILDER CORPORATION and
BROWN & ROOT INTERNATIONAL,
INC., petitioners, vs. NATIONAL LABOR RELATIONS
The record does not show what the proper amount of the inheritance tax in this COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M.
case would be nor that the appellee (petitioner below) in any way challenged the power AMUL, DONATO B. EVANGELISTA, ROMEO PATAG,
of the Government to levy an inheritance tax or the validity of the statute under which RIZALINO REYES, IGNACIO DE VERA, SOLOMON B. REYES,
the register of deeds refused to issue a certificate of transfer reciting that the appellee is JOSE M. ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN,
the exclusive owner of the Philippine lands included in the three certificates of title ROMEO ACUPAN, BENJAMIN ALEJANDRE, WILFREDO D.
here involved. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B. AMUL,
The judgment of the court below of March 10, 1931, is reversed with directions AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE
to dismiss the petition, without special pronouncement as to the costs. ARLITA, HERBERT AYO, SILVERIO BALATAZO, AL
Avancea, C.J., Malcolm, Villa-Real, Abad Santos, Hull, and Vickers,
JJ., concur.
DECISION
Street, J., dissents.

FIRST DIVISION QUIASON, J p:

[G.R. No. 104776. December 5, 1994.] 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:
4. BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO
B. EVANGELISTA, and the rest of 1, 767 NAMED- (1)to modify the Resolution dated September 2, 1991 of the National Labor
COMPLAINANTS, thru and by their Attorney-in-fact, Atty. Relations Commission (NLRC) in POEA Cases Nos. L-84-06-555, L-85-10-777, L-
GERARDO A. DEL MUNDO, petitioners, vs. PHILIPPINE 85-10-779 and L-86-05-460;
OVERSEAS EMPLOYMENT ADMINISTRATION'S (2)to render a new decision: (i) declaring private respondents as in default; (ii)
ADMINISTRATOR, NATIONAL LABOR RELATIONS declaring the said labor cases as a class suit; (iii) ordering Asia International Builders
COMMISSION, BROWN & ROOT INTERNATIONAL, INC. Corporation (AIBC) and Brown and Root International Inc. (BRII) to pay the claims of
AND/OR ASIA INTERNATIONAL BUILDERS the 1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro
CORPORATION, respondents. guilty of forum-shopping; and (v) dismissing POEA Case No. L-86-05-460; and

[G.R. Nos. 104911-14. December 5, 1994.]

 (3)to reverse the Resolution dated March 24, 1992 of the 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. No. 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. No. 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 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. 14-16). On April 15, 1985, the POEA Administrator directed AIBC to file its
answer to the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment."
On the same day, the POEA issued an order directing AIBC and BRII to file their
answers to the "Amended Complaint," otherwise, they would be deemed to have
waived their right to present evidence and the case would be resolved on the basis of
complainants' 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. L-86-05-460. On September 6, 1988, AIBC and
BRII submitted their Supplemental Memorandum. On September 12, 1988, BRII filed
its "Reply to Complainant's Memorandum." On October 26, 1988, claimants submitted
their "Ex-parte Manifestational Motion and Counter-Supplemental Motion," together
with 446 individual contracts of employments and service records. On October 27,
1988, AIBC and BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in POEA
Case No. L-84-06-555 and the other consolidated cases, which awarded the amount of
$824,652.44 in favor of only 324 complainants. cdphil
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 reglementary 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 complaints
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 forcertiorari 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 Philippines. These overseas employment contracts invariably contained
15 other co-claimants dated May 4, 1993 (G.R. No. 105029-32, Rollo, pp. 906-956; the following relevant terms and conditions.
G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp. 1773-1814); PART B
9)Joint Manifestation and Motion involving Valerio Evangelista and 3 co- (1)Employment Position
claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829); Classification:
10)Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and (Code):
36 co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R.
Nos. 104911-14, Rollo, pp. 748-864; G.R. No. 104776, Rollo, pp. 1066-1183); (2)Company Employment
Status:
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. (3)Date of Employment
Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-14, Rollo, pp. 896-959); to Commence on:
12)Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2 (4)Basic Working
co-claimants dated September 7, 1993 (G.R. Nos. 105029-3,Rollo, pp. 1266-1278; Hours Per Week:
G.R. No. 104776, Rollo, pp. 1243-1254; G.R. Nos. 104911-14, Rollo, pp. 972-984); (5)Basic Working
13)Joint Manifestation and Motion involving claimant Dante C. Aceres and 37 Hours per Month:
co-claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp. 1257-1375; G.R. (6)Basic Hourly Rate:
Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
(7)Overtime Rate
14)Joint Manifestation and Motion involving Vivencio V. Abella and 27 co- Per Hour:
claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);
(8)Projected Period of Service
15)Joint Manifestation and Motion involving Domingo B. Solano and six co- (Subject to C (1) of this [sic]):
claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R. No. Months and/or
104911-14). Job Completion
III xxx xxx xxx
The facts as found by the NLRC are as follows: 3.HOURS OF WORK AND COMPENSATION
"We have taken painstaking efforts to sift over the more than fifty a)The Employee is employed at the hourly rate and overtime rate
volumes now comprising the records of these cases. From the records, it as set out in Part B of this Document.
appears that the complainants-appellants allege that they were recruited
b)The hours of work shall be those set forth by the Employer, and
by respondent-appellant AIBC for its accredited foreign principal, Brown
Employer may, at his sole option, change or adjust such hours as may be
& Root, on various dates from 1975 to 1983. They were all deployed at
deemed necessary from time to time.
various projects undertaken by Brown & Root in several countries in the
Middle East, such as Saudi Arabia, Libya, United Arab Emirates and 4.TERMINATION
Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia. a)Notwithstanding any other terms and conditions of this
Having been officially processed as overseas contract workers by agreement, the Employer may, at his sole discretion, terminate
the Philippine Government, all the individual complainants signed employee's service with cause, under this agreement at any time. If the
standard overseas employment contracts (Records, Vols. 25-32. Employer terminates the services of the Employee under this Agreement
Hereafter, reference to the records would be sparingly made, considering because of the completion or termination, or suspension of the work on
their chaotic arrangement) with AIBC before their departure from the 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 (emphasis supplied):
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. 59-65).
IV
The issues raised before and resolved by the NLRC were:
First: Whether or not complainants are entitled to the benefits
provided by Amiri Decree No. 23 of Bahrain;
(a)Whether or not the complainants who have worked in Bahrain
are entitled to the above-mentioned benefits.
(b)Whether or not Art. 44 of the same Decree (allegedly
prescribing a more favorable treatment of alien employees) bars
complainants from enjoying its benefits.
Second: Assuming that Amiri Decree No. 23 of Bahrain is
applicable in these cases, whether or not complainants' claim for the
benefits provided therein have prescribed.
Third: Whether or not the instant cases qualify as a class suit.
Fourth: Whether or not the proceedings conducted by the
POEA, as well as the decision that is the subject of these appeals,
conformed with the requirements of due process;
(a)Whether or not the respondent-appellant was denied its right to
due process;
(b)Whether or not the admission of evidence by the POEA after
these cases were submitted for decision was valid;
(c)Whether or not the POEA acquired jurisdiction over Brown &
Root International, Inc.;
(d)Whether or not the judgment awards are supported by
substantial evidence;
(e)Whether or not the awards based on the averages and formula
presented by the complainants-appellants are supported by
substantial evidence;
(f)Whether or not the POEA awarded sums beyond what the
complainants-appellants prayed for; and, if so, whether or not
these awards are valid.
Fifth: Whether or not the POEA erred in holding respondents
AIBC and Brown & Root jointly are severally liable for the judgment
awards despite the alleged finding that the former was the employer of
the complainants;
Rules on Evidence governing the pleading and proof of a foreign law and admitted in
(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.
Eight: Whether or not the POEA Administrator erred in not
dismissing POEA Case No. (L) 86-65-460 on the ground of multiplicity
of suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised
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. No. 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 AIBI 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 facto amended the
worker's contracts of employment. Respondents consciously failed to
conform to these provisions which specifically provide for the increase of
the worker's rate. It was only after June 30, 1983, four months after the
brown builders brought a suit against B & R in Bahrain for this same
claim, when respondent AIBC's contracts have undergone amendments in
Bahrain for the new hires/renewals (Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to
this instant case is Article 1144 of the Civil Code of the Philippines,
which provides:
'Art. 1144.The following actions may be brought within
ten years from the time the cause of action accrues:
(1)Upon a written contract;
(2)Upon an obligation created by law;'
Thus, herein money claims of the complainants against the respondents
shall prescribe in ten years from August 16, 1976. Inasmuch as all claims
were filed within the ten-year prescriptive period, no claim suffered the
infirmity of being prescribed" (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period
is three years as provided in Article 291 of the Labor Code of the Philippines, the
NLRC argued as follows:
"The Labor Code provides that 'all money claims arising from
employer-employee relations . . . shall be filed within three years from the
time the cause of action accrued; otherwise they shall be forever barred'
(Art. 291, Labor Code, as amended). This three-year prescriptive period
shall be the one applied here and which should be reckoned from the date
of repatriation of each individual complainant, considering the fact that
the case is having (sic) filed in this country. We do not agree with the
POEA Administrator that this three-year prescriptive period applies only
to money claims specifically recoverable under the Philippine Labor
Code. Article 291 gives no such indication. Likewise, We can not
consider complainants' cause/s of action to have accrued from a violation
of their employment contracts. There was no violation; the claims arise
from the benefits of the law of the country where they worked. (G.R. No.
104776, Rollo, pp. 90-91).
Anent the applicability of the one-year prescriptive period as provided by the
Amiri Decree No. 23 of 1976, NLRC opined that the applicability of said law was one
of characterization, i.e., whether to characterize the foreign law on prescription or
statute of limitation as "substantive" or "procedural." NLRC cited the decision
in Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955], where the
issue was the applicability of the Panama Labor Code in a case filed in the State of
New York for claims arising from said Code. In said case, the claims would have
prescribed under the Panamanian Law but not under the Statute of Limitations of New
York. The U.S. Circuit Court of Appeals held that the Panamanian Law was
procedural as it was not "specifically intended to be substantive," hence, the
prescriptive period provided in the law of the forum should apply. The Court observed:
". . . And where, as here, we are dealing with a statute of
limitations of a foreign country, and it is not clear on the face of the
statute that its purpose was to limit the enforceability, outside as well as
within the foreign country concerned, of the substantive rights to which
the statute pertains, we think that as a yardstick for determining whether
that was the purpose this test is the most satisfactory one. It does not lead
American courts into the necessity of examining into the unfamiliar
peculiarities and refinements of different foreign legal systems. . ."
The court further noted:
xxx xxx xxx
"Applying that test here it appears to us that the libelant is entitled
to succeed, for the respondents have failed to satisfy us that the
Panamanian period of limitation in question was specifically aimed
against the particular rights which the libelant seeks to enforce. The
Panama Labor Code is a statute having broad objectives, viz: 'The present
Code regulates the relations between capital and labor, placing them on a
basis of social justice, so that, without injuring any of the parties, there
may be guaranteed for labor the necessary conditions for a normal life
and to capital an equitable return to its investment.' In pursuance of these
objectives the Code gives laborers various rights against their employers.
Article 623 establishes the period of limitation for all such rights, except
certain ones which are enumerated in Article 621. And there is nothing in
the record to indicate that the Panamanian legislature gave special
consideration to 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 'specificity' 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 from 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
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 (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. 1993) 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 claim is the
cases at bench all arose from the employer-employee relations, which is broader in
scope than claims arising from a specific law or from the collective bargaining
agreement.
The contention of the POEA Administrator, that the three-year prescriptive
period under Article 291 of the Labor Code of the Philippines applies only to money
claims specifically recoverable under said Code does not find support in the plain
language of the provision. Neither is the contention of the claimants in G.R. No.
104911-14 that said Article refers only to claims "arising from the employer's violation
of the employee's right," as provided by the Labor Code supported by the facial
reading of the provision.
VII
G.R. No. 104776
A.As 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 No. L-85-10-777 and L-
85-10-779). Another complaint was filed on May 29, 1986 (POEA Case No. L-86-05-
460). NLRC, in exasperation, noted that the exact number of claimants had never been
completely established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57). All
the three new cases were consolidated with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the
proceedings, thus:
"These cases could have been spared the long and arduous route towards
resolution had the parties and their counsel been more interested in
pursuing the truth and the merits of the claims rather than exhibiting a
fanatical reliance on technicalities. Parties and counsel have made these
cases a litigation of emotion. The intransigence of parties and counsel is
remarkable. As late as last month, this Commission made a last and final
attempt to bring the counsel of all the parties (this Commission issued a
special order directing respondent Brown & Root's resident agent/s to
appear) to come to a more conciliatory stance. Even this failed" (Rollo, p.
58).
The squabble between the lawyers of claimants added to the delay in the
disposition of the cases, to the lament of NLRC, which complained:
"It is very evident from the records that the protagonists in these
consolidated cases appear to be not only the individual complainants, on
the one hand, and AIBC and Brown & Root, on the other hand. The two
lawyers for the complainants, Atty. Gerardo Del Mundo and Atty.
Florante De Castro, have yet to settle the right of representation, each one
persistently claiming to appear in behalf of most of the complainants. As
a result, there are two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of their respective
authority to represent the complainants prove futile. The bickerings by
these two counsels are reflected in their pleadings. In the charges and
countercharges of falsification of documents and signatures, and in the
disbarment proceedings by one against the other. All these have, to a
large extent, abetted in confounding the issues raised in these cases,
jumble the presentation of evidence, and even derailed the prospects of an
amicable settlement. It would not be far-fetched to imagine that both
 counsel, unwittingly, perhaps, painted a rainbow for the complainants,
with the proverbial pot of gold at its end containing more than US$100
million, the aggregate of the claims in these cases. It is, likewise, not
improbable that their misplaced zeal and exuberance caused them to
throw all caution to the wind in the matter of elementary rules of
procedure and evidence" (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some
of the complainants in both petitions filed by the two lawyers. As noted by NLRC, "the
problem created by this situation is that if one of the two petitions is dismissed, then
the parties and the public respondents would not know which claim of which petitioner
was dismissed and which was not."
B.Claimants insist that all their claims could properly be consolidated in a
"class suit" because "all the name 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. 838-
810; 1525).
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 e.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 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. LLjur
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 those ripen into
litigation. Every effort must be taken to encourage them to arrive at a settlement. The
submission of offers and counter-offers in the negotiation table is a step in the right
direction. But to bind a party to his offers, as what claimants would make this Court
do, would defeat the salutary purpose of the Rule.
G.R. Nos. 105029-32
 A.NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater
benefits than those stipulated in the overseas-employment contracts of the claimants. It
was of the belief that "where the laws of the host country are more favorable and
beneficial to the workers, then the laws of the host country shall form part of the
overseas employment contract." It quoted with approval the observation of the POEA
Administrator that ". . . in labor proceedings, all doubts in the implementation of the
provisions of the Labor Code and its implementing regulations shall be resolved in
favor of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it
refused to enforce the overseas-employment contracts, which became the law of the
parties. They contend that the principle that a law is deemed to be a part of a contract
applies only to provisions of Philippine law in relation to contracts executed in the
Philippines.
The overseas-employment contracts, which were prepared by AIBC and BRII
themselves, provided that the laws of the host country became applicable to said
contracts if they offer terms and conditions more favorable that those stipulated
therein. It was stipulated in said contracts that:
"The Employee agrees that while in the employ of the Employer, he will
not engage in any other business or occupation, nor seek employment
with anyone other than the Employer; that he shall devote his entire time
and attention and his best energies, and abilities to the performance of
such duties as may be assigned to him by the Employer; that he shall at
all times be subject to the direction and control of the employer; and that
the benefits provided to Employee hereunder are substituted for and in
lieu of all other benefits provided by any applicable law, provided of
course, that total remuneration and benefits do not fall below that of the
host country regulation or custom, it being understood that should
applicable laws establish that fringe benefits, or other such benefits
additional to the compensation herein agreed cannot be waived,
Employee agrees that such compensation will be adjusted downward so
that the total compensation hereunder, plus the non-waivable benefits
shall be equivalent to the compensation herein agreed" (Rollo, pp. 352-
353).
The overseas-employment contracts could have been drafted more felicitously.
While a part thereof provides that the compensation to the employee may be "adjusted
downward so that the total computation (thereunder) plus the non-waivable benefits
shall be equivalent to the compensation" therein agreed, another part of the same
provision categorically states "that total remuneration and benefits do not fall below
that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts should be interpreted
against AIBC and BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v.
Margarine-Verkaufs-Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
"The interpretation of obscure words or stipulations in a contract shall not
favor the party who caused the obscurity."
Said rule of interpretation is applicable to contracts of adhesion where there is
already a prepared form containing the stipulations of the employment contract and the
employees merely "take it or leave it." The presumption is that there was an imposition
by one party against the other and that the employees signed the contracts out of
necessity that reduced their bargaining power (Fieldmen's Insurance Co., Inc. v.
Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment contracts in
question as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and
parcel thereof.
The parties to a contract may select the law by which it is to be governed
(Cheshire, Private International Law, 187 [7th ed]). In such a case, the foreign law is
adopted as a "system" to regulate the relations of the parties, including questions of
their capacity to enter into the contract, the formalities to be observed by them, matters
of performance, and so forth (16 Am Jur 2d, 150-161).
Instead of adopting the entire mass of the foreign law, the parties may just
agree that specific provisions of a foreign statute shall be deemed incorporated into
their contract "as a set of terms." By such reference to the provisions of the foreign
law, the contract does not become a foreign contract to be governed by the foreign law.
The said law does not operate as a statute but as a set of contractual terms deemed
written in the contract (Anton, Private International Law 197 [1967]; Dicey and
Morris, The Conflict of Laws 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties
(Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal of Transnational
Law 1, 21 [1977]). Such party expectation is protected by giving effect to the parties'
own choice of the applicable law (Fricke v. Isbrandtsen Co. Inc., 151 F. Supp. 465,
467 [1957]). The choice of law must, however, bear some relationship to the parties or
their transaction (Scoles and Hayes, conflict of Law 644-647 [1982]). there is no
question that the contracts sought to be enforced by claimants have a direct connection
with the Bahrain law because the services were rendered in that country.

In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486
(1982), the "Employment Agreement," between Norse Management co. and the late
husband of the private respondent, expressly provided that in the event of illness or
injury to the employee arising out of and in the course of his employment and not due
to his own misconduct, "compensation shall be paid to employee in accordance with
and subject to the limitation of the Workmen's Compensation Act of the Republic of
the Philippines or the Worker's Insurance Act of registry of the vessel, whichever is
greater." Since the laws of Singapore, the place of registry of the vessel in which the
late husband of private respondent served at the time of his death, granted a better
compensation package, we applied said foreign law in preference to the terms of the
contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor
Relations Commission, 135 SCRA 278 (1985), relied upon by AIBC and BRII is
inapposite to the facts of the cases at bench. The issue in that case was whether the
amount of the death compensation of a Filipino seaman should be determined under
the shipboard employment contract executed in the Philippines or the Hongkong law.
Holding that the shipboard employment contract was controlling, the court
differentiated said case from Norse Management Co. in that in the latter case there was
an express stipulation in the employment contract that the foreign law would be
applicable if it afforded greater compensation.
B.AIBC and BRII claim that they were denied by NLRC of their right to due
process when said administrative agency granted Friday-pay differential, holiday-pay
differential, annual-leave differential and leave indemnity pay to the claimants listed in
Annex B of the Resolution. At first, NLRC reversed the resolution of the POEA
Administrator granting these benefits on a finding that the POEA Administrator failed
to consider the evidence presented by AIBC and BRII, that some findings of fact of the
POEA Administrator were not supported by the evidence, and that some of the
evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But
instead of remanding the case to the POEA Administrator for a new hearing, which
means further delay in the termination of the case, NLRC decided to pass upon the
validity of the claims itself. It is this procedure that AIBC and BRII complain of as
being irregular and a "reversible error."
They pointed out that NLRC took into consideration evidence submitted on
appeal, the same evidence which NLRC found to have been "unilaterally submitted by
the claimants and not disclosed to the adverse parties" (Rollo, pp. 37-39).
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). Cdpr
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 inAng Tibay v. Court of Industrial
Relations, 69 Phil. 635 (1940).
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.
Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.
FIRST DIVISION
[G.R. No. L-68470. October 8, 1985.]
5. 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.
DECISION
MELENCIO-HERRERA, J p:
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 We consider 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 all 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.That 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 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. 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. cdll
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.
Teehankee (Chairman), Plana, Relova Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.
SECOND DIVISION
[G.R. No. 80116. June 30, 1989.]
 6. 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.
DECISION
REGALADO, J p:
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. 87-52434. On the other hand, respondent
judge merely reset the date of the arraignment in Criminal Case No. 87-52435 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. LexLib
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 partriae,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. cdphil
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 Dorn, a 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, herein before
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 entered DISMISSING 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.
FIRST DIVISION
[G.R. No. 124371. November 23, 2000.]
7. PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and
ALICIA F. LLORENTE, respondents.
E.A. Dacanay for petitioner.
Pardalis, Navarro & Sales for private respondents.
SYNOPSIS
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy
from 1927 to 1957 and a naturalized American citizen. On February 22, 1937, Lorenzo
married petitioner Paula Llorente. Before the outbreak of the Pacific War, Lorenzo
departed for the United States and Paula stayed in the conjugal home in barrio Antipolo,
Nabua, Camarines Sur. When Lorenzo returned to the Philippines to visit his wife in 1945,
he discovered that his wife Paula was pregnant and was "living in" and having an
adulterous relationship with his brother, Ceferino Llorente. Lorenzo refused to forgive
Paula and live with her. Lorenzo returned to the United States and filed for divorce with
the Superior Court of the State of California in and for the County of San Diego. Paula
was represented by counsel, John Riley, and actively participated in the proceedings. The
Superior Court of the State of California, for the County of San Diego found all factual
allegations to be true and issued an interlocutory judgment of divorce. The divorce decree
became final in 1952. On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.
Apparently, Alicia had no knowledge of the first marriage even if they resided in the same
town as Paula, who did not oppose the marriage or cohabitation. From 1958 to 1985,
Lorenzo and Alicia lived together as husband and wife and produced three children, Raul,
Luz and Beverly, all surnamed Llorente. On March 13, 1981, Lorenzo executed a Last
Will and Testament. In the will, Lorenzo bequeathed all his property to Alicia and their
three children. On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga,
Camarines Sur, a petition for the probate and allowance of his last will and testament
wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate. The
trial court admitted the will to probate. On June 11, 1985, before the proceedings could be
terminated, Lorenzo died. Paula filed with the same court a petition for letters of
administration over Lorenzo's estate in her favor. Alicia also filed in the testate proceeding
a petition for the issuance of letters testamentary. The trial court denied Alicia's petition
and ruled that the divorce decree granted to the late Lorenzo Llorente was void and
inapplicable in the Philippines, therefore, her marriage to Lorenzo was likewise void. The
trial court appointed Paula Llorente as legal administrator of the estate of the deceased,
Lorenzo Llorente. Respondent Alicia filed with the trial court a motion for
reconsideration, but was denied. Alicia appealed to the Court of Appeals. The appellate
court promulgated its decision, affirming with modification the decision of the trial court.
The trial court declared Alicia as co-owner of whatever properties she and the deceased
Lorenzo may have acquired during the twenty-five (25) years of cohabitation. Petitioner
Paula moved for reconsideration, but was denied for lack of merit. Hence, the present
petition.
The Supreme Court reversed and set aside the ruling of the trial court and recognized as
valid and as a matter of comity the decree of divorce granted in favor of the deceased
Lorenzo N. Llorente by the Superior Court of the State of California in and for the County
of San Diego, made final on December 4, 1952. According to the Court, the "national law"
indicated in Article 16 of the Civil Code cannot possibly apply to the general American
law. There is no such law governing the validity of testamentary provisions in the United
States. Each State of the union has its own law applicable to its citizens and in force only
within the State. It can, therefore, refer to no other than the law of the State of which the
decedent was a resident and there was also no showing that the application of
the renvoi doctrine was called for or required by New York State law. The Court also said
that the clear intent of Lorenzo to bequeath his property to his second wife and children by
her was glaringly shown in the will he executed and the Court did not wish to frustrate
Lorenzo's wishes, since he was a foreigner, not covered by Philippine laws on family
rights and duties, status, condition and legal capacity. The Court remanded the cases to the
court of origin for determination of the intrinsic validity of Lorenzo N. Llorente's will and
determination of the parties' successional rights allowing proof of foreign law.
DECISION
PARDO, J p:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals 1 modifying that
of the Regional Trial Court, Camarines Sur, Branch 35, Iriga City2 declaring respondent
Alicia F. Llorente (hereinafter referred to as "Alicia"), as co-owners of whatever property
she and the deceased Lorenzo N. Llorente (hereinafter referred to as "Lorenzo") may have
acquired during the twenty-five (25) years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy
from March 10, 1927 to September 30, 1957. 3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as
"Paula") were married before a parish priest, Roman Catholic Church, in Nabua,
Camarines Sur. 4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula
stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur. 5
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate
of Naturalization No. 5579816 was issued in his favor by the United States District Court,
Southern District of New York. 6
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was
granted an accrued leave by the U.S. Navy, to visit his wife and he visited the
Philippines. 7 He discovered that his wife Paula was pregnant and was "living in" and
having an adulterous relationship with his brother, Ceferino Llorente. 8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of
Nabua as "Crisologo Llorente," with the certificate stating that the child was not legitimate
and the line for the father's name was left blank. 9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the
couple drew a written agreement to the effect that (1) all the family allowances allotted by
the United States Navy as part of Lorenzo's salary and all other obligations for Paula's
daily maintenance and support would be suspended; (2) they would dissolve their marital
union in accordance with judicial proceedings; (3) they would make a separate agreement
regarding their conjugal property acquired during their marital life; and (4) Lorenzo would
not prosecute Paula for her adulterous act since she voluntarily admitted her fault and
agreed to separate from Lorenzo peacefully. The agreement was signed by both Lorenzo
and Paula and was witnessed by Paula's father and stepmother. The agreement was
notarized by Notary Public Pedro Osabel. 10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the
Superior Court of the State of California in and for the County of San Diego. Paula was
represented by counsel, John Riley, and actively participated in the proceedings. On
November 27, 1951, the Superior Court of the State of California, for the County of San
Diego found all factual allegations to be true and issued an interlocutory judgment of
divorce. 11
On December 4, 1952, the divorce decree became final. 12
In the meantime, Lorenzo returned to the Philippines. CADHcI
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. 13 Apparently, Alicia
had no knowledge of the first marriage even if they resided in the same town as Paula,
who did not oppose the marriage or cohabitation. 14
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. 15 Their
twenty-five (25) year union produced three children, Raul, Luz and Beverly, all surnamed
Llorente. 16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized
by Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses
Francisco Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all
his property to Alicia and their three children, to wit:
"(1)I give and bequeath to my wife ALICIA R. FORTUNO exclusively
my residential house and lot, located at San Francisco, Nabua, Camarines
Sur, Philippines, including ALL the personal properties and other
movables or belongings that may be found or existing therein;
"(2)I give and bequeath exclusively to my wife Alicia R. Fortuno and to
my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente,
in equal shares, all my real properties whatsoever and wheresoever
located, specifically my real properties located at Barangay Aro-Aldao,
Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur;
Barangay Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay
Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
"(3)I likewise give and bequeath exclusively unto my wife Alicia R.
Fortuno and unto my children, Raul F. Llorente, Luz F. Llorente and
Beverly F. Llorente, in equal shares, my real properties located in Quezon
City Philippines, and covered by Transfer Certificate of Title No. 188652;
and my lands in Antipolo, Rizal, Philippines, covered by Transfer
Certificate of Title Nos. 124196 and 165188, both of the Registry of
Deeds of the province of Rizal, Philippines;
"(4)That their respective shares in the above-mentioned properties,
whether real or personal properties, shall not be disposed of, ceded, sold
and conveyed to any other persons, but could only be sold, ceded,
conveyed and disposed of by and among themselves;
"(5)I designate my wife ALICIA R. FORTUNO to be the sole executor of
this my Last Will and Testament, and in her default or incapacity of the
latter to act, any of my children in the order of age, if of age;
"(6)I hereby direct that the executor named herein or her lawful substitute
should served (sic) without bond;
"(7)I hereby revoke any and all my other wills, codicils, or testamentary
dispositions heretofore executed, signed, or published, by me;
"(8)It is my final wish and desire that if I die, no relatives of mine in any
degree in the Llorente's Side should ever bother and disturb in any
manner whatsoever my wife Alicia R. Fortunato and my children with
respect to any real or personal properties I gave and bequeathed
respectively to each one of them by virtue of this Last Will and
Testament." 17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur,
a petition for the probate and allowance of his last will and testament wherein Lorenzo
moved that Alicia be appointed Special Administratrix of his estate. 18
On January 18, 1984, the trial court denied the motion for the reason that the testator
Lorenzo was still alive. 19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the
will to probate. 20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died. 21
On September 4, 1985, Paula filed with the same court a petition 22 for letters of
administration over Lorenzo's estate in her favor. Paula contended (1) that she was
Lorenzo's surviving spouse, (2) that the various property were acquired during their
marriage, (3) that Lorenzo's will disposed of all his property in favor of Alicia and her
children, encroaching on her legitime and 1/2 share in the conjugal property. 23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a
petition for the issuance of letters testamentary. 24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due
course to Paula's petition in Sp. Proc. No. IR-888. 25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol
Star". 26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus: ISaCTE
"Wherefore, considering that this court has so found that the divorce
decree granted to the late Lorenzo Llorente is void and inapplicable in the
 Philippines, therefore the marriage he contracted with Alicia Fortunato on
January 16, 1958 at Manila is likewise void. This being so the petition of
Alicia F. Llorente for the issuance of letters testamentary is denied.
Likewise, she is not entitled to receive any share from the estate even if
the will especially said so her relationship with Lorenzo having gained
the status of paramour which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente,
meritorious, and so declares the intrinsic disposition of the will of
Lorenzo Llorente dated March 13, 1981 as void and declares her entitled
as conjugal partner and entitled to one-half of their conjugal properties,
and as primary compulsory heir, Paula T. Llorente is also entitled to one-
third of the estate and then one-third should go to the illegitimate
children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to
partition in equal shares and also entitled to the remaining free portion in
equal shares.
"Petitioner, Paula Llorente is appointed legal administrator of the estate
of the deceased, Lorenzo Llorente. As such let the corresponding letters
of administration issue in her favor upon her filing a bond in the amount
(sic) of P100,000.00 conditioned for her to make a return to the court
within three (3) months a true and complete inventory of all goods,
chattels, rights, and credits, and estate which shall at any time come to her
possession or to the possession of any other person for her, and from the
proceeds to pay and discharge all debts, legacies and charges on the same,
or such dividends thereon as shall be decreed or required by this court; to
render a true and just account of her administration to the court within
one (1) year, and at any other time when required by the court and to
perform all orders of this court by her to be performed.
"On the other matters prayed for in respective petitions for want of
evidence could not be granted.
"SO ORDERED." 27
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted
decision. 28
On September 14, 1987, the trial court denied Alicia's motion for reconsideration but
modified its earlier decision, stating that Raul and Luz Llorente are not children
"legitimate or otherwise" of Lorenzo since they were not legally adopted by
him. 29 Amending its decision of May 18, 1987, the trial court declared Beverly Llorente
as the only illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and
one-third (1/3) of the free portion of the estate. 30
On September 28, 1987, respondent appealed to the Court of Appeals. 31
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with
modification the decision of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with
the MODIFICATION that Alicia is declared as co-owner of whatever
properties she and the deceased may have acquired during the twenty-five
(25) years of cohabitation.
"SO ORDERED." 32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. 33
On March 21, 1996, the Court of Appeals, 34 denied the motion for lack of merit.
Hence, this petition. 35
The Issue
Stripping the petition of its legalese and sorting through the various arguments
raised, 36 the issue is simple. Who are entitled to inherit from the late Lorenzo N.
Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial
court for ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long before and at
the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will;
and (4) death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign
law.
The Civil Code clearly provides:
"ARTICLE 15.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. SCcHIE
"ARTICLE 16.Real property as well as personal property is subject to the
law of the country where it is situated.
"However, intestate and testamentary succession, both with respect to the
order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under
consideration,whatever may be the nature of the property and regardless
of the country wherein said property may be found." (italics ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other fact, they must be alleged and
proved. 37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit
the foreign law. The Court of Appeals and the trial court called to the fore
the renvoi doctrine, where the case was "referred back" to the law of the decedent's
domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently
proven, in the same breath it made the categorical, albeit equally unproven statement that
"American law" follows the 'domiciliary theory' hence, Philippine law applies when
determining the validity of Lorenzo's will. 38
First, there is no such thing as one American law. The "national law" indicated in Article
16 of the Civil Code cannot possibly apply to general American law. There is no such law
governing the validity of testamentary provisions in the United States. Each State of the
union has its own law applicable to its citizens and in force only within the State. It can
therefore refer to no other than the law of the State of which the decedent was a
resident. 39 Second,there is no showing that the application of the renvoi doctrine is called
for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in
favor of Alice, who in the trial court's opinion was a mereparamour. The trial court threw
the will out, leaving Alice, and her two children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2)
of whatever property she and Lorenzo acquired during their cohabitation, applying Article
144 of the Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will, already
probated as duly executed in accordance with the formalities of Philippine law, is
fatal, especially in light of the factual and legal circumstances here obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr. 40 we held 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. In the same case, the Court ruled that aliens may obtain divorces abroad,
provided they are valid according to their national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals, 41 that once proven
that respondent was no longer a Filipino citizen when he obtained the divorce from
petitioner, the ruling in Van Dorn would become applicable and petitioner could "very
well lose her right to inherit" from him.
In Pilapil v. Ibay-Somera, 42 we recognized the divorce obtained by the respondent in his
country, the Federal Republic of Germany. There, we stated that divorce and its legal
effects may be recognized in the Philippines insofar as respondent is concerned in view of
the nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be
reversed. 43 We hold that the divorce obtained by Lorenzo H. Llorente from his first wife
Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects
of this divorce (as to the succession to the estate of the decedent) are matters best left to
the determination of the trial court.
Validity of the Will
The Civil Code provides:
"ARTICLE 17.The forms and solemnities of contracts, wills, and other
public instruments shall be governed by the laws of the country in which
they are executed.
 "When the acts referred to are executed before the diplomatic or consular
officials of the Republic of the Philippines in a foreign country, the
solemnities established by Philippine laws shall be observed in their
execution." (italics ours)
The clear intent of Lorenzo to bequeath his property to his second wife and children by her
is glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he
was a foreigner, not covered by our laws on "family rights and duties, status, condition and
legal capacity." 44
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best
proved by foreign law which must be pleaded and proved. Whether the will was executed
in accordance with the formalities required is answered by referring to Philippine law. In
fact, the will was duly probated.HAICcD
As a guide however, the trial court should note that whatever public policy or good
customs may be involved in our system of legitimes, Congress did not intend to extend the
same to the succession of foreign nationals. Congress specifically left the amount of
successional rights to the decedent's national law. 45
Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.
R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and
RECOGNIZES as VALID the decree of divorce granted in favor of the deceased Lorenzo
N. Llorente by the Superior Court of the State of California in and for the County of San
Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the
intrinsic validity of Lorenzo N. Llorente's will and determination of the parties'
successional rights allowing proof of foreign law with instructions that the trial court shall
proceed with all deliberate dispatch to settle the estate of the deceased within the
framework of the Rules of Court.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
FIRST DIVISION
[G.R. No. 154380. October 5, 2005.]
8. REPUBLIC OF THE PHILIPPINES, petitioner, vs. CIPRIANO
ORBECIDO III, respondent.
DECISION
QUISUMBING, J p:
Given a valid marriage between two Filipino citizens, where one party is later naturalized
as a foreign citizen and obtains a valid divorce decree capacitating him or her to remarry,
can the Filipino spouse likewise remarry under Philippine law?
Before us is a case of first impression that behooves the Court to make a definite ruling on
this apparently novel question, presented as a pure question of law.
In this petition for review, the Solicitor General assails the Decision 1 dated May 15,
2002, of the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and
its Resolution 2 dated July 4, 2002 denying the motion for reconsideration. The court a
quo had declared that herein respondent Cipriano Orbecido III is capacitated to remarry.
The fallo of the impugned Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art.
26 of the Family Code and by reason of the divorce decree obtained
against him by his American wife, the petitioner is given the capacity to
remarry under the Philippine Law.
IT IS SO ORDERED. 3
The factual antecedents, as narrated by the trial court, are as follows.
On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United
Church of Christ in the Philippines in Lam-an, Ozamis City. Their marriage was blessed
with a son and a daughter, Kristoffer Simbortriz V. Orbecido and Lady Kimberly V.
Orbecido.
In 1986, Cipriano's wife left for the United States bringing along their son Kristoffer. A
few years later, Cipriano discovered that his wife had been naturalized as an American
citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce
decree and then married a certain Innocent Stanley. She, Stanley and her child by him
currently live at 5566 A. Walnut Grove Avenue, San Gabriel, California.
Cipriano thereafter filed with the trial court a petition for authority to remarry invoking
Paragraph 2 of Article 26 of the Family Code. No opposition was filed. Finding merit in
the petition, the court granted the same. The Republic, herein petitioner, through the
Office of the Solicitor General (OSG), sought reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER
ARTICLE 26 OF THE FAMILY CODE 4
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to
the instant case because it only applies to a valid mixed marriage; that is, a marriage
celebrated between a Filipino citizen and an alien. The proper remedy, according to the
OSG, is to file a petition for annulment or for legal separation. 5 Furthermore, the OSG
argues there is no law that governs respondent's situation. The OSG posits that this is a
matter of legislation and not of judicial determination. 6
For his part, respondent admits that Article 26 is not directly applicable to his case but
insists that when his naturalized alien wife obtained a divorce decree which capacitated
her to remarry, he is likewise capacitated by operation of law pursuant to Section 12,
Article II of the Constitution. 7
At the outset, we note that the petition for authority to remarry filed before the trial court
actually constituted a petition for declaratory relief. In this connection, Section 1, Rule 63
of the Rules of Court provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
Section 1.Who may file petition Any person interested under a deed,
will, contract or other written instrument, or whose rights are affected by
a statute, executive order or regulation, ordinance, or other governmental
regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or
duties, thereunder.
xxx xxx xxx
The requisites of a petition for declaratory relief are: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3)
that the party seeking the relief has a legal interest in the controversy; and (4) that the issue
is ripe for judicial determination.8
This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between
two Filipino citizens where one later acquired alien citizenship, obtained a divorce decree,
and remarried while in the U.S.A. The interests of the parties are also adverse, as
petitioner representing the State asserts its duty to protect the institution of marriage while
respondent, a private citizen, insists on a declaration of his capacity to remarry.
Respondent, praying for relief, has legal interest in the controversy. The issue raised is
also ripe for judicial determination inasmuch as when respondent remarries, litigation
ensues and puts into question the validity of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code
apply to the case of respondent? Necessarily, we must dwell on how this provision had
come about in the first place, and what was the intent of the legislators in its enactment?
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209,
otherwise known as the "Family Code," which took effect on August 3, 1988. Article 26
thereof states:
All marriages solemnized outside the Philippines in accordance with the
laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order
No. 227 was likewise signed into law, amending Articles 26, 36, and 39 of the Family
Code. A second paragraph was added to Article 26. As so amended, it now provides:
ART. 26.All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the
alien spouse capacitating him or her to remarry, the Filipino spouse shall
have capacity to remarry under Philippine law. (Emphasis supplied)
On its face, the foregoing provision does not appear to govern the situation presented by
the case at hand. It seems to apply only to cases where at the time of the celebration of the
marriage, the parties are a Filipino citizen and a foreigner. The instant case is one where at
the time the marriage was solemnized, the parties were two Filipino citizens, but later on,
the wife was naturalized as an American citizen and subsequently obtained a divorce
granting her capacity to remarry, and indeed she remarried an American citizen while
residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings 9 on the Family Code, the Catholic
Bishops' Conference of the Philippines (CBCP) registered the following objections to
Paragraph 2 of Article 26:
1.The rule is discriminatory. It discriminates against those whose spouses
are Filipinos who divorce them abroad. These spouses who are
divorced will not be able to re-marry, while the spouses of
foreigners who validly divorce them abroad can.
2.This is the beginning of the recognition of the validity of divorce even
for Filipino citizens. For those whose foreign spouses validly
divorce them abroad will also be considered to be validly divorced
here and can re-marry. We propose that this be deleted and made
into law only after more widespread consultation. (Emphasis
supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of
Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil
Code Revision Committee, is to avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after obtaining a divorce, is no longer married to
the Filipino spouse. AETcSa
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v.
Romillo, Jr. 10 The Van Dorn case involved a marriage between a Filipino citizen and a
foreigner. The Court held therein that a divorce decree validly obtained by the alien spouse
is valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry
under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the
marriage, the parties were Filipino citizens, but later on, one of them obtains a foreign
citizenship by naturalization?
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of
Appeals. 11 In Quita, the parties were, as in this case, Filipino citizens when they got
married. The wife became a naturalized American citizen in 1954 and obtained a divorce
in the same year. The Court therein hinted, by way ofobiter dictum, that a Filipino
divorced by his naturalized foreign spouse is no longer married under Philippine law and
can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason, we
hold that Paragraph 2 of Article 26 should be interpreted to include cases involving parties
who, at the time of the celebration of the marriage were Filipino citizens, but later on, one
of them becomes naturalized as a foreign citizen and obtains a divorce decree. The
Filipino spouse should likewise be allowed to remarry as if the other party were a
foreigner at the time of the solemnization of the marriage. To rule otherwise would be to
sanction absurdity and injustice. Where the interpretation of a statute according to its exact
and literal import would lead to mischievous results or contravene the clear purpose of the
legislature, it should be construed according to its spirit and reason, disregarding as far as
necessary the letter of the law. A statute may therefore be extended to cases not within the
literal meaning of its terms, so long as they come within its spirit or intent. 12
If we are to give meaning to the legislative intent to avoid the absurd situation where the
Filipino spouse remains married to the alien spouse who, after obtaining a divorce is no
longer married to the Filipino spouse, then the instant case must be deemed as coming
within the contemplation of Paragraph 2 of Article 26. AHDTIE
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of
Article 26 as follows:
1.There is a valid marriage that has been celebrated between a Filipino
citizen and a foreigner; and
2.A valid divorce is obtained abroad by the alien spouse capacitating him
or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien
spouse capacitating the latter to remarry.
In this case, when Cipriano's wife was naturalized as an American citizen, there was still a
valid marriage that has been celebrated between her and Cipriano. As fate would have it,
the naturalized alien wife subsequently obtained a valid divorce capacitating her to
remarry. Clearly, the twin requisites for the application of Paragraph 2 of Article 26 are
both present in this case. Thus Cipriano, the "divorced" Filipino spouse, should be allowed
to remarry.
We are also unable to sustain the OSG's theory that the proper remedy of the Filipino
spouse is to file either a petition for annulment or a petition for legal separation.
Annulment would be a long and tedious process, and in this particular case, not even
feasible, considering that the marriage of the parties appears to have all the badges of
validity. On the other hand, legal separation would not be a sufficient remedy for it would
not sever the marriage tie; hence, the legally separated Filipino spouse would still remain
married to the naturalized alien spouse.
However, we note that the records are bereft of competent evidence duly submitted by
respondent concerning the divorce decree and the naturalization of respondent's wife. It is
settled rule that one who alleges a fact has the burden of proving it and mere allegation is
not evidence. 13
Accordingly, for his plea to prosper, respondent herein must prove his allegation that his
wife was naturalized as an American citizen. Likewise, before a foreign divorce decree
can be recognized by our own courts, the party pleading it must prove the divorce as a fact
and demonstrate its conformity to the foreign law allowing it. 14 Such foreign law must
also be proved as our courts cannot take judicial notice of foreign laws. Like any other
fact, such laws must be alleged and proved. 15 Furthermore, respondent must also show
that the divorce decree allows his former wife to remarry as specifically required in Article
26. Otherwise, there would be no evidence sufficient to declare that he is capacitated to
enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the
Family Code (E.O. No. 209, as amended by E.O. No. 227), should be interpreted to allow
a Filipino citizen, who has been divorced by a spouse who had acquired foreign
citizenship and remarried, also to remarry. However, considering that in the present
petition there is no sufficient evidence submitted and on record, we are unable to declare,
based on respondent's bare allegations that his wife, who was naturalized as an American
citizen, had obtained a divorce decree and had remarried an American, that respondent is
now capacitated to remarry. Such declaration could only be made properly upon
respondent's submission of the aforecited evidence in his favor. CcAHEI
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The
assailed Decision dated May 15, 2002, and Resolution dated July 4, 2002, of the Regional
Trial Court of Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.
EN BANC
[G.R. No. 46631. November 16, 1939.]
9. IDONAH SLADE PERKINS, petitioner, vs. ARSENIO P. DIZON,
Judge of First Instance of Manila, EUCENE ARTHUR PERKINS,
and BENGUET CONSOLIDATED MINING
COMPANY, respondents.
Alva J. Hill; for petitioner.
Ross, Lawrence, Selph & Carrascoso; for respondent Judge and Benguet
Consolidated Mining Company.
DeWitt, Perkins & Ponce Enrile; for respondent Perkins.
 DECISION
MORAN, J p:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the
Court of First Instance of Manila against the Benguet Consolidated Mining Company
for dividends amounting to P71,379.90 on 52,874 shares of stock registered in his
name, payment of which was being withheld by the company; and, for the recognition
of his right to the control and disposal of said shares, to the exclusion of all others. To
the complaint, the company filed its answer alleging, by way of defense, that the
withholding of such dividends and the non-recognition of plaintiff's right to the
disposal and control of the shares were due to certain demands made with respect to
said shares by the petitioner herein, Idonah Slade Perkins, and by one George H.
Engelhard. The answer prays that the adverse claimants be made parties to the action
and served with notice thereof by publication, and that thereafter all such parties be
required to interplead and settle the rights among themselves. On September 5, 1938,
the trial court ordered respondent Eugene Arthur Perkins to include in his complaint as
parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The
complaint was accordingly amended and in addition to the relief prayed for in the
original complaint,-respondent Perkins prayed that petitioner Idonah Slade Perkins and
George H. Engelhard be adjudged without interest in the shares of stock in question
and excluded from any claim they assert thereon. Thereafter, summons by publication
were served upon the non-resident defendants, Idonah Slade Perkins and George H.
Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard
filed his answer to the amended complaint, and on December 10, 1938, petitioner
Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue,
motion to quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction
of the lower court over her person. Petitioner's objection, motion and demurrer having
been overruled as well as her motion for reconsideration of the order of denial, she
now brought the present petition for certiorari, praying that the summons by
publication issued against her be declared null and void, and that, with respect to her,
respondent judge be permanently prohibited from taking any action on the case.
The controlling issue here involved is whether or not the Court of First Instance
of Manila has acquired jurisdiction over the person of the present petitioner as a non-
resident defendant, or, notwithstanding the want of such jurisdiction, whether or not
said court may validly try the case. The parties have filed lengthy memorandums
relying on numerous authorities, but the principles governing the question are well
settled in this jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident
defendant is sued in the Philippine courts and it appears, by the complaint or by
affidavits, that the action relates to real or personal property within the Philippines in
which said defendant has or claims a lien or interest, actual or contingent, or in which
the relief demanded consists, wholly or in part, in excluding such person from any
interest therein, service of summons may be made by publication.
We have fully explained the meaning of this provision in El Banco Espaol
Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the following rules:
(1)In order that the court may validly try a case, it must have jurisdiction over
the subject-matter and over the persons of the parties. Jurisdiction over the subject-
matter is acquired by concession of the sovereign authority which organizes a court
and determines the nature and extent of its powers in general and thus fixes its
jurisdiction with reference to actions which it may entertain and the relief it may grant.
Jurisdiction over the persons of the parties is acquired by their voluntary appearance in
court and their submission to its authority, or by the coercive power of legal process
exerted over their persons.
(2)When the defendant is a non-resident and refuses to appear voluntarily, the
court cannot acquire jurisdiction over his person even if the summons be served by
publication, for he is beyond the reach of judicial process. No tribunal established by
one State can extend its process beyond its territory so as to subject to its decisions
either persons or property located in another State. "There are many expressions in the
American reports from which it might be inferred that the court acquires personal
jurisdiction over the person of the defendant by publication and notice; but such is not
the case. In truth, the proposition that jurisdiction over the person of a non-resident
cannot be acquired by publication and notice was never clearly understood even in the
American courts until after the decision had been rendered by the Supreme Court of
the United States in the leading case of Pennoyer v. Neff (95 U. S., 714; 24 Law. ed.,
565). In the light of that decision, and of other decisions which have subsequently been
rendered in that and other courts, the proposition that jurisdiction over the person
cannot be thus acquired by publication and notice is no longer open to question; and it
is now fully established that a personal judgment upon constructive or substituted
service against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is
rendered; and the only exception seems to be found in the case where the non-resident
defendant has expressly or impliedly consented to the mode of service. (Note to Raher
vs. Raher, 35 L. R. A. [N. S.], 292; see also 5 L. R. A. 585; 35 L. R. A. L. R. S.], 312.)
(3)The general rule, therefore, is that a suit against a non-resident cannot be
entertained by a Philippine court. Where, however, the action is in rem or quasi in rem
in connection with property located in the Philippines, the court acquires jurisdiction
over the res, and its jurisdiction over the person of the non-resident is non-essential. In
order that the court may exercise power over the res, it is not necessary that the court
should take actual custody of the property, potential custody thereof being sufficient.
There is potential custody when, from the nature of the action brought, the power of
the court over the property is impliedly recognized by law. "An illustration of what we
term potential jurisdiction over the res, is found in the proceeding to register the title of
land under our system for the registration of land. Here the court, without taking actual
physical control over the property, assumes, at the instance of some person claiming to
be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title
in favor of the petitioner against all the world."
(4)As before stated, in an action in rem or quasi in rem against a non-resident
defendant, jurisdiction over his person is non-essential, and if the law requires in such
case that the summons upon the defendant be served by publication, it is merely to
satisfy the constitutional requirement of due process. If any be said, in this connection,
that "many reported cases can be cited in which it is assumed that the question of the
sufficiency of publication or notice in a case of this kind is a question affecting the
jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by
virtue of the publication. This phraseology was undoubtedly originally adopted by the
court because of the analogy between service by publication and personal service of
process upon the defendant; and, as has already been suggested, prior to the decision of
Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of
service was obscure. It is accordingly not surprising that the modes of expression
which had already been mounded into legal tradition before that case was decided have
been brought down to the present day. But it is clear that the legal principle here
involved is not affected by the peculiar language in which the courts have expounded
their ideas."
The reason for the rule that Philippine courts cannot acquire jurisdiction over
the person of a non-resident, as laid down by the Supreme Court of the United States
in Pennoyer v. Neff, supra, may be found in a recognized principle of public law to the
effect that "no State can exercise direct jurisdiction and authority over persons or
property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The
several States are of equal dignity and authority, and the independence of one implies
the exclusion of power from all others. And so it is laid down by jurists, as an
elementary principle, that the laws of one State have no operation outside of its
territory, except so far as is allowed by comity; and that no tribunal established by it
can extend its process beyond that territory so as to subject either persons or property
to its decisions. Any exertion of authority of this sort beyond this limit,' says Story, 'is
a mere nullity, and incapable of binding such persons or property in any other
tribunals.' Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U. S., 714; 24 Law. ed.,
565, 568-569.)
When, however, the action relates to property located in the Philippines, the
Philippine courts may validly try the case, upon the principle that a "State, through its
tribunals, may subject property situated within its limits owned by non-residents to the
payment of the demand of its own citizens against them; and the exercise of this
jurisdiction in no respect infringes upon the sovereignty of the State where the owners
are domiciled. Every State owes protection to its own citizens; and, when non-
residents deal with them, it is a legitimate and just exercise of authority to hold and
appropriate any property owned by such non-residents to satisfy the claims of its
citizens. It is in virtue of the State's jurisdiction over the property of the non-resident
situated within its limits that its tribunals can inquire into the non-resident's obligations
to its own citizens, and the inquiry can then be carried only to the extent necessary to
control the disposition of the property. If the non-resident has no property in the State,
there is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene
Arthur Ferkins in his amended complaint against the petitioner, Idonah Slade Perkins,
seeks to exclude her from any interest in a property located in the Philippines. That
property consists in certain shares of stock of the Benguet Consolidated Mining
Company, a sociedad anonima, organized in the Philippines under the provisions of
the Spanish Code of Commerce, with its principal office in the City of Manila and
which conducts its mining activities therein. The situs of the shares is in the
jurisdiction where the corporation is created, whether the certificates evidencing the
ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia
Corporations, Permanent ed., Vol. 11, p. 95). Under these circumstances, we hold that
the action thus brought is quasi in rem, for, while the judgment that may be rendered
therein is not strictly a judgment in rem, "it fixes and settles the title to the property in
controversy and to that extent partakes of the nature of the judgment in rem." (50 C. J.,
p. 503). As held by the Supreme Court of the United States in Pennoyer v. Neff
(supra):
"It is true that, in a strict sense, a proceeding in rem is one taken
directly against property, and has for its object the disposition of the
property, without reference to the title of individual claimants; but, in a
larger and more general senses the terms are applied to actions between
parties, where the direct object is to reach and dispose of property owned
by them, or of some interest therein."
The action being quasi in rem, the Court of First Instance of Manila has
jurisdiction to try the same even if it can acquire no jurisdiction over the person of the
non-resident. In order to satisfy the constitutional requirement of due process,
summons has been served upon her by publication. There is no question as to the
adequacy of the publication made nor as to the mailing of the order of publication to
the petitioner's last known place of residence in the United States. But, of course, the
action being quasi in rem and notice having been made by publication, the relief that
may be granted by the Philippine court must be confined to the res, it having no
jurisdiction to render a personal judgment against the non-resident. In the amended
complaint filed by Eugene Arthur Perkins, no money judgment or other relief in
personam is prayed for against the petitioner. The only relief sought therein is that she
be declared to be without any interest in the shares in controversy and that she be
excluded from any claim thereto.
Petitioner contends that the proceeding instituted against her is one of
interpleading and is therefore an action in personam. Section 120 of our Code of Civil
Procedure provides that whenever conflicting claims are or may he made upon a
person for or relating to personal property, or the performance of an obligation or any
portion thereof, so that he may be made subject to several actions by different persons,
such person may bring an action against the conflicting claimants, disclaiming
personal interest in the controversy, and the court may order them to interplead with
one another and litigate their several claims among themselves, and thereupon proceed
to determine their several claims. Here, the Benguet Consolidated Mining Company, in
its answer to the complaint filed by Eugene Arthur Perkins, averred that in connection
with the shares of stock in question, conflicting claims were being made upon it by
said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named
George H. Engelhard, and prayed that these last two be made parties to the action and
served with summons by publication, so that the three claimants may litigate their
conflicting claims and settle their rights among themselves. The court has not issued an
order compelling the conflicting claimants to interplead with one another and litigate
their several claims among themselves, but instead ordered the plaintiff to amend his
complaint including the other two claimants as parties defendant. The plaintiff did so,
praying that the new defendants thus joined be excluded from any interest in the shares
in question, and it is upon this amended complaint that the court ordered the service of
the summons by publication. It is, therefore, clear that the publication of the summons
was ordered not in virtue of an interpleading, but upon the filing of the amended
complaint wherein an action quasi in remis alleged.
Had not the complaint been amended, including the herein petitioner as an
additional defendant, and had the court, upon the filing of the answer of the Benguet
Consolidated Mining Company, issued an order under section 120 of the Code of Civil
Procedure, calling the conflicting claimants into court and compelling them to
interplead with one another, such order could not perhaps have validly been served by
publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the
proceeding would be purely one of interpleading. Such proceeding is a personal action,
for it merely seeks to call conflicting claimants into court so that they may interplead
and litigate their several claims among themselves, and no specific relief is prayed for
against them, as the interpleader simply disclaims any personal interest in the
controversy. What would be the situation if, after the claimants have appeared in court,
one of them pleads ownership of the personal property located in the Philippines and
seeks to exclude a non-resident claimant from any interest therein, is a question which
we do not decide now. Suffice it to say that here the service of the summons by
publication was ordered by the lower court by virtue of an action quasi in rem against
the non-resident defendant.
Respondents contend that, as the petitioner in the lower court has pleaded res
adjudicata, lis pendens and lack of jurisdiction over the subject-matter, she has
submitted herself to its jurisdiction. We have noticed, however, that these pleas have
been made not as independent grounds for relief, but merely as additional arguments in
support of her contention that the lower court had no jurisdiction over her person. In
other words, she claimed that the lower court had no jurisdiction over her person not
only because she is a non-resident, but also because the court had no jurisdiction over
the subject-matter of the action and that the issues therein involved have already been
decided by the New York court and are being relitigated in the California court.
Although this argument is obviously erroneous, as neither jurisdiction over the subject-
matter nor res adjudicata nor lis pendenshas anything to do with the question of
jurisdiction over her person, we believe and so hold that the petitioner has not, by such
erroneous argument, submitted herself to the jurisdiction of the court. Voluntary
appearance cannot be implied from either a mistaken or superfluous reasoning but
from the nature of the relief prayed for.
For all of the foregoing, petition is hereby denied, with costs against petitioner.
Avancea, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.
SECOND DIVISION
[G.R. No. 103493. June 19, 1997.]
10. PHILSEC INVESTMENT CORPORATION, BPI-
INTERNATIONAL FINANCE LIMITED, and ATHONA
HOLDINGS, N.V., petitioners,vs. THE HONORABLE COURT OF
APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT,
PRECIOSO R. PERLAS and WILLIAM H. CRAIG, respondents.
Padilla Law Office for petitioners.
Salonga Hernandez & Mendoza for Guevarra.
Oreta, Suarez & Narvasa Law Firm for private respondents.
DECISION
MENDOZA, J p:
This case presents for determination the conclusiveness of a foreign judgment upon the
rights of the parties under the same cause of action asserted in a case in our local court.
Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in
view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on
the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of
Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from
petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00
secured by shares of stock owned by Ducat with a market value of P14,088,995.00. In
order to facilitate the payment of the loans, private respondent 1488, Inc., through its
president, private respondent Drago Daic, assumed Ducat's obligation under an
Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with
Vendor's Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called
ATHONA) a parcel of land in Harris County, Texas, U.S.A. for US$2,807,209.02, while
PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00
as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by
means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently,
upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA
released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in
their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire
amount covered by the note became due and demandable. Accordingly, on October 17,
1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA and ATHONA
in the United States for payment of the balance of US$307,209.02 and for damages for
breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting
the marketability of the shares of stock delivered to 1488, Inc. under the Agreement.
Originally instituted in the United States District Court of Texas, 165th Judicial District,
where it was docketed as Case No. 85-57746, the venue of the action was later transferred
to the United States District Court for the Southern District of Texas, where 1488, Inc.
filed an amended complaint, reiterating its allegations in the original complaint. ATHONA
filed an answer with counterclaim, impleading private respondents herein as
counterdefendants, for allegedly conspiring in selling the property at a price over its
market value. Private respondent Perlas, who had allegedly appraised the property, was
later dropped as counterdefendant. ATHONA sought the recovery of damages and excess
payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the
property. For their part, PHILSEC and AYALA filed a motion to dismiss on the ground of
lack of jurisdiction over their person, but, as their motion was denied, they later filed a
joint answer with counterclaim against private respondents and Edgardo V. Guevarra,
PHILSEC's own former president, for the rescission of the sale on the ground that the
property had been over-valued. On March 13, 1990, the United States District Court for
the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on
the ground that it was "frivolous and [was] brought against him simply to humiliate and
embarrass him." For this reason, the U.S. court imposed so-called Rule 11 sanctions on
PHILSEC and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint "For Sum of Money with Damages and Writ of Preliminary
Attachment" against private respondents in the Regional Trial Court of Makati, where it
was docketed as Civil Case No. 16563. The complaint reiterated the allegation of
petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United
States District Court of Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true value of US$800,000.00.
Petitioners claimed that, as a result of private respondents' fraudulent
misrepresentations, ATHONA, PHILSEC and AYALA were induced to enter into the
Agreement and to purchase the Houston property. Petitioners prayed that private
respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00
and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1)
litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the
U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to
state a cause of action. Ducat contended that the alleged overpricing of the property
prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which
were not parties to the sale and whose only participation was to extend financial
accommodation to ATHONA under a separate loan agreement. On the other hand, private
respondents 1488, Inc. and its president Daic filed a joint "Special Appearance and
Qualified Motion to Dismiss," contending that the action being in personam,
extraterritorial service of summons by publication was ineffectual and did not vest the
court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and
Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the
evidentiary requirements of the controversy may be more suitably tried before the
forum of the litis pendentia in the U.S., under the principle in private international law
of forum non conveniens," even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On
March 9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic
on the ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is the
validity of the sale of real property in the United States between
defendant 1488 and plaintiff ATHONA is the subject matter of the
pending case in the United States District Court which, under the doctrine
offorum non conveniens, is the better (if not exclusive) forum to litigate
matters needed to determine the assessment and/or fluctuations of the fair
market value of real estate situated in Houston, Texas, U.S.A. from the
date of the transaction in 1983 up to the present and verily, . . . (emphasis
by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they
were non-residents and the action was not an action in rem or quasi in rem, so that
extraterritorial service of summons was ineffective. The trial court subsequently lifted the
writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying
the principle of litis pendentia and forum non conveniens and in ruling that it had no
jurisdiction over the defendants, despite the previous attachment of shares of stocks
belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No.
16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the
defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL's
former name) and the Athona Holdings, NV. The case at bar involves the
same parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc.
In the U.S. case, breach of contract and the promissory notes are sued
upon by 1488 Inc., which likewise alleges fraud employed by herein
appellants, on the marketability of Ducat's securities given in exchange
for the Texas property. The recovery of a sum of money and damages, for
fraud purportedly committed by appellees, in overpricing the Texas land,
constitute the action before the Philippine court, which likewise stems
from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for
the recovery of a sum of money for alleged tortious acts, so that service of summons by
publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic.
The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was
likewise affirmed by the Court of Appeals on the ground that the case can be better tried
and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve
foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas,
U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the
buyer, Athona Holdings, a foreign corporation which does not claim to be doing business
in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is
also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed in
Texas, U.S.A.
In their present appeal, petitioners contend that:
1.THE DOCTRINE OF PENDENCY OF ANOTHER ACTION
BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS
PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN
AFFIRMING THE TRIAL COURT'S DISMISSAL OF THE CIVIL
ACTION IS NOT APPLICABLE.
2.THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED
UPON BY THE COURT OF APPEALS IN AFFIRMING THE
DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS
LIKEWISE NOT APPLICABLE.
3.AS A COROLLARY TO THE FIRST TWO GROUNDS, THE
COURT OF APPEALS ERRED IN NOT HOLDING THAT
PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT
THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS
 RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS
EVERY REASON TO PROTECT AND VINDICATE PETITIONERS'
RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT
PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT
ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case
was pending in the Court of Appeals, the United States District Court for the Southern
District of Texas rendered judgment 5 in the case before it. The judgment, which was in
favor of private respondents, was affirmed on appeal by the Circuit Court of
Appeals. 6 Thus, the principal issue to be resolved in this case is whether Civil Case No.
16536 is barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a
judgment admitting the foreign decision is not necessary. On the other hand, petitioners
argue that the foreign judgment cannot be given the effect of res judicata without
giving them an opportunity to impeach it on grounds stated in Rule 39, 50 of the
Rules of Court, to wit: "want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact."
Petitioners' contention is meritorious. While this court has given the effect of res
judicata to foreign judgments in several cases, 7 it was after the parties opposed to
the judgment had been given ample opportunity to repel them on grounds allowed
under the law. 8 It is not necessary for this purpose to initiate a separate action or
proceeding for enforcement of the foreign judgment. What is essential is that there is
opportunity to challenge the foreign judgment, in order for the court to properly
determine its efficacy. This is because in THIS jurisdiction, with respect to actions in
personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facie evidence of the justness of the claim of a party and, as such, is
subject to proof to the contrary. 9 Rule 39, 50 provides:
SEC. 50.Effect of foreign judgments. The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the
judgment is as follows:
(a)In case of a judgment upon a specific thing, the judgment is conclusive
upon the title to the thing;
(b)In case of a judgment against a person, the judgment is presumptive
evidence of a right as between the parties and their successors in interest
by a subsequent title; but the judgment may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of
Canton, Ltd., 10 which private respondents invoke for claiming conclusive effect for the
foreign judgment in their favor, the foreign judgment was considered res judicata because
this Court found "from the evidence as well as from appellant's own pleadings" 11 that the
foreign court did not make a "clear mistake of law or fact" or that its judgment was void
for want of jurisdiction or because of fraud or collusion by the defendants. Trial had been
previously held in the lower court and only afterward was a decision rendered, declaring
the judgment of the Supreme Court of the State of Washington to have the effect of res
judicata in the case before the lower court. In the same vein, in Philippine International
Shipping Corp. v. Court of Appeals, 12 this court held that the foreign judgment was valid
and enforceable in the Philippines there being no showing that it was vitiated by want of
notice to the party, collusion, fraud or clear mistake of law or fact. The prima facie
presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge
the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the
rights of private respondents. The proceedings in the trial court were summary. Neither the
trial court nor the appellate court was even furnished copies of the pleadings in the U.S.
court or apprised of the evidence presented thereat, to assure a proper determination of
whether the issues then being litigated in the U.S. court were exactly the issues raised in
this case such that the judgment that might be rendered would constitute res judicata. As
the trial court stated in its disputed order dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of this
case and the pending case in the United States are not identical, precisely
the Order of January 26, 1988 never found that the causes of action of
this case and the case pending before the USA Court, were identical.
(emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners' action is
barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the
U.S. court over their persons, but their claim was brushed aside by both the trial court and
the Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for
the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed
as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were
suspended because of the pendency of this case. To sustain the appellate court's ruling that
the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would
effectively preclude petitioners from repelling the judgment in the case for enforcement.
An absurdity could then arise: a foreign judgment is not subject to challenge by the
plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case, but it
may be opposed by the defendant if the foreign judgment is sought to be enforced against
him in a separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the
jurisdiction where affirmative relief is being sought. Hence, in the interest
of justice, the complaint should be considered as a petition for the
recognition of the Hongkong judgment under Section 50 (b), Rule 39 of
the Rules of Court in order that the defendant, private respondent herein,
may present evidence of lack of jurisdiction, notice, collusion, fraud or
clear mistake of fact and law, if applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No.
92-1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial
Court of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge
Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge
Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching
the foreign judgment and only in the event they succeed in doing so may they proceed
with their action against private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the
principle of forum non conveniens. First, a motion to dismiss is limited to the grounds
under Rule 16, 1, which does not include forum non conveniens. 16 The propriety of
dismissing a case based on this principle requires a factual determination, hence, it is more
properly considered a matter of defense. Second, while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so only after
"vital facts are established, to determine whether special circumstances" require the court's
desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed to
consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter's
debt which was the object of the transaction under litigation. The trial court arbitrarily
dismissed the case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in
personam and summons were served by extraterritorial service. Rule 14, 17 on
extraterritorial service provides that service of summons on a non-resident defendant may
be effected out of the Philippines by leave of Court where, among others, "the property of
the defendant has been attached within the Philippines." 1 8 It is not disputed that the
properties, real and personal, of the private respondents had been attached prior to service
of summons under the Order of the trial court dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to
suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to
enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court
finds that the judgment sought to be enforced is severable from the main judgment under
consideration in Civil Case No. 16563. The separability of Guevarra's claim is not only
admitted by petitioners, 20 it appears from the pleadings that petitioners only belatedly
impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be
lifted and Civil Case No. 92-1445 allowed to proceed. cdasia
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No.
16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil
Case No. 92-1070 and for further proceedings in accordance with this decision. The
temporary restraining order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ ., concur.
SECOND DIVISION
[G.R. No. 162894. February 26, 2008.]
11. RAYTHEON INTERNATIONAL, INC., petitioner, vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J p:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure which seeks the reversal of the Decision 1 and Resolution 2 of the Court
of Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and
existing under the laws of the State of Connecticut, United States of America, and
respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby
BMSI hired respondent as its representative to negotiate the sale of services in
several government projects in the Philippines for an agreed remuneration of 10% of
the gross receipts. On 11 March 1992, respondent secured a service contract with the
Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the
Mt. Pinatubo eruption and mudflows. 3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor
Relations Commission (NLRC) a suit against BMSI and Rust International, Inc.
(RUST), Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of
commissions, illegal termination and breach of employment contract. 4 On 28 September
1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to
pay respondent's money claims. 5 Upon appeal by BMSI, the NLRC reversed the decision
of the Labor Arbiter and dismissed respondent's complaint on the ground of lack of
jurisdiction. 6 Respondent elevated the case to this Court but was dismissed in a
Resolution dated 26 November 1997. The Resolution became final and executory on 09
November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union. The
Complaint, 7 docketed as Civil Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two corporations impleaded
in the earlier labor case. The complaint essentially reiterated the allegations in the labor
case that BMSI verbally employed respondent to negotiate the sale of services in
government projects and that respondent was not paid the commissions due him from the
Pinatubo dredging project which he secured on behalf of BMSI. The complaint also
averred that BMSI and RUST as well as petitioner itself had combined and functioned as
one company.
In its Answer, 8 petitioner alleged that contrary to respondent's claim, it was a foreign
corporation duly licensed to do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of money. Petitioner also denied
combining with BMSI and RUST for the purpose of assuming the alleged obligation of the
said companies. 9 Petitioner also referred to the NLRC decision which disclosed that per
the written agreement between respondent and BMSI and RUST, denominated as "Special
Sales Representative Agreement," the rights and obligations of the parties shall be
governed by the laws of the State of Connecticut. 10 Petitioner sought the dismissal of
the complaint on grounds of failure to state a cause of action and forum non
conveniens and prayed for damages by way of compulsory counterclaim. 11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment 12 seeking the dismissal of the
complaint on grounds of forum non conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution of the omnibus motion, the
deposition of Walter Browning was taken before the Philippine Consulate General in
Chicago. 13
In an Order 14 dated 13 September 2000, the RTC denied petitioner's omnibus motion.
The trial court held that the factual allegations in the complaint, assuming the same to be
admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled
that the principle of forum non conveniens was inapplicable because the trial court could
enforce judgment on petitioner, it being a foreign corporation licensed to do business
in the Philippines. 15
Petitioner filed a Motion for Reconsideration 16 of the order, which motion was opposed
by respondent. 17 In an Order dated 31 July 2001, 18 the trial court denied petitioner's
motion. Thus, it filed a Rule 65 Petition 19 with the Court of Appeals praying for the
issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the
trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from
conducting further proceedings. 20
On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying the
petition for certiorari for lack of merit. It also denied petitioner's motion for
reconsideration in the assailed Resolution issued on 10 March 2004. 22
The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner's omnibus motion, it found the evidence presented by petitioner, that is, the
deposition of Walter Browning, insufficient for purposes of determining whether the
complaint failed to state a cause of action. The appellate court also stated that it could not
rule one way or the other on the issue of whether the corporations, including petitioner,
named as defendants in the case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be threshed out during
trial. 23 Moreover, the appellate court deferred to the discretion of the trial court when
the latter decided not to desist from assuming jurisdiction on the ground of the
inapplicability of the principle offorum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT FOR FAILURE TO
STATE A CAUSE OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT ON THE GROUND
OF FORUM NON CONVENIENS. 24
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino
Padua Law Office, counsel on record for respondent, manifested that the lawyer handling
the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before the
filing of the instant petition and that it could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a Resolution 25 dated 20 November
2006, the Court resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI included
a valid choice of law clause, that is, that the contract shall be governed by the laws of the
State of Connecticut. It also mentions the presence of foreign elements in the dispute
namely, the parties and witnesses involved are American corporations and citizens and the
evidence to be presented is located outside the Philippines that renders our local courts
inconvenient forums. Petitioner theorizes that the foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura, 26 the Court outlined three consecutive phases
involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice
of law, and recognition and enforcement of judgments. Thus, in the instances 27 where
the Court held that the local judicial machinery was adequate to resolve controversies with
a foreign element, the following requisites had to be proved: (1) that the Philippine Court
is one to which the parties may conveniently resort; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have the power to enforce its decision. 28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a
Philippine court and where the court has jurisdiction over the subject matter, the
parties and the res, it may or can proceed to try the case even if the rules of conflict-of-
laws or the convenience of the parties point to a foreign forum. This is an exercise of
sovereign prerogative of the country where the case is filed. 29
Jurisdiction over the nature and subject matter of an action is conferred by the Constitution
and the law 30 and by the material allegations in the complaint, irrespective of whether or
not the plaintiff is entitled to recover all or some of the claims or reliefs sought
therein. 31 Civil Case No. 1192-BG is an action for damages arising from an alleged
breach of contract. Undoubtedly, the nature of the action and the amount of damages
prayed are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein
respondent (as party plaintiff) upon the filing of the complaint. On the other hand,
jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary
appearance in court. 32
That the subject contract included a stipulation that the same shall be governed by the laws
of the State of Connecticut does not suggest that the Philippine courts, or any other foreign
tribunal for that matter, are precluded from hearing the civil action. JURISDICTION
AND CHOICE OF LAW ARE TWO DISTINCT CONCEPTS. Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will determine the merits of
the case is fair to both parties. 33 The choice of law stipulation will become relevant only
when the substantive issues of the instant case develop, that is, AFTER HEARING on the
merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may
refuse impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies
elsewhere. 34 Petitioner's averments of the foreign elements in the instant case are
not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-
BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a
matter of defense. While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after vital facts are established,
to determine whether special circumstances require the court's desistance. 35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound discretion of the lower courts
because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a
cause of action against petitioner. Failure to state a cause of action refers to the
insufficiency of allegation in the pleading. 36 As a general rule, the elementary test for
failure to state a cause of action is whether the complaint alleges facts which if true would
justify the relief demanded. 37
The complaint alleged that petitioner had combined with BMSI and RUST to function as
one company. Petitioner contends that the deposition of Walter Browning rebutted this
allegation. On this score, the resolution of the Court of Appeals is instructive, thus:
. . . Our examination of the deposition of Mr. Walter Browning as well as
other documents produced in the hearing shows that these
evidencealiunde are not quite sufficient for us to mete a ruling that the
complaint fails to state a cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing and
conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC)
assumed the warranty obligations of defendant Rust International in the
Makar Port Project in General Santos City, after Rust International ceased
to exist after being absorbed by REC. Other documents already submitted
in evidence are likewise meager to preponderantly conclude that
Raytheon International, Inc., Rust International[,] Inc. and Brand Marine
Service, Inc. have combined into one company, so much so that Raytheon
International, Inc., the surviving company (if at all) may be held liable for
the obligation of BMSI to respondent Rouzie for unpaid commissions.
Neither these documents clearly speak otherwise. 38
As correctly pointed out by the Court of Appeals, the question of whether petitioner,
BMSI and RUST merged together requires the presentation of further evidence, which
only a full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
Carpio, Sandoval-Gutierrez, * Carpio-Morales and Velasco, Jr., JJ., concur.
FIRST DIVISION
[G.R. No. 120077. October 13, 2000.]
12. THE MANILA HOTEL CORP. AND MANILA HOTEL INTL.
LTD., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS, respondents.
Office of the Government Corporate Counsel for petitioner.
The Solicitor General for respondent.
Genie Castillo Quilas for private respondent.
SYNOPSIS
Private respondent Marcelo Santos was an overseas worker employed as printer at the
Mazoon Printing Press, Sultanate of Oman. While in Oman, on May 2, 1998, he received a
letter from Mr. Gerald R. Shmidt, General Manager of Palace Hotel, Beijing, China,
offering him the same position as printer with a higher monthly salary and increased
benefits as he was recommended by his friend Nestor Buenio. Palace Hotel is a member of
the Manila Hotel Group. Santos signified his acceptance. Subsequently, an employment
contract for a period of two years beginning September 1, 1998 was perfected. However,
since it was only on November 5, 1988 that Santos left for Beijing, China, the employment
contract was amended. The amended employment contract was signed by Mr. Shmidt as
the representative of Palace Hotel, and was noted by the Vice President for Operations
and Development of MHICL, Miguel O. Cergueda. On August 10, 1989, the Palace Hotel
informed respondent Santos by letter signed by Mr. Shmidt that his employment at the
Palace Hotel print shop will be terminated due to business reverses brought about by the
political upheaval in China. On February 20, 1990, respondent Santos filed a complaint for
illegal dismissal against MHC, MHICL, the Palace Hotel and Mr. Shmidt before the
Arbitration Branch, National Capital Region, National Labor Relations Commission. The
Palace Hotel and Mr. Shmidt were not served with summons and neither participated in
the proceedings before the Labor Arbiter. Subsequently, the Labor Arbiter decided against
MHC and MHICL. MHC and MHICL appealed to the NLRC which decided in favor of
Santos. Hence, this appeal.
The main aspects of the case transpired in two foreign jurisdictions, and the case involves
purely foreign elements. The only link that the Philippines has with the case is that
respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving Filipino citizens can be tried here. This is not to say
that Philippine courts and agencies have no power to solve controversies involving foreign
employers. If Santos were an "overseas contract worker," a Philippine forum, specifically
the POEA, not the NLRC, would protect him. However, he is not an "overseas contract
worker," a fact which he admits with conviction. He was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman where
he was then employed. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government.
Further, it is basic that a corporation has a personality separate and distinct from those
composing it as well as from that of any other legal entity to which it may be related. Clear
and convincing evidence is needed to pierce the veil of corporate fiction. The Court found
no evidence to show that MHICL and MHC are one and the same entity. Moreover, when
one "notes" a contract, one is not expressing his agreement or approval, as a party would.
InSichangco v. Board of Commissioners of Immigration, the Court recognized that the
term "noted" means that the person so noting has merely taken cognizance of the existence
of an act or declaration, without exercising a judicious deliberation or rendering a decision
on the matter. Considering that no employer-employee relationship existed between
MHICL, MHC and respondent Santos, the Labor Arbiter had no jurisdiction over
respondent's claim.
The Court ANNULLED the orders and resolutions of the National Labor Relations
Commission.
DECISION
PARDO, J p:
The case before the Court is a petition for certiorari 1 to annul the following orders of the
National Labor Relations Commission (hereinafter referred to as "NLRC") for having been
issued without or with excess jurisdiction and with grave abuse of discretion: 2
(1)Order of May 31, 1993. 3 Reversing and setting aside its earlier resolution of August
28, 1992. 4 The questioned order declared that the NLRC, not the Philippine Overseas
Employment Administration (hereinafter referred to as "POEA"), had jurisdiction over
private respondent's complaint;
(2)Decision of December 15, 1994. 5 Directing petitioners to jointly and severally pay
private respondent twelve thousand and six hundred dollars (US$12,600.00) representing
salaries for the unexpired portion of his contract; three thousand six hundred dollars
(US$3,600.00) as extra four months salary for the two (2) year period of his contract, three
thousand six hundred dollars (US$3,600.00) as "14th month pay" or a total of nineteen
thousand and eight hundred dollars (US$19,800.00) or its peso equivalent and attorney's
fees amounting to ten percent (10%) of the total award; and
(3)Order of March 30, 1995. 6 Denying the motion for reconsideration of the
petitioners. EHSITc
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was
an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of
Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing,
People's Republic of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the
Manila Hotel International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled
corporation duly organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong
Kong. 7 MHC is an "incorporator" of MHICL, owning 50% of its capital stock. 8
By virtue of a "management agreement" 9 with the Palace Hotel (Wang Fu Company
Limited), MHICL 10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt,
General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos
that he was recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. The position was slated to open on October 1,
1988. 11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of
the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in Manila, together with his
passport and two additional pictures for his visa to China. TAIEcS
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective
June 30, 1988, under the pretext that he was needed at home to help with the family's
piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's
letter. Respondent Santos enclosed four (4) signed copies of the employment contract
(dated June 4, 1988) and notified them that he was going to arrive in Manila during the
first week of July 1988.
The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years. 12 It provided for a monthly salary of nine
hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year. 13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing
Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the
Palace Hotel. 14
Subsequently, respondent Santos signed an amended "employment agreement" with the
Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the
Palace Hotel. The Vice President (Operations and Development) of petitioner
MHICL Miguel D. Cergueda signed the employment agreement under the word
"NOTED."
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He
returned to China and reassumed his post on July 17, 1989. AaEcDS
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a
handwritten note that respondent Santos be given one (1) month notice of his release from
employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr.
Shmidt that his employment at the Palace Hotel print shop would be terminated due to
business reverses brought about by the political upheaval in China. 15 We quote the
letter: 16
"After the unfortunate happenings in China and especially Beijing
(referring to Tiannamen Square incidents), our business has been severely
affected. To reduce expenses, we will not open/operate printshop for the
time being.
"We sincerely regret that a decision like this has to be made, but rest
assured this does in no way reflect your past performance which we
found up to our expectations."
"Should a turnaround in the business happen, we will contact you directly
and give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos
and paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr.
Shmidt, demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
"His service with the Palace Hotel, Beijing was not abruptly terminated
but we followed the one-month notice clause and Mr. Santos received all
benefits due him.
 "For your information the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in various
departments of the hotel is going on which is a normal management
practice to control costs.
"When going through the latest performance ratings, please also be
advised that his performance was below average and a Chinese National
who is doing his job now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly
showed up for work but still enjoyed free accommodation/laundry/meals
up to the day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
Arbitration Branch, National Capital Region, National Labor Relations Commission
(NLRC). He prayed for an award of nineteen thousand nine hundred and twenty-three
dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as
exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The
complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as
respondents. DCSETa
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated
in the proceedings before the Labor Arbiter. 18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners,
thus: 19
"WHEREFORE, judgment is hereby rendered:
"1.directing all the respondents to pay complainant jointly and severally;
"a)$20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
"b)P50,000.00 as moral damages;
"c)P40,000.00 as exemplary damages; and
"d)Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the
NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared
null and void for want of jurisdiction. Complainant is hereby enjoined to
file his complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
resolution. He argued that the case was not cognizable by the POEA as he was not an
"overseas contract worker." 21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed
Labor Arbiter Emerson Tumanon to hear the case on the question of whether private
respondent was retrenched or dismissed. 22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him. 23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National
Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G.
de Vera. 24
On November 25, 1994, Labor Arbiter de Vera submitted his report. 25 He found that
respondent Santos was illegally dismissed from employment and recommended that he be
paid actual damages equivalent to his salaries for the unexpired portion of his contract. 26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit: 27
"WHEREFORE, finding that the report and recommendations of Arbiter
de Vera are supported by substantial evidence, judgment is hereby
rendered, directing the respondents to jointly and severally pay
complainant the following computed contractual benefits: (1)
US$12,600.00 as salaries for the unexpired portion of the parties'
contract; (2) US$3,600.00 as extra four (4) months salary for the two (2)
years period (sic) of the parties' contract; (3) US$3,600.00 as "14th month
pay" for the aforesaid two (2) years contract stipulated by the parties or a
 total of US$19,800.00 or its peso equivalent, plus (4) attorney's fees of
10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Vera's recommendation had no basis in law and in fact.28
On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Hence, this petition. 30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the
annulment of the entry of judgment of the NLRC dated July 31, 1995. 31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition. 32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over
the petition and its annexes, they can not defend and sustain the position taken by the
NLRC in its assailed decision and orders. The Solicitor General prayed that he be excused
from filing a comment on behalf of the NLRC. 33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and
required the NLRC to file its own comment to the petition. 35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the
case involves purely foreign elements. The only link that the Philippines has with the
case is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are
foreign corporations. Not all cases involving our citizens can be tried here. ICTaEH
The employment contract. Respondent Santos was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was hired without the intervention of
the POEA or any authorized recruitment agency of the government. 36
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is
one to which the parties may conveniently resort to; (2) that the Philippine court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine court has or is likely to have power to enforce its decision. 37 The conditions
are unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the
incidents of the case from the time of recruitment, to employment to dismissal occurred
outside the Philippines. The inconvenience is compounded by the fact that the proper
defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither are
they "doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and
Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as
to the law governing the employment contract as such was perfected in foreign soil. This
calls to fore the application of the principle of lex loci contractus (the law of the place
where the contract was made). 38
The employment contract was not perfected in the Philippines. Respondent Santos
signified his acceptance by writing a letter while he was in the Republic of Oman. This
letter was sent to the Palace Hotel in the People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to
justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper
decision could be reached by the NLRC, such would not have any binding effect against
the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the
laws of China and was not even served with summons. Jurisdiction over its person was not
acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an
employment contract executed in a foreign country. If Santos were an "overseas contract
worker," a Philippine forum, specifically the POEA, not the NLRC, would protect
him. 39 He is not an "overseas contract worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum, even on the merits, the
NLRC's decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2)
that MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct
juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock.
However, this is not enough to pierce the veil of corporate fiction between MHICL and
MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
corporate fiction is used to defeat public convenience, justify wrong, protect fraud or
defend a crime. 41 It is done only when a corporation is a mere alter ego or business
conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals, 42 we held that "the mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself a sufficient reason for disregarding the fiction of separate
corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporation's finances,
policy and business practices with regard to the transaction attacked. There must be proof
that the other corporation had no separate mind, will or existence with respect the act
complained of. Second, control must be used by the defendant to commit fraud or
wrong. Third, the aforesaid control or breach of duty must be the proximate cause of the
injury or loss complained of. The absence of any of the elements prevents the piercing of
the corporate veil. 43
It is basic that a corporation has a personality separate and distinct from those composing
it as well as from that of any other legal entity to which it may be related. 44 Clear and
convincing evidence is needed to pierce the veil of corporate fiction. 45 In this case, we
find no evidence to show that MHICL and MHC are one and the same entity. DSHTaC
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his
employment contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel
D. Cergueda signed the employment contract as a mere witness. He merely signed under
the word "noted."
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would. 46 In Sichangco v. Board of Commissioners of Immigration, 47 the Court
recognized that the term "noted" means that the person so noting has merely taken
cognizance of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part"
of the document is that which, "in a deed or other formal instrument is that part
which comes after the recitals, or where there are no recitals, after the parties (italics
ours)." 48 As opposed to a party to a contract, a witness is simply one who, "being present,
personally sees or perceives a thing; a beholder, a spectator, or eyewitness." 49 One who
"notes" something just makes a "brief written statement" 50 a memorandum or
observation.
Second, and more importantly, there was no existing employer-employee relationship
between Santos and MHICL. In determining the existence of an employer-employee
relationship, the following elements are considered: 51
"(1)the selection and engagement of the employee;
"(2)the payment of wages;
"(3)the power to dismiss; and
"(4)the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It
did not select respondent Santos as an employee for the Palace Hotel. He was referred to
the Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos
to work. The terms of employment were negotiated and finalized through correspondence
between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL. Neither did respondent Santos adduce
any proof that MHICL had the power to control his conduct. Finally, it was the Palace
Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor." 52 There
is no proof that MHICL "supplied" respondent Santos or even referred him for
employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the
same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group"
is not enough to pierce the corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no
employer-employee relationship existed between MHICL, MHC and respondent Santos,
Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in
NLRC NCR Case No. 00-02-01058-90. AaCcST
Labor Arbiters have exclusive and original jurisdiction only over the following: 53
"1.Unfair labor practice cases;
"2.Termination disputes;
"3.If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and other
terms and conditions of employment;
"4.Claims for actual, moral, exemplary and other forms of damages
arising from employer-employee relations;
"5.Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6.Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from employer-
employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can be resolved
by reference to the Labor Code, or other labor statutes, or their collective bargaining
agreements. 54
"To determine which body has jurisdiction over the present controversy, we rely on the
sound judicial principle that jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein." 55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
complaint. His failure to dismiss the case amounts to grave abuse of discretion. 56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the
orders and resolutions of the National Labor Relations Commission dated May 31, 1993,
December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR
Case No. 00-02-01058-90).
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
SECOND DIVISION
[G.R. No. 133876. December 29, 1999.]
 13. BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN
REALTY CORPORATION and COURT OF
APPEALS, respondents.
Agcaoili & Associates for petitioner.
William R. Veto for private respondent.
SYNOPSIS
As security for restructured loans, American Realty Corporation, a third party mortgagor,
executed two (2) real estate mortgages in favor of Bank of America. Eventually, the
corporate borrowers defaulted in the payment of the restructured loans. Consequently,
Bank of America filed collection suits before foreign courts. Later Bank of America
likewise filed an application for extra-judicial foreclosure of real estate mortgage.
This prompted American Realty Corporation to file an action for damages against Bank
of America. The trial court rendered judgment in favor of American Realty
Corporation. According to the trial court, the filing by Bank of America of collections
suits operated as a waiver of the security of the mortgages. The Court of Appeals affirmed
the assailed decision of the lower court. Its motion for reconsideration having been denied,
petitioner resorted to this action. aSDCIE
A mortgage creditor may institute against the mortgage debtor either a personal action for
debt or a real action to foreclose the mortgage. The remedies available to the mortgage
creditor are deemed alternative and not cumulative. An election of one remedy
operates as a waiver of the other.
A suit brought before a foreign court having competence and jurisdiction to entertain the
action is deemed to be within the contemplation of the remedy available to the mortgagee-
creditor. This would best serve the interest of justice and fair play and further discourage
the noxious practice of splitting up a lone cause of action.
Despite the fact that the award of actual and compensatory damages by the lower court
exceeded that prayed for in the complaint, the same was nonetheless valid. Inasmuch as
the petitioner was afforded the opportunity to refute the evidence formally offered by
private respondent, the rudiments of fair play were deemed satisfied.
DECISION
BUENA, J p:
Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage
constituted over a third party mortgagor's property situated in the Philippines by filing an
action for the collection of the principal loan before foreign courts? cdrep
Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the
Rules of Court are the decision 1 of public respondent Court of Appeals in CA G.R. CV
No. 51094, promulgated on 30 September 1997 and its resolution, 2 dated 22 May 1998,
denying petitioner's motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and
financing institution duly licensed to do business in the Philippines, organized and existing
under and by virtue of the laws of the State of California, United States of America while
private respondent American Realty Corporation (ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited liability
company organized and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted three major
multi-million United States (US) Dollar loans to the following corporate borrowers: (1)
Liberian Transport Navigation, S.A.; (2) El Challenger S.A. and (3) Eshley Compania
Naviera S.A. (hereinafter collectively referred to as "borrowers"), all of which are existing
under and by virtue of the laws of the Republic of Panama and are foreign affiliates of
private respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and the corporate
borrowers signed and entered into restructuring agreements. As additional security for the
restructured loans, private respondent ARC as third party mortgagor executed two real
estate mortgages, 4 dated 17 February 1983 and 20 July 1984, over its parcels of land
including improvements thereon, located at Barrio Sto. Cristo, San Jose Del Monte,
Bulacan, and which are covered by Transfer Certificate of Title Nos. T-78759, T-78760,
T-78761, T-78762 and T-78763. Cdpr
Eventually, the corporate borrowers defaulted in the payment of the restructured loans
prompting petitioner BANTSA to file civil actions 5 before foreign courts for the
collection of the principal loan, to wit:
"a)In England, in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2098) against Liberian
Transport Navigation S.A., Eshley Compania Naviera S.A., El
 Challenger S.A., Espriona Shipping Company S.A., Eddie
Navigation Corp., S.A., Eduardo Katipunan Litonjua and Aurelio
Katipunan Litonjua on June 17, 1992.
b)In England, in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2245) against El Challenger
S.A., Espriona Shipping Company S.A., Eduardo Katipuan
Litonjua & Aurelio Katipunan Litonjua on July 2, 1992; cdrep
c)In Hongkong, in the Supreme Court of Hongkong High Court (Action
No. 4039 of 1992) against Eshley Compania Naviera S.A., El
Challenger S.A., Espriona Shipping Company S.A. Pacific
Navigators Corporation, Eddie Navigation Corporation S.A.,
Litonjua Chartering (Edyship) Co., Inc., Aurelio Katipunan
Litonjua, Jr. and Eduardo Katipunan Litonjua on November 19,
1992; and
d)In Hongkong, in the Supreme Court of Hongkong High Court (Action
No. 4040 of 1992) against Eshley Compania Naviera S.A., El
Challenger S.A., Espriona Shipping Company, S.A., Pacific
Navigators Corporation, Eddie Navigation Corporation S.A.,
Litonjua Chartering (Edyship) Co., Jr. and Eduardo Katipunan
Litonjua on November 21, 1992."
In the civil suits instituted before the foreign courts, private respondent ARC, being a third
party mortgagor, was not impleaded as party-defendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial
Sheriff of Bulacan, Philippines, an application for extrajudicial foreclosure 6 of real estate
mortgage. cdasia
On 22 January 1993, after due publication and notice, the mortgaged real properties were
sold at public auction in an extrajudicial foreclosure sale, with Integrated Credit and
Corporation Services Co. (ICCS) as the highest bidder for the sum of Twenty Four Million
Pesos (P24,000,000.00). 7
On 12 February 1993, private respondent filed before the Pasig Regional Trial Court,
Branch 159, an action for damages 8 against the petitioner, for the latter's act of
foreclosing extrajudicially the real estate mortgages despite the pendency of civil suits
before foreign courts for the collection of the principal loan.
In its answer 9 petitioner alleged that the rule prohibiting the mortgagee from foreclosing
the mortgage after an ordinary suit for collection has been filed, is not applicable in the
present case, claiming that:
"a)The plaintiff, being a mere third party mortgagor and not a party to the
principal restructuring agreements, was never made a party defendant in
the civil cases filed in Hongkong and England;
"b)There is actually no civil suit for sum of money filed in the Philippines
since the civil actions were filed in Hongkong and England. As such, any
decisions (sic) which may be rendered in the abovementioned courts are
not (sic) enforceable in the Philippines unless a separate action to enforce
the foreign judgments is first filed in the Philippines, pursuant to Rule 39,
Section 50 of the Revised Rules of Court. prLL
"c)Under English Law, which is the governing law under the principal
agreements, the mortgagee does not lose its security interest by filing
civil actions for sums of money."
On 14 December 1993, private respondent filed a motion for suspension 10 of the
redemption period on the ground that "it cannot exercise said right of redemption without
at the same time waiving or contradicting its contentions in the case that the foreclosure of
the mortgage on its properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private respondent's
motion for suspension after which a copy of said order was duly received by the Register
of Deeds of Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure
sale, consolidated its ownership over the real properties, resulting to the issuance of
Transfer Certificate of Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in
its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real
properties to Stateland Investment Corporation for the amount of Thirty Nine Million
Pesos (P39,000,000.00). 12 Accordingly, Transfer Certificate of Title Nos. T-187781(m),
T-187782(m), T-187783(m), T-16653P(m) and T-16652P(m) were issued in the latter's
name. prLL
After trial, the lower court rendered a decision 13 in favor of private respondent ARC
dated 12 May 1993, the decretal portion of which reads:
 "WHEREFORE, judgment is hereby rendered declaring that the filing in
foreign courts by the defendant of collection suits against the principal
debtors operated as a waiver of the security of the mortgages.
Consequently, the plaintiff's rights as owner and possessor of the
properties then covered by Transfer Certificates of Title Nos. T-78759, T-
78762, T-78763, T-78760 and T-78761, all of the Register of Deeds of
Meycauayan, Bulacan, Philippines, were violated when the defendant
caused the extrajudicial foreclosure of the mortgages constituted thereon.
"Accordingly, the defendant is hereby ordered to pay the plaintiff the
following sums, all with legal interest thereon from the date of the filing
of the complaint up to the date of actual payment:
"1)Actual or compensatory damages in the amount of Ninety Nine
Million Pesos (P99,000,000.00); cdtai
"2)Exemplary damages in the amount of Five Million Pesos
(P5,000,000.00); and
"3)Costs of suit.
"SO ORDERED."
On appeal, the Court of Appeals affirmed the assailed decision of the lower court
prompting petitioner to file a motion for reconsideration which the appellate court denied.
Hence, the instant petition for review 14 on certiorari where herein petitioner BANTSA
ascribes to the Court of Appeals the following assignment of errors:
1.The Honorable Court of Appeals disregarded the doctrines laid down by
this Hon. Supreme Court in the cases of Caltex Philippines,
Inc. vs.Intermediate Appellate Court docketed as G.R. No. 74730
promulgated on August 25, 1989 and Philippine Commercial
International Bank vs. IAC, 196 SCRA 29 (1991 case), although
said cases were duly cited, extensively discussed and specifically
mentioned, as one of the issues in the assignment of errors found
on page 5 of the decision dated September 30, 1997. Cdpr
2.The Hon. Court of Appeals acted with grave abuse of discretion when it
awarded the private respondent actual and exemplary damages
totalling P171,600,000.00, as of July 12, 1998 although such huge
amount was not asked nor prayed for in private respondent's
complaint, is contrary to law and is totally unsupported by
evidence (sic).
In fine, this Court is called upon to resolve two main issues:
1.Whether or not the petitioner's act of filing a collection suit against the
principal debtors for the recovery of the loan before foreign courts
constituted a waiver of the remedy of foreclosure.
2.Whether or not the award by the lower court of actual and exemplary
damages in favor of private respondent ARC, as third-party
mortgagor, is proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that a waiver of the
remedy of foreclosure requires the concurrence of two requisites: an ordinary civil action
for collection should be filed and subsequently a final judgment be correspondingly
rendered therein. cdrep
According to petitioner, the mere filing of a personal action to collect the principal loan
does not suffice; a final judgment must be secured and obtained in the personal action so
that waiver of the remedy of foreclosure may be appreciated. To put it differently, absent
any of the two requisites, the mortgagee-creditor is deemed not to have waived the remedy
of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the jurisprudence
laid down in Bachrach 15 and similar cases adjudicated thereafter, thus:
"In the absence of express statutory provisions, a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a
real action to foreclose the mortgage. In other words, he may pursue
either of the two remedies, but not both. By such election, his cause of
action can by no means be impaired, for each of the two remedies is
complete in itself. Thus, an election to bring a personal action will leave
open to him all the properties of the debtor for attachment and execution,
 even including the mortgaged property itself. And, if he waives such
personal action and pursues his remedy against the mortgaged property,
an unsatisfied judgment thereon would still give him the right to sue for a
deficiency judgment, in which case, all the properties of the defendant,
other than the mortgaged property, are again open to him for the
satisfaction of the deficiency. In either case, his remedy is complete, his
cause of action undiminished, and any advantages attendant to the pursuit
of one or the other remedy are purely accidental and are all under his
right of election. On the other hand, a rule that would authorize the
plaintiff to bring a personal action against the debtor and simultaneously
or successively another action against the mortgaged property, would
result not only in multiplicity of suits so offensive to justice (Soriano vs.
Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio vs. San
Agustin, 25 Phil., 404), but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of the residence of
the plaintiff, and then again in the place where the property lies." LexLib
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence enunciated
in Manila Trading and Supply Co. vs. Co Kim 17 and Movido vs. RFC, 18invariably held:
". . . The rule is now settled that a mortgage creditor may elect to waive
his security and bring, instead, an ordinary action to recover the
indebtedness with the right to execute a judgment thereon on all the
properties of the debtor, including the subject matter of the mortgage . .
.,subject to the qualification that if he fails in the remedy by him elected,
he cannot pursue further the remedy he has waived. (Underscoring Ours)
Anent real properties in particular, the Court has laid down the rule that a mortgage
creditor may institute against the mortgage debtor either a personal action for debt or a real
action to foreclose the mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative
and not cumulative. Notably, an election of one remedy operates as a waiver of the other.
For this purpose, a remedy is deemed chosen upon the filing of the suit for collection or
upon the filing of the complaint in an action for foreclosure of mortgage, pursuant to the
provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure,
such remedy is deemed elected by the mortgage creditor upon filing of the petition not
with any court of justice but with the Office of the Sheriff of the province where the sale is
to be made, in accordance with the provisions of Act No. 3135, as amended by Act No.
4118. cdphil
In the case at bench, private respondent ARC constituted real estate mortgages over its
properties as security for the debt of the principal debtors. By doing so, private respondent
subjected itself to the liabilities of a third party mortgagor. Under the law, third persons
who are not parties to a loan may secure the latter by pledging or mortgaging their own
property. 20
Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which
makes a third person who secures the fulfillment of another's obligation by mortgaging his
own property, to be solidarily bound with the principal obligor. The signatory to the
principal contract loan remains to be primarily bound. It is only upon default of the
latter that the creditor may have recourse on the mortgagors by foreclosing the mortgaged
properties in lieu of an action for the recovery of the amount of the loan. 21
In the instant case, petitioner's contention that the requisites of filing the action for
collection and rendition of final judgment therein should concur, is untenable. cda
Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in said case, that
the filing of a collection suit barred the foreclosure of the mortgage:
"A mortgagee who files a suit for collection abandons the remedy of
foreclosure of the chattel mortgage constituted over the personal property
as security for the debt or value of the promissory note when he seeks to
recover in the said collection suit."
". . . When the mortgagee elects to file a suit for collection, not
foreclosure, thereby abandoning the chattel mortgage as basis for relief,
he clearly manifests his lack of desire and interest to go after the
mortgaged property as security for the promissory note . . . ."
Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity and emphasis,
that the mere act of filing of an ordinary action for collection operates as a waiver of the
mortgage-creditor's remedy to foreclose the mortgage. By the mere filing of the ordinary
action for collection against the principal debtors, the petitioner in the present case is
deemed to have elected a remedy, as a result of which a waiver of the other necessarily
must arise. Corollarily, no final judgment in the collection suit is required for the rule on
waiver to apply. cdll
Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court, 23 a case relied upon
by petitioner, supposedly to buttress its contention, this Court had occasion to rule that the
mere act of filing a collection suit for the recovery of a debt secured by a mortgage
constitutes waiver of the other remedy of foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is non-payment
of the debt. Nevertheless, alternative remedies are available for its enjoyment and exercise.
Petitioner then may opt to exercise only one of two remedies so as not to violate the rule
against splitting a cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co.,
Inc. vs. Icarangal. 24
"For non-payment of a note secured by mortgage, the creditor has a single
cause of action against the debtor. This single cause of action consists in
the recovery of the credit with execution of the security. In other words,
the creditor in his action may make two demands, the payment of the debt
and the foreclosure of his mortgage. But both demands arise from the
same cause, the non-payment of the debt, and for that reason, they
constitute a single cause of action. Though the debt and the mortgage
constitute separate agreements, the latter is subsidiary to the former, and
both refer to one and the same obligation. Consequently, there exists only
one cause of action for a single breach of that obligation. Plaintiff, then,
by applying the rules above stated, cannot split up his single cause of
action by filing a complaint for payment of the debt, and thereafter
another complaint for foreclosure of the mortgage. If he does so, the
filing of the first complaint will bar the subsequent complaint. By
allowing the creditor to file two separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his
mortgage, we will, in effect, be authorizing him plural redress for a single
breach of contract at so much cost to the courts and with so much
vexation and oppression to the debtor." prcd
Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine
enunciated in Caltex, wherein this High Court relaxed the application of the general rules
to wit:
"In the present case, however, we shall not follow this rule to the letter
but declare that it is the collection suit which was waived and/or
abandoned. This ruling is more in harmony with the principles underlying
our judicial system. It is of no moment that the collection suit was filed
ahead, what is determinative is the fact that the foreclosure
proceedings ended even before the decision in the collection suit was
rendered. . . ."
Notably, though, petitioner took the Caltex ruling out of context. We must stress that the
Caltex case was never intended to overrule the well-entrenched doctrine enunciated in
Bachrach, which to our mind still finds applicability in cases of this sort. To reiterate,
Bachrach is still good law.
We then quote the decision 25 of the trial court, in the present case, thus:
"The aforequoted ruling in Caltex is the exception rather than the rule,
dictated by the peculiar circumstances obtaining therein. In the said case,
the Supreme Court chastised Caltex for making ". . . a mockery of our
judicial system when it initially filed a collection suit then, during the
pendency thereof, foreclosed extrajudicially the mortgaged property
which secured the indebtedness, and still pursued the collection suit to the
end." Thus, to prevent a mockery of our judicial system", the collection
suit had to be nullified because the foreclosure proceedings have already
been pursued to their end and can no longer be undone.
xxx xxx xxx
"In the case at bar, it has not been shown whether the defendant pursued
to the end or are still pursuing the collection suits filed in foreign
courts. There is no occasion, therefore, for this court to apply the
exception laid down by the Supreme Court in Caltex, by nullifying the
collection suits. Quite obviously, too, the aforesaid collection suits are
beyond the reach of this Court. Thus the only way the court may prevent
the specter of a creditor having "plural redress for a single breach of
contract" is by holding, as the Court hereby holds, that the defendant has
waived the right to foreclose the mortgages constituted by the plaintiff on
its properties originally covered by Transfer Certificates of Title Nos. T-
78759, T-78762, T-78760 and T-78761." (RTC Decision pp., 10-11)
In this light, the actuations of Caltex are deserving of severe criticism, to say the least. 26
Moreover, petitioner attempts to mislead this Court by citing the case of PCIB
vs. IAC. 27 Again, petitioner tried to fit a square peg in a round hole. It must be stressed
that far from overturning the doctrine laid down in Bachrach, this Court in PCIB
buttressed its firm stand on this issue by declaring:
 "While the law allows a mortgage creditor to either institute a personal
action for the debt or a real action to foreclosure the mortgage, he cannot
pursue both remedies simultaneously or successively as was done by
PCIB in this case." LibLex
xxx xxx xxx
"Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of
the 1.3 million promissory note secured by real estate mortgages and
subsequently filed a petition for extrajudicial foreclosure, it violates the
rule against splitting a cause of action."
Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of
filing four civil suits before foreign courts, necessarily abandoned the remedy to foreclose
the real estate mortgages constituted over the properties of third-party mortgagor and
herein private respondent ARC. Moreover, by filing the four civil actions and by
eventually foreclosing extrajudicially the mortgages, petitioner in effect transgressed the
rules against splitting a cause of action well-enshrined in jurisprudence and our statute
books. LibLex
In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure after the
collection suit was filed, considering that the creditor should not be afforded "plural
redress for a single breach of contract." For cause of action should not be confused with
the remedy created for its enforcement. 28
Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy
chosen in addressing the creditor's cause. Hence, a suit brought before a foreign court
having competence and jurisdiction to entertain the action is deemed, for this purpose, to
be within the contemplation of the remedy available to the mortgagee-creditor. This
pronouncement would best serve the interest of justice and fair play and further discourage
the noxious practice of splitting up a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to petitioner is
the governing law with regard to the principal agreements, the mortgagee does not lose its
security interest by simply filing civil actions for sums of money. 29
We rule in the negative. LLphil
This argument shows desperation on the part of petitioner to rivet its crumbling cause. In
the case at bench, Philippine law shall apply notwithstanding the evidence presented by
petitioner to prove the English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle in our
jurisdiction that there is no judicial notice of any foreign law. A foreign law must be
properly pleaded and proved as a fact. 30 Thus, if the foreign law involved is not properly
pleaded and proved, our courts will presume that the foreign law is the same as our local
or domestic or internal law. 31 This is what we refer to as the doctrine of processual
presumption.
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in accordance with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales, 32 said foreign law would still
not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established
public policy of the forum, the said foreign law, judgment or order shall not be applied. 33
Additionally, prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country. 34
The public policy sought to be protected in the instant case is the principle imbedded in
our jurisdiction proscribing the splitting up of a single cause of action. LibLex
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
"If two or more suits are instituted on the basis of the same cause of
action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others."
Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important
function of law; hence, a law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 35
Clearly then, English Law is not applicable. Cdpr
As to the second pivotal issue, we hold that the private respondent is entitled to the award
of actual or compensatory damages inasmuch as the act of petitioner BANTSA in
extrajudicially foreclosing the real estate mortgages constituted a clear violation of the
rights of herein private respondent ARC, as third-party mortgagor.
Actual or compensatory damages are those recoverable because of pecuniary loss in
business, trade, property, profession, job or occupation and the same must be proved,
otherwise if the proof is flimsy and non-substantial, no damages will be given. 36 Indeed,
the question of the value of property is always a difficult one to settle as valuation of real
property is an imprecise process since real estate has no inherent value readily
ascertainable by an appraiser or by the court. 37 The opinions of men vary so much
concerning the real value of property that the best the courts can do is hear all of the
witnesses which the respective parties desire to present, and then, by carefully weighing
that testimony, arrive at a conclusion which is just and equitable. 38
In the instant case, petitioner assails the Court of Appeals for relying heavily on the
valuation made by Philippine Appraisal Company. In effect, BANTSA questions the act of
the appellate court in giving due weight to the appraisal report composed of twenty three
pages, signed by Mr. Lauro Marquez and submitted as evidence by private respondent.
The appraisal report, as the records would readily show, was corroborated by the
testimony of Mr. Reynaldo Flores, witness for private respondent.
On this matter, the trial court observed:
"The record herein reveals that plaintiff-appellee formally offered as
evidence the appraisal report dated March 29, 1993 (Exhibit J, Records,
p. 409), consisting of twenty three (23) pages which set out in detail the
valuation of the property to determine its fair market value (TSN, April
22, 1994, p. 4), in the amount of P99,986,592.00 (TSN, ibid., p. 5),
together with the corroborative testimony of one Mr. Reynaldo F. Flores,
an appraiser and director of Philippine Appraisal Company, Inc.
(TSN, ibid., p. 3). The latter's testimony was subjected to extensive cross-
examination by counsel for defendant-appellant (TSN, April 22, 1994, pp.
6-22)." 39
In the matter of credibility of witnesses, the Court reiterates the familiar and well-
entrenched rule that the factual findings of the trial court should be respected. 40 The time-
tested jurisprudence is that the findings and conclusions of the trial court on the credibility
of witnesses enjoy a badge of respect for the reason that trial courts have the advantage of
observing the demeanor of witnesses as they testify. 41
This Court will not alter the findings of the trial court on the credibility of witnesses,
principally because they are in a better position to assess the same than the appellate
court. 42 Besides, trial courts are in a better position to examine real evidence as well as
observe the demeanor of witnesses. 43
Similarly, the appreciation of evidence and the assessment of the credibility of witnesses
rest primarily with the trial court. 44 In the case at bar, we see no reason that would justify
this Court to disturb the factual findings of the trial court, as affirmed by the Court of
Appeals, with regard to the award of actual damages.
In arriving at the amount of actual damages, the trial courts justified the award by
presenting the following ratiocination in its assailed decision 45 , to wit:
"Indeed, the Court has its own mind in the matter of valuation. The size
of the subject real properties are (sic) set forth in their individual titles,
and the Court itself has seen the character and nature of said properties
during the ocular inspection it conducted. Based principally on the
foregoing, the Court makes the following observations:
"1.The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose
del Monte, Bulacan, which is (sic) not distant from Metro Manila the
biggest urban center in the Philippines and are easily accessible
through well-paved roads;
"2.The properties are suitable for development into a subdivision for low
cost housing, as admitted by defendant's own appraiser (TSN, May 30,
1994, p. 31);
"3.The pigpens which used to exist in the property have already been
demolished. Houses of strong materials are found in the vicinity of the
property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing community. It
has even been shown that the house of the Barangay Chairman is located
adjacent to the property in question (Exh. 27), and the only remaining
piggery (named Cherry Farm) in the vicinity is about 2 kilometers away
from the western boundary of the property in question (TSN, November
19, p. 3); prcd
"4.It will not be hard to find interested buyers of the property, as
indubitably shown by the fact that on March 18, 1994, ICCS (the buyer
during the foreclosure sale) sold the consolidated real estate properties to
Stateland Investment Corporation, in whose favor new titles were issued,
i.e., TCT Nos. T-187781(m); T-187782(m), T-187783(m); T-16653P(m)
and T-166521(m) by the Register of Deeds of Meycauayan (sic),
Bulacan;
 "5.The fact that ICCS was able to sell the subject properties to Stateland
Investment Corporation for Thirty Nine Million (P39,000,000.00) Pesos,
which is more than triple defendant's appraisal (Exh. 2) clearly shows that
the Court cannot rely on defendant's aforesaid estimate (Decision,
Records, p. 603)."
It is a fundamental legal aphorism that the conclusions of the trial judge on the credibility
of witnesses command great respect and consideration especially when the conclusions are
supported by the evidence on record. 46 Applying the foregoing principle, we therefore
hold that the trial court committed no palpable error in giving credence to the testimony of
Reynaldo Flores, who according to the records, is a licensed real estate broker, appraiser
and director of Philippine Appraisal Company, Inc. since 1990. 47 As the records show,
Flores had been with the company for 26 years at the time of his testimony. prcd
Of equal importance is the fact that the trial court did not confine itself to the appraisal
report dated 29 March 1993, and the testimony given by Mr. Reynaldo Flores, in
determining the fair market value of the real property. Above all these, the record would
likewise show that the trial judge in order to appraise himself of the characteristics and
condition of the property, conducted an ocular inspection where the opposing parties
appeared and were duly represented.
Based on these considerations and the evidence submitted, we affirm the ruling of the trial
court as regards the valuation of the property
". . . a valuation of Ninety Nine Million Pesos (P99,000,000.00) for the
39-hectare properties (sic) translates to just about Two Hundred Fifty
Four Pesos (P254.00) per square meter. This appears to be, as the court so
holds, a better approximation of the fair market value of the subject
properties. This is the amount which should be restituted by the defendant
to the plaintiff by way of actual or compensatory damages . . ." 48
Further, petitioner ascribes error to the lower court for awarding an amount allegedly not
asked nor prayed for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory damages by the lower
court exceeded that prayed for in the complaint, the same is nonetheless valid, subject to
certain qualifications. cda
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
"SECTION 5.Amendment to conform to or authorize presentation of
evidence. When issues not raised by the pleadings are tried with the
express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment of
the pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any party
at any time, even after judgment; but failure to amend does not affect the
result of the trial of these issues. If evidence is objected to at the trial on
the ground that it is not within the issues made by the pleadings, the court
may allow the pleadings to be amended and shall do so with liberality if
the presentation of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a continuance to
enable the amendment to be made."
The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de
Agricultures de Talisay-Silay, Inc. 49 citing Northern Cement Corporation
vs. Intermediate Appellate Court 50 is enlightening:
"There have been instances where the Court has held that even without
the necessary amendment, the amount proved at the trial may be validly
awarded, as in Tuazon v. Bolanos (95 Phil. 106), where we said that if the
facts shown entitled plaintiff to relief other than that asked for, no
amendment to the complaint was necessary, especially where defendant
had himself raised the point on which recovery was based. The appellate
court could treat the pleading as amended to conform to the evidence
although the pleadings were actually not amended. Amendment is also
unnecessary when only clerical error or non substantial matters are
involved, as we held in Bank of the Philippine Islands vs. Laguna (48
Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed that the rule on
amendment need not be applied rigidly, particularly where no surprise or
prejudice is caused the objecting party. And in the recent case of National
Power Corporation vs. Court of Appeals (113 SCRA 556), we held that
where there is a variance in the defendant's pleadings and the evidence
adduced by it at the trial, the Court may treat the pleading as amended to
conform with the evidence. prLL
"It is the view of the Court that pursuant to the above-mentioned rule and
in light of the decisions cited, the trial court should not be precluded from
awarding an amount higher than that claimed in the pleading
notwithstanding the absence of the required amendment. But it is upon
the condition that the evidence of such higher amount has been presented
 properly, with full opportunity on the part of the opposing parties to
support their respective contentions and to refute each other's evidence.
"The failure of a party to amend a pleading to conform to the evidence
adduced during trial does not preclude an adjudication by the court on the
basis of such evidence which may embody new issues not raised in the
pleadings, or serve as a basis for a higher award of damages. Although
the pleading may not have been amended to conform to the evidence
submitted during trial, judgment may nonetheless be rendered, not simply
on the basis of the issues alleged but also on the basis of issues discussed
and the assertions of fact proved in the course of trial. The court may treat
the pleading as if it had been amended to conform to the evidence,
although it had not been actually so amended. Former Chief Justice
Moran put the matter in this way:
'When evidence is presented by one party, with the expressed or
implied consent of the adverse party, as to issues not alleged in the
pleadings, judgment may be rendered validly as regards those
issues, which shall be considered as if they have been raised in the
pleadings. There is implied consent to the evidence thus presented
when the adverse party fails to object thereto.'
"Clearly, a court may rule and render judgment on the basis of the
evidence before it even though the relevant pleading had not been
previously amended, so long as no surprise or prejudice is thereby caused
to the adverse party. Put a little differently, so long as the basis
requirements of fair play had been met, as where litigants were given full
opportunity to support their respective contentions and to object to or
refute each other's evidence, the court may validly treat the pleadings as if
they had been amended to conform to the evidence and proceed to
adjudicate on the basis of all the evidence before it."
In the instant case, in as much as the petitioner was afforded the opportunity to refute and
object to the evidence, both documentary and testimonial, formally offered by private
respondent, the rudiments of fair play are deemed satisfied. In fact, the testimony of
Reynaldo Flores was put under scrutiny during the course of the cross-examination. Under
these circumstances, the court acted within the bounds of its jurisdiction and committed no
reversible error in awarding actual damages the amount of which is higher than that prayed
for. Verily, the lower court's actuations are sanctioned by the Rules and supported by
jurisprudence. prcd
Similarly, we affirm the grant of exemplary damages although the amount of Five Million
Pesos (P5,000,000.00) awarded, being excessive, is subject to reduction. Exemplary or
corrective damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages. 51 Considering its
purpose, it must be fair and reasonable in every case and should not be awarded to unjustly
enrich a prevailing party. 52 In our view, an award of P50,000.00 as exemplary damages
in the present case qualifies the test of reasonableness.
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION of the
amount awarded as exemplary damages. Accordingly, petitioner is hereby ordered to pay
private respondent the sum of P99,000,000.00 as actual or compensatory damages;
P50,000.00 as exemplary damage and the costs of suit. LexLib
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.
THIRD DIVISION
[G.R. No. 55960. November 24, 1988.]
14. YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN
YEN, petitioners, vs. AIDA SY-GONZALES, MANUEL SY,
TERESITA SY-BERNABE, RODOLFO SY, and HONORABLE
COURT OF APPEALS, respondents.
Montesa, Albon & Associates for petitioner.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.
DECISION
CORTES, J p:
Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City where he was then
residing, leaving behind real and personal properties here in the Philippines worth
P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a
petition for the grant of letters of administration docketed as Special Proceedings Case No.
C-699 of the then Court of First Instance of Rizal Branch XXXIII, Caloocan City. In said
petition they alleged among others that (a) they are the children of the deceased with
Asuncion Gillego; (b) to their knowledge Sy Kiat died intestate; (c) they do not recognize
Sy Kiat's marriage to Yao Kee nor the filiation of her children to him; and, (d) they
nominate Aida Sy-Gonzales for appointment as administratrix of the intestate estate of the
deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who
alleged that: (a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19,
1931 in China; (b) the other oppositors are the legitimate children of the deceased with
Yao Kee; and, (c) Sze Sook Wah is the eldest among them and is competent, willing and
desirous to become the administratrix of the estate of Sy Kiat [Record on Appeal, pp. 12-
13; Rollo, p. 107.]
After hearing, the probate court, finding among others that:
(1)Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27;
Rollo, pp. 49-64;]
(2)Sze Sook Wah, Sze Lai Cho and Sze Chum Yen are the legitimate
children of Yao Kee with Sy Kiat [CFI decision, pp. 28-31; Rollo. pp. 65-
68;] and,
(3)Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy
are the acknowledged illegitimate offsprings of Sy Kiat with Asuncion
Gillego [CFI decision, pp. 27-28; Rollo, pp. 64-65.]
held in favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the
administratrix of the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo,
pp. 106.]
On appeal the Court of Appeals rendered a decision modifying that of the probate court,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is
hereby MODIFIED and SET ASIDE and a new judgment rendered as
follows:
(1)Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy-
Bernabe and Rodolfo Sy acknowledged natural children of the deceased
Sy Kiat with Asuncion Gillego, an unmarried woman with whom he lived
as husband and wife without benefit of marriage for many years:
(2)Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen,
the acknowledged natural children of the deceased Sy Kiat with his
Chinese wife Yao Kee, also known as Yui Yip, since the legality of the
alleged marriage of Sy Kiat to Yao Kee in China had not been proven to
be valid to the laws of the Chinese People's Republic of China (sic);
(3)Declaring the deed of sale executed by Sy Kiat on December 7, 1976
in favor of Tomas Sy (Exhibit "G-1", English translation of Exhibit "G")
of the Avenue Tractor and Diesel Parts Supply to be valid and
accordingly, said property should be excluded from the estate of the
deceased Sy Kiat; and
(4)Affirming the appointment by the lower court of Sze Sook Wah as
judicial administratrix of the estate of the deceased. [CA decision, pp. 11-
12; Rollo, pp. 36-37.]
From said decision both parties moved for partial reconsideration, which was however
denied by respondent court. They thus interposed their respective appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled
"Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy v. Court of Appeals,
Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and
(4) of the dispositive portion of the Court of Appeals' decision. The Supreme Court
however resolved to deny the petition and the motion for reconsideration. Thus on March
8, 1982 entry of judgment was made in G.R. No. 56045. *
The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive
portion of the decision of the Court of Appeals. This petition was initially denied by the
Supreme Court on June 22, 1981. Upon motion of the petitioners the Court in a resolution
dated September 16, 1981 reconsidered the denial and decided to give due course to this
petition.
Herein petitioners assign the following as errors:
I.RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN
DECLARING THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT
HAVE (sic) BEEN PROVEN VALID IN ACCORDANCE WITH LAWS
OF THE PEOPLE'S REPUBLIC OF CHINA.
II.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
DECLARING AIDA SY-GONZALES, MANUEL SY, TERESITA SY-
BERNABE AND RODOLFO SY AS NATURAL CHILDREN OF SY
KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p. 6.]
I.Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese
law and custom was conclusively proven. To buttress this argument they rely on the
following testimonial and documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as follows:
Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in
Fookien, China; that she does not have a marriage certificate because the
practice during that time was for elders to agree upon the betrothal of
their children, and in her case, her elder brother was the one who
contracted or entered into [an] agreement with the parents of her husband;
that the agreement was that she and Sy Kiat would be married, the
wedding date was set, and invitations were sent out; that the said
agreement was complied with; that she has five children with Sy Kiat, but
two of them died; that those who are alive are Sze Sook Wah, Sze Lai
Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is already
38 years old; that Sze Sook Wah was born on November 7, 1939; that she
and her husband, Sy Kiat, have been living in Fookien, China before he
went to the Philippines on several occasions; that the practice during the
time of her marriage was a written document [is exchanged] just between
the parents of the bride and the parents of the groom, or any elder for that
matter; that in China, the custom is that there is a go-between, a sort of
marriage broker who is known to both parties who would talk to the
parents of the bride-to-be; that if the parents of the bride-to-be agree to
have the groom-to-be their son-in-law, then they agree on a date as an
engagement day; that on engagement day, the parents of the groom would
bring some pieces of jewelry to the parents of the bride-to-be, and then
one month after that, a date would be set for the wedding, which in her
case, the wedding date to Sy Kiat was set on January 19, 1931; that
during the wedding the bridegroom brings with him a couch (sic) where
the bride would ride and on that same day, the parents of the bride would
give the dowry for her daughter and then the document would be signed
by the parties but there is no solemnizing officer as is known in the
Philippines; that during the wedding day, the document is signed only by
the parents of the bridegroom as well as by the parents of the bride; that
the parties themselves do not sign the document; that the bride would
then be placed in a carriage where she would be brought to the town of
the bridegroom and before departure the bride would be covered with a
sort of a veil; that upon reaching the town of the bridegroom, the
bridegroom takes away the veil; that during her wedding to Sy Kiat
(according to said Chinese custom), there were many persons present;
that after Sy Kiat opened the door of the carriage, two old ladies helped
her go down the carriage and brought her inside the house of Sy Kiat; that
during her wedding, Sy Chiok, the eldest brother of Sy Kiat, signed the
document with her mother; that as to the whereabouts of that document,
she and Sy Kiat were married for 46 years already and the document was
left in China and she doubt if that document can still be found now; that it
was left in the possession of Sy Kiat's family; that right now, she does not
know the whereabouts of that document because of the lapse of many
years and because they left it in a certain place and it was already eaten
by the termites; that after her wedding with Sy Kiat, they lived
immediately together as husband and wife, and from then on, they lived
together; that Sy Kiat went to the Philippines sometime in March or April
in the same year they were married; that she went to the Philippines in
1970, and then came back to China; that again she went back to the
Philippines and lived with Sy Kiat as husband and wife; that she begot
her children with Sy Kiat during the several trips by Sy Kiat made back to
China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]
Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was
among the many people who attended the wedding of his sister with Sy Kiat and that no
marriage certificate is issued by the Chinese government, a document signed by the
parents or elders of the parties being sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.]
Third, the statements made by Asuncion Gillego when she testified before the trial court to
the effect that (a) Sy Kiat was married to Yao Kee according to Chinese custom; and, (b)
Sy Kiat's admission to her that he has a Chinese wife whom he married according to
Chinese custom [CFI decision, p. 17; Rollo, p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3,
1972 where the following entries are found: "Marital status Married"; "If married give
name of spouse Yao Kee"; "Address China"; "Date of marriage 1931"; and
"Place of marriage China" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968
where the following entries are likewise found: "Civil status Married"; and, "If married,
state name and address of spouse Yao Kee Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the
People's Republic of China to the effect that "according to the information available at the
Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese
were married on January 19, 1931 in Fukien, the People's Republic of China" [Exhibit
"5".]
These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat.
However, the same do not suffice to establish the validity of said marriage in accordance
with Chinese law or custom.
Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed
(practiced) as a social rule, legally binding and obligatory" [In the Matter of the Petition
for Authority to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and
Reyes", July 30, 1979, SCRA 3, 12 citing JBL Reyes & RC Puno, Outline of Phil. Civil
Law, Fourth Ed. Vol. 1, p. 7.] The law requires that "a custom must be proved as a fact,
according to the rules of evidence" [Article 12, Civil Code.] On this score the Court had
occasion to state that "a local custom as a source of right can not be considered by a court
of justice unless such custom is properly established by competent evidence like any other
fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a
higher degree, should be required of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code which states that:
Art. 71.All marriages performed outside the Philippines in accordance
with the laws in force in the country where they were performed, and
valid there as such, shall also be valid in this country, except bigamous,
polygamous, or incestuous marriages, as determined by Philippine law.
(Emphasis supplied.) **
Construing this provision of law the Court has held that to establish a valid foreign
marriage two things must be proven, namely: (1) the existence of the foreign law as a
question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v.
Cheong Seng Gee, 43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of Court. With respect to
an unwritten foreign law, Rule 130 section 45 states that:
SEC. 45.Unwritten law. The oral testimony of witnesses, skilled
therein, is admissible as evidence of the unwritten law of a foreign
country, as are also printed and published books of reports of decisions of
the courts of the foreign country, if proved to be commonly admitted in
such courts.
Proof of a written foreign law, on the other hand, is provided for under Rule 132 section
25, thus:
SEC. 25.Proof of public or official record. An official record or an
entry therein, when admissible for any purpose, may be evidenced by an
official publication thereof or by a copy 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 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 has interpreted section 25 to include competent evidence like the testimony of a
witness to prove the existence of a written foreign law [Collector of Internal Revenue v.
Fisher, 110 Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works v. Muzzal,
61 Phil. 471 (1935).]
In the case at bar petitioners did not present any competent evidence relative to the law
and custom of China on marriage. The testimonies of Yao and Gan Ching cannot be
considered as proof of China's law or custom on marriage not only because they are self-
serving evidence, but more importantly, there is no showing that they are competent to
testify on the subject matter. For failure to prove the foreign law or custom, and
consequently, the validity of the marriage in accordance with said law or custom, the
marriage between Yao Kee and Sy Kiat cannot be recognized in this jurisdiction.

Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to
prove the Chinese law on marriage as judicial notice thereof had been taken by this Court
in the case of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the principle that
Philippine courts cannot take judicial notice of foreign laws. They must be alleged and
proved as any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48
(1915); Fluemer v. Hix, 54 Phil. 610 (1930).]
Moreover a reading of said case would show that the party alleging the foreign marriage
presented a witness, one Li Ung Bieng, to prove that matrimonial letters mutually
exchanged by the contracting parties constitute the essential requisite for a marriage to be
considered duly solemnized in China. Based on his testimony, which as found by the
Court is uniformly corroborated by authors on the subject of Chinese marriage, what was
left to be decided was the issue of whether or not the fact of marriage in accordance with
Chinese law was duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court has indeed taken judicial
notice of the law of China on marriage in the aforecited case, petitioners however have not
shown any proof that the Chinese law or custom obtaining at the time the Sy Joc
Lieng marriage was celebrated in 1847 was still the law when the alleged marriage of Sy
Kiat to Yao Kee took place in 1931 or eighty-four (84) years later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being
applicable to the instant case. They aver that the judicial pronouncement in
the Memoracion case, that the testimony of one of the contracting parties is competent
evidence to show the fact of marriage, holds true in this case.
The Memoracion case however is not applicable to the case at bar as said case did not
concern a foreign marriage and the issue posed was whether or not the oral testimony of a
spouse is competent evidence to prove the fact of marriage in a complaint for adultery.
Accordingly, in the absence of proof of the Chinese law on marriage, it should be
presumed that it is the same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076,
March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her testimony that there
was no solemnizing officer as is known here in the Philippines [See Article 56, Civil
Code] when her alleged marriage to Sy Kiat was celebrated [CFI decision, p. 14; Rollo, p.
51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in
this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]
II.The second issue raised by petitioners concerns the status of private respondents.
Respondent court found the following evidence of petitioners' filiation:
(1)Sy Kiat's Master Card of Registered Alien where the following are
entered: "Children if any: give number of children Four"; and, "Name
All living in China" [Exhibit "SS-1";]
(2)the testimony of their mother Yao Kee who stated that she had five
children with Sy Kiat, only three of whom are alive namely, Sze Sook
Wah Sze Lai Chu and Sze Chin Yan [TSN, December 12, 1977, pp. 9-
11;] and,
(3)an affidavit executed on March 22, 1961 by Sy Kiat for presentation to
the Local Civil Registrar of Manila to support Sze Sook Wah's
application for a marriage license, wherein Sy Kiat expressly stated that
she is his daughter [Exhibit "3".]
Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has
three daughters with his Chinese wife, two of whom Sook Wah and Sze Kai Cho she
knows, and one adopted son [TSN, December 6, 1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with Sy Kiat according
to the laws of China, they cannot be accorded the status of legitimate children but only that
of acknowledged natural children. Petitioners are natural children, it appearing that at the
time of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to
marry one another [See Art. 269, Civil Code.] And they are acknowledged children of the
deceased because of Sy Kiat's recognition of Sze Sook Wah [Exhibit "3"] and its extension
to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil
Code.]
Private respondents on the other hand are also the deceased's acknowledged natural
children with Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years
without the benefit of marriage. They have in their favor their father's acknowledgment,
evidenced by a compromise agreement entered into by and between their parents and
approved by the Court of First Instance on February 12, 1974 wherein Sy Kiat not only
acknowledged them as his children by Asuncion Gillego but likewise made provisions for
their support and future inheritance, thus:
xxx xxx xxx
 2.The parties also acknowledge that they are common-law husband and
wife and that out of such relationship, which they have likewise decided
to definitely and finally terminate effective immediately, they begot five
children, namely: Aida Sy, born on May 30, 1950; Manuel Sy, born on
July 1, 1953; Teresita Sy, born on January 28, 1955; Ricardo Sy now
deceased, born on December 14, 1956; and Rodolfo Sy, born on May 7,
1958.
3.With respect to the AVENUE TRACTOR AND DIESEL PARTS
SUPPLY . . ., the parties mutually agree and covenant that
(a)The stocks and merchandise and the furniture and
equipments . . ., shall be divided into two equal shares between,
and distributed to, Sy Kiat who shall own one-half of the total
and the other half to Asuncion Gillego who shall transfer the same
to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and
Rodolfo Sy.
(b)the business name and premises . . . shall be retained by
Sy Kiat. However, it shall be his obligation to give to the
aforenamed children an amount of One Thousand Pesos
(P1,000;00) monthly out of the rental of the two doors of the same
building now occupied by Everett Construction.
xxx xxx xxx
(5)With respect to the acquisition, during the existence of the common-
law husband-and-wife relationship between the parties, of the real estates
and properties registered and/or appearing in the name of Asuncion
Gillego . . ., the parties mutually agree and covenant that the said real
estates and properties shall be transferred in equal shares to their
children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy, but to
be administered by Asuncion Gillego during her lifetime. . . . [Exhibit
"D".] (Emphasis supplied.)
xxx xxx xxx
This compromise agreement constitutes a statement before a court of record by which a
child may be voluntarily acknowledged [See Art. 278, Civil Code.]
Petitioners further argue that the questions on the validity of Sy Kiat's marriage to Yao
Kee and the paternity and filiation of the parties should have been ventilated in the
Juvenile and Domestic Relations Court.
Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled
"An Act Revising Rep. Act No. 3278, otherwise known as the Charter of the City of
Caloocan"; with regard to the Juvenile and Domestic Relations Court:
SEC. 91-A.Creation and Jurisdiction of the Court.
xxx xxx xxx
The provisions of the Judiciary Act to the contrary notwithstanding, the
court shall have exclusive original jurisdiction to hear and decide the
following cases;
xxx xxx xxx
(2)Cases involving custody, guardianship, adoption, revocation of
adoption, paternity and acknowledgment;
(3)Annulment of marriages, relief from marital obligations legal
separation of spouses, and actions for support;
(4)Proceedings brought under the provisions of title six and title seven,
chapters one to three of the civil code;
xxx xxx xxx
and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21 SCRA
1324] reiterated in Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA 307.]
With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, the Juvenile and Domestic Relations Courts were abolished.
Their functions and jurisdiction are now vested with the Regional Trial Courts
[See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Bellosillo, G.R. No. L-47407,
August 12, 1986, 143 SCRA 356, 360] hence it is no longer necessary to pass upon the
issue of jurisdiction raised by petitioners.
Moreover, even without the enactment of Batas Pambansa Blg. 129 we find in Rep. Act
No. 5502 sec. 91-A last paragraph that:
 xxx xxx xxx
If any question involving any of the above matters should arise as an
incident in any case pending in the ordinary court, said incident shall be
determined in the main case.
xxx xxx xxx
As held in the case of Divinagracia v. Rovira [G.R. No. L-42615. August 10, 1976, 72
SCRA 307]:
CONCEPCION, J p:
xxx xxx xxx
It is true that under the aforequoted section 1 of Republic Act No.
4834 **** a case involving paternity and acknowledgment may be
ventilated as an incident in the intestate or testate proceeding (See
Baluyot vs. Ines Luciano, L-42215, July 13, 1976). But that legal
provision presupposes that such an administration proceeding is pending
or existing and has not been terminated. [at pp. 313-314.] (Emphasis
supplied.)
xxx xxx xxx
The reason for this rule is not only "to obviate the rendition of conflicting rulings on
the same issue by the Court of First Instance and the Juvenile and Domestic Relations
Court" [Vda. de Baluyut v. Luciano, G.R. No. L-42215, July 13, 1976, 72 SCRA 52,
63] but more importantly to prevent multiplicity of suits.
Accordingly, this Court finds no reversible error committed by respondent court.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Fernan, C .J ., Gutierrez, Jr., Feliciano and Bidin, JJ ., concur.
EN BANC
[G.R. No. L-6897. November 29, 1956.]
15. In the Matter of the Claim for Attorney's Fees. CLARO M.
RECTO, claimant-appellee, vs. ESPERANZA P. DE HARDEN and
FRED M. HARDEN, defendants-appellants.
DECISION
This is an appeal taken by Esperanza P. de Harden and Fred M. Harden from a
decision of the Court of First Instance of Manila, the pertinent part of which is of the
following tenor:.
"The contingent fee to which the claimant is entitled under
paragraph 3 of the contract, Exhibit JJJ or 20, is 20% of P1,920,554.85 or
the sum of P384,110.97.
"WHEREFORE, this Court hereby approves the recommendation
of the Commissioner with the above-stated modification, and finds that
Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED
EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS
AND NINETY-SEVEN CENTAVOS (P384,110.97), representing 20%
of Esperanza P. de Harden's share in the conjugal properties owned by her
and her husband, Fred M. Harden, as contingent fee stipulated in
paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20,
and the said Esperanza P. de Harden is hereby ordered to pay the said
amount above-stated." It appears that sometime in July, 1941, appellant,
Mrs. Harden, and appellee, Claro M. Recto, executed the following:
"CONTRACT OF PROFESSIONAL SERVICES
KNOW ALL MEN BY THESE PRESENTS:
"That I, ESPERANZA PEREZ DE HARDEN, of age, married to
Fred M. Harden, and temporarily residing in the Philippines, with address
at 534 Sales Street, Manila, have engaged the services of Attorney Claro
M. Recto to appear and act as my counsel in the action which I will file
against my husband, Fred M. Harden, for the purpose of securing an
increase in the amount of support being received by me from the conjugal
partnership of myself and said Fred M. Harden, and for the purpose
likewise of protecting and preserving my rights in the properties of the
said conjugal partnership, in contemplation of the divorce suit which I
intent to file against him in the competent Court of California and of the
liquidation of the conjugal partnership between us, this contract of
services to be under the following conditions:
"1.That in lieu of retainer fee, which under the circumstances I am
not in a position to pay, I hereby agree to pay Attorney Claro M. Recto,
such payment to be made monthly, during the pendency of the litigation
and until the termination of the same, twenty-five (25%) per cent of the
total increase in allowance or pension which may be awarded to me by
the court over and above the amount of P1,500.00 which I now receive
monthly from defendant Fred M. Harden out of the funds of the conjugal
partnership; Provided, that should the case be terminated or an amicable
settlement thereof be arrived at by the parties before the expiration of two
years from the date of the filing of the complaint, I shall continue to pay
the said twenty-five (25%) per cent up to the end of said period.
"2.That the aforesaid monthly payments shall be in addition to
whatever amount may be adjudged by the court against the defendant
Fred M. Harden or against the conjugal partnership by way of litis
expense, that is, attorney's fees chargeable as expenses of litigation.
"3.That as full and complete satisfaction of the fees of Attorney
Claro M. Recto in connection with the case above referred to, and said
case being for the purposes aforestated, that is, to secure an increase in
the amount of support I now receive as well as to protect and preserve my
rights and interest in the properties of the conjugal partnership, in
contemplation of divorce and of the liquidation of said partnership, I
hereby agree to pay said Attorney Claro M. Recto twenty (20%) per cent
of the value of the share and participation which I may receive in the
funds and properties of the said conjugal partnership of myself and
defendant Fred M. Harden, as a result of the liquidation thereof either by
death, divorce, judicial separation, compromise or by any means or
method by virtue of which said partnership is or may be liquidated.
"4.All expenses in connection with the litigation are to be for my
account, but the same may be advanced by Attorney Claro M. Recto, to
be reimbursed to him either from the money which I receive by way of
support or from the funds of the conjugal partnership.
"5.It is hereby understood that this contract includes the services
of Attorney Claro M. Recto in connection with the securing of the
liquidation of the properties and assets of the conjugal partnership of
myself and Fred M. Harden, upon dissolution of said partnership or for
any other cause mentioned in Paragraph (3) hereof.
IN WITNESS WHEREOF, I have signed these presents in the
City _____ of Manila, Philippines this _______ day of July, 1941.
s/ Esperanza P. de Harden
t/ ESPERANZA P. DE HARDEN
ACCEPTED:
s/ Claro M. Recto
t/ CLARO M. RECTO"
In compliance therewith, on July 12, 1941, the appellee, as counsel for Mrs.
Harden, commenced Civil Case No. 59634 of the Court of First Instance of Manila,
entitled "Esperanza P. de Harden vs. Fred M. Harden and Jose Salumbides." In the
complaint therein filed, it was prayed, among other things: (a) that Mrs. Harden be
given the exclusive administration of the business and all properties of the conjugal
partnership of Mr. and Mrs. Harden; (b) that, in the event of denial of this prayer, the
defendants be ordered to inform her "of everything pertaining to the administration of
said business and properties", as well as to render accounts thereof and to permit her to
examine the books and records pertinent thereto; (c) that Mr. Harden be ordered to
account to Mrs. Harden, and to return to this jurisdiction, the sum of P449,015.44
allegedly withdrawn by him from the Philippines or sent by him to Hongkong on April
1, 1941; (d) that defendant Salumbides be ordered to account for all moneys,
amounting to P285,000.00, belonging to the business and assets of said conjugal
partnership and deposited by him in a safety box, either in his name, or in that of
Antonio Wilson, from January 23 to December 23, 1940; (e) that the transfer, in the
name of Salumbides, of certain shares of stock, allegedly belonging to the conjugal
partnership, be rescinded and said defendant ordered to transfer said shares of stock in
the name of Mrs. Harden or in that of Mr. and Mrs. Harden, should Mr. Harden be
allowed to continue as administrator of said partnership; ( f ) that the transfer, made by
Mr. Harden and/or by defendant Salumbides, as his attorney-in-fact, of 36,000 shares
of stock of the Angelo Mining Company, to some residents of Hongkong, be rescinded
and said shares returned to the assets of the conjugal partnership and placed in the
name of Mr. and Mrs. Harden; (g) that the monthly allowance of Mrs. Harden be
increased from P1,500 to P15,000; (h) that, pending final decision, Mr. Harden be
ordered to increase the allowance or pension of Mrs. Harden and their daughter Sarah
Elizabeth to P10,000 a month; and (i) that a writ of preliminary injunction be issued
restraining the defendants from disposing of the assets of the conjugal partnership in
fraud of Mrs. Harden.
 By an order dated July 12, 1941, the court authorized the issuance of said writ,
upon the filing of the corresponding bond. It appears that, pursuant to an agreement
submitted by both parties, and with a view to avoiding unnecessary embarrassment,
restraint or inconvenience in the financial operations of the business enterprises
affected by said writ of preliminary injunction, the same was amended by an order
dated July 19, 1941, in the sense that.
". . . without prejudicing in any way the rights of the parties in this
case, a separate bank account be established in the Chartered Bank of
India, Australia and China, of Manila, and all transactions in connection
with the aforesaid businesses passed through that account by Mr. Harden
or his duly authorized representative, who at present is Mr. Salumbides,
without the necessity of securing a particular order from this Court on
each occasion; that the present funds in the Philippine National Bank in
the name of Plaza Lunch and Fred M. Harden be utilized for the purpose
of starting said special bank account in the Chartered Bank of India,
Australia and China; that all income from the aforesaid businesses be
deposited in this special bank account and no checks be drawn upon the
same, except to pay the necessary overhead and running expenses
including purchases of tobacco, merchandise, etc., required for the proper
operation of said businesses; that a new set of books be opened by Mr.
Harden or his duly authorized representative covering all business
transactions passed through said special bank account and the same be
opened for inspection by the plaintiff's duly authorized representative.
"The order of injunction of July 12, 1941, is modified only to the
above extent, and in all other respects is maintained."
Subsequently, the Philippines was invaded by the Japanese and placed under
military occupation. Then came the liberation, in the course of which the records of
this case were destroyed. On October 23, 1946, said records were reconstituted at the
instance of appellee herein. Thereafter, the proceedings were resumed and, in due
course, the Court of First Instance of Manila rendered, on or about October 31, 1949, a
decision the dispositive part of which we quote:
"In view of the foregoing considerations, this court finds and so
holds that
"(a)Fred M. Harden abandoned his domicile of origin in New
Jersey and established a domicile of choice in Manila, Philippines, since
1901;
"(b)The matrimonial domicile of Fred M. Harden and Esperanza
P. de Harden was established in Manila, Philippines, from the date of
their marriage on December 14, 1917;
"(c)Since they did not execute any antenuptial contract before
their marriage, all the properties, real or personal, acquired by either or
both of them on and after December 14, 1917, up to the present, over and
above the sum of P20,000.00 representing Fred M. Harden's capital, are
hereby declared conjugal properties;
"(d)The total amount of P1,944,794.37 representing deposits in
safety deposit boxes in the name of Jose Salumbides, the selling price of
the house in Los Angeles, California, and the pre-war and post-war
remittances abroad of Fred M. Harden, from which has already been
deducted the sum of P160,000.00 covering payments for deficiency
Federal income taxes and attorney's fees, both in the tax case and the
present one, is hereby declared chargeable to the share of defendant
Harden and deductible from whatever participation he may still have in
the said conjugal partnership upon the liquidation thereof, upon his failure
to return and deposit them in the name of the Plaza Lunch with the
Manila branch of the Chartered Bank of India, Australia and China up to
the time this decision shall become final;
"(e)A conjugal lien be annotated in the original and owner's
duplicate of Transfer Certificates of Title Nos. 24393, 52436 and 54911
of the Register of Deeds of Manila and in Original Certificate of Title No.
2292 of Quezon Province, and on all the certificates of shares belonging
to said conjugal partnership, as well as in the corresponding books of the
companies or corporations issuing them, whereby it will be made to
appear that any subsequent alienation or encumbrance of said properties
by Fred M. Harden alone or his representative without the consent of his
wife will be deemed fraudulent and subject to revocation or cancellation
for being in fraud and prejudicial to the right of Esperanza P. de Harden;
"( f )Within a period of fifteen (15) days after this decision shall
have become final, Fred M. Harden and Esperanza P. de Harden are
hereby ordered to execute a document to be approved by this court
creating and express active trust upon the remaining cash assets and
income of the conjugal partnership in the Philippines, whereby the
Philippine Trust Company, with offices in Manila, will act as trustee,
subject to the right of Fred M. Harden to receive therefrom the sum of
P2,500,00 a month by way of allowance and an equal amount for the
plaintiff as separate support and maintenance;
"(g)Within thirty (30) days after this decision shall have become
final, Fred M. Harden shall inform the plaintiff of all the properties and
businesses of the conjugal partnership, be they in the Philippines or
 abroad, and render a true and complete accounting of the earnings and
profits thereof;
"(h)The plaintiff is entitled to litis expensae in the amount of
P175,000.00 for services rendered by her counsel up to the rendition of
this judgment, which Fred M. Harden or the herein receiver is ordered to
pay within a period of fifteen (15) days after this decision has become
final; and
"(i)The writ of preliminary injunction of July 12, 1941, is hereby
declared permanent and the order of receivership of November 20, 1946,
is hereby maintained, but said auxiliary remedies will be automatically
lifted upon the conclusion of the annotation of the conjugal lien and the
execution of the deed of trust above mentioned. Without costs.
"IT IS SO ORDERED."
The defendants appealed from said decision to this Court, where the case was
docketed as case No. L-3687. While the appeal was thus pending before us, herein
appellee filed a manifestation and a motion, both dated February 20, 1952. In said
"manifestation", appellee stated that Mrs. Harden had instructed him, by letter, to
"discontinue all proceedings relative to" said case, "vacate all orders and judgments
rendered therein, and abandon and nullify all her claims to the conjugal partnership
existing between her and Mr. Harden", in accordance with several instruments dated
January 29, 1952, and executed without the knowledge, advise and consent of said
appellee, as counsel for Mrs. Harden, whereby: (1) Mr. and Mrs. Harden had
purportedly agreed to settle their differences in consideration of the sum of $5,000 paid
by Mr. Harden to Mrs. Harden, and a monthly pension of P500 to be paid by him to
her; (2) Mr. Harden had created a trust fund of $20,000 from which said monthly
pension of $500 would be taken; and (3) Mr. and Mrs. Harden had mutually released
and forever discharged each other from all actions, debts, duties, accounts, demands
and claims to the conjugal partnership, in consideration of the sum of $1. It was further
asserted, in appellee's "manifestation", that the purpose of the said instruments,
executed by Mr. and Mrs. Harden, was to defeat the claim of the former for attorney's
fees, for which reason, he prayed, in his aforementioned motion, that
"a)Pending the resolution of this motion, the receiver appointed
herein be authorized to continue holding the properties above mentioned
in his custody in order not to defeat the undersigned's inchoate lien on
them;
"b)A day set aside to receive the evidence of the undersigned and
those of the plaintiff and the defendant Fred M. Harden, in order to
determine the amount of fees due to the undersigned, by the appointment
of a referee or commissioner for the reception of such
"c)After due hearing, the undersigned be declared entitled to the
sum of P400,000.00 as his fees for services rendered in behalf of the
plaintiff in this case, under paragraph 3 of the contract, Annex 'A', and to
that end a charging lien therefore be established upon the properties
above-mentioned;
"d)And the receiver be ordered to pay to the undersigned the full
amount of the fees to which the latter is found to be entitled."
Counsel for the defendants-appellants, in turn, moved for the dismissal of the
case, to which appellee objected. Acting upon the issues raised in such motion for
dismissal and in appellee's motion to establish and enforce his charging lien, as counsel
for Mrs. Harden, this Court issued on July 22, 1952, a resolution the pertinent part of
which reads:
"It will be seen from the above that the defendants-appellants pray
for the complete dismissal of the above entitled case without prejudice to
the annotation of the contingent claim of Attorney Claro M. Recto on the
property under receivership, other than the 368,553 shares of the Balatoc
Mining Company which belong to Fred M. Harden. On the other hand,
Attorney Claro M. Recto agrees to the lifting of the writ of preliminary
injunction, the orders of contempt and commitment, and all other
interlocutory orders which were issued in the course of this case, with the
exception of the receivership, but objects to the dismissal of the case on
the ground that, since receivership is merely an auxiliary remedy, the
present case should be allowed to remain pending for the purpose of
maintaining the receivership to safeguard his right to collect the fees that
may be due him.
"Attorney Claro M. Recto prays that a commissioner or referee be
immediately appointed by this Court to receive evidence in support of his
allegations as to his attorney's lien and its enforcement. Counsel for the
defendants-appellants does not object to this proceeding provided that the
restrictions set forth by him be observed. However, this Court does not
have the proper facilities for receiving evidence in order to determine the
amount of the fees claimed by Attorney Claro M. Recto, and it is deemed
advisable that this matter be determined by the Court of First Instance.
This is specially so considering the opposition to the claim of Attorney
Claro M. Recto filed by Attorney J. W. Ferrier, Sr. in behalf of Esperanza
P. de Harden.
"In view of the foregoing, the above entitled case is hereby
remanded to the court of origin in order to determine the amount of fees
 claimed by Attorney Claro M. Recto in his motion dated February 20,
1952.
"It is understood that, after said fees had been finally determined
and paid, this case will be completely dismissed as prayed for by the
defendants-appellants, without prejudice to considering the claim of the
receiver for compensation as stated in his urgent motion dated July 2,
1952. "Pending the determination of the amount of fees claimed by
Attorney Claro M. Recto, the writ of preliminary injunction, the orders of
contempt and commitment, and all interlocutory orders which were
issued in the course of this case, are hereby lifted and vacated, and with
regard to the receivership, the same is hereby dissolved, only with respect
to the 368,553 shares of the Balatoc Mining Company. As to the rest of
the properties, the receivership shall be maintained."
In compliance with said resolution, the records of this case were remanded to
the lower court, which, on September 2, 1952, designated a commissioner to receive
evidence on the amount of the fees collectible by herein appellee and to report thereon.
After due hearing, said commissioner submitted, on February 6, 1953, a report of
about one hundred (100) pages of the printed record on appeal, setting forth, in detail,
the evidence introduced by both parties, and his findings of fact, with the following
conclusion and recommendation:
"Taking into consideration the value of the properties involved in
this litigation, the length of time in which claimant had handled the same
for Esperanza Harden, the volume and quality of the work performed, the
complicated legal questions involved, the responsibility assumed by the
claimant as counsel, his reputation in the bar, the difficulties encountered
by him while handling the same in which he had to work hard every inch
of the way because of the stiff oppositions filed by adverse counsel, the
diligence he employed not only in the preservation of the records in his
possession during the days of enemy occupation but also in the protection
of the interests of Esperanza Harden, his successful handling of said case
and those cases growing out of it which reached the Supreme Court, and
the extra services he rendered in her behalf in the tax and other court
cases, the undersigned Commissioner concludes that claimant is entitled
to the full amount of 20% of Esperanza Harden's share of the conjugal
properties, as provided in paragraph 3 of the Contract of Professional
Services, Exhibit JJJ.
"WHEREFORE, the undersigned Commissioner respectfully
recommends that Atty. Claro M. Recto be paid the equivalent amount of
20% of Esperanza P. de Harden's share of the conjugal properties or the
sum of P369,410.04 as his contingent fee for services rendered in her
behalf."
After appropriate proceedings, the lower court rendered a decision dated April
30, 1953, adopting substantially said report of the commissioner, but increasing the
contingent fee of appellee herein from P369,410.04, the sum recommended in the
report, to P384,110.97. Hence, this appeal taken by Mr. and Mrs. Harden.
The first question for determination therein is the validity of the above-quoted
contract of services, which the appellants assail as void, mainly, upon the ground: (1)
that Mrs. Harden cannot bind the conjugal partnership without her husband's consent;
(2) that Article 1491 of the Civil Code of the Philippines in effect prohibits contingent
fees; (3) that the contract in question has for its purpose to secure a decree of divorce,
allegedly in violation of Articles 1305, 1352 and 1409 of the Civil Code of the
Philippines; and (4) that the terms of said contract are harsh, inequitable and
oppressive.
The first objection has no foundation in fact, for the contract in dispute does
not seek to bind the conjugal partnership. By virtue of said contract, Mrs. Harden
merely bound herself or assumed the personal obligation to pay, by way of
contingent fees, 20% of her share in said partnership. The contract neither gives, nor
purports to give, to the appellee any right whatsoever, personal or real, in and to her
aforesaid share. The amount thereof is simply a basis for the computation of said fees.
For the same reason, the second objection is, likewise, untenable. Moreover, it
has already been held that contingent fees are not prohibited in the Philippines and are
impliedly sanctioned by our Cannons (No. 13) of Professional Ethics. (see, also,
Ulanday vs. Manila Railroad Co., 45 Phil., 540, 554.) Such is, likewise, the rule in the
United States (Legal Ethics by Henry S. Drinker, p. 176).
". . . in the United States, the great weight of authority recognizes
the validity of contracts for contingent fees, provided such contracts are
not in contravention of public policy, and it is only when the attorney has
taken an unfair or unreasonable advantage of his client that such a claim
is condemned." (See 5 Am. Jur. 359 et seq.; Ballentine, Law Dictionary,
2nd ed., p. 276.)
Needless to say, there is absolutely nothing in the records before us to show
that appellee herein had, in any manner, taken an unfair or unreasonable advantage of
his client Mrs. Harden.
The third objection is not borne out, either by the language of the contract
between them, or by the intent of the parties thereto. Its purpose was not to secure a
divorce, or to facilitate or promote the procurement of a divorce. It merely sought to
protect the interest of Mrs. Harden in the conjugal partnership, during the pendency of
a divorce suit she intended to file in the United States. What is more, inasmuch as Mr.
and Mrs. Harden are admittedly citizens of the United States, their status and the
dissolution thereof are governed pursuant to Article 9 of the Civil Code of Spain
(which was in force in the Philippines at the time of the execution of the contract in
question) and Article 15 of the Civil Code of the Philippines by the laws of the
United States, which sanction divorce. In short, the contract of services, between Mrs.
Harden and herein appellee, is not contrary to law, morals, good customs, public order
or public policy.
The last objection is based upon principles of equity, but, pursuant thereto, one
who seeks equity must come with clean hands (Bastida, et al.,vs. Dy Buncio & Co., 93
Phil., 195; 30 C. J. S. 475), and appellants have not done so, for the circumstances
surrounding the case show, to our satisfaction, that their aforementioned agreements,
ostensibly for the settlement of the differences between husband and wife, were made
for the purpose of circumventing or defeating the rights of herein appellee, under his
above-quoted contract of services with Mrs. Harden. Indeed, having secured a
judgment in her favor, acknowledging her rights to the assets of the conjugal
partnership, which turned out to be worth almost P4,000,000 in addition to litis
expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would have
waived such rights, as well as the benefits of all orders and judgments in her favor, in
consideration of the paltry sum of $5,000 allegedly paid to her by Mr. Harden and the
additional sum of $20,000 to be paid by him in installments, at the rate of $500 a
month. In fact, no explanation has been given for this most unusual avowed settlement
between Mr. and Mrs. Harden. One can not even consider the possibility of a
reconciliation between the spouses, the same being inconsistent with the monetary
consideration for said alleged settlement. What is more, the records show that the
relations between said spouses which were bad indeed, not only in July, 1941, when
Mrs. Harden engaged the services of the appellee, but, even, before, for Mr. and Mrs.
Harden were separated since 1938 had worsened considerably thereafter, as
evidence by an action for divorce filed by Mr. Harden in New Jersey, in July 1948,
upon the ground of repeated acts of infidelity allegedly committed by Mrs. Harden in
1940 and 1941.
Again, it appears that appellee had rendered, under the contract in question, the
following services, for the benefit of Mrs. Harden:
1.He succeeded in defeating defendants' motion for the dissolution of the writ
of preliminary injunction, issued by the Court on July 12, 1941, and amended on July
19, 1941.
2.On November 12, 1946, appellee moved for the appointment of a receiver,
upon the ground that, despite said writ of preliminary injunction, the defendants had
been disposing of the properties of the conjugal partnership for the purpose of
defrauding Mrs. Harden. After due hearing, the court, by an order dated November 20,
1946, directed the appointment of Abelardo Perez as receiver of said properties, upon
the filing of a P10,000 bond. Defendants asked, on February 13, 1947, that the
receivership be suspended, or else, that they be allowed to file a bond for the discharge
of the receivership. Appellee replied objecting thereto, unless the defendants posted a
P4,000,000 bond. Subsequently or on March 5, 1947, the defendants sought a
reconsideration of the order of November 20, 1946, and the discharge of the receiver.
By an order dated March 21, 1947, the Court authorized said discharged upon the
filing, by the defendants, of a bond in the sum of P500,000, provided that Mr. Harden
"should bring back all the 368,553 shares of the Balatoc Mining Co., in his name to the
Philippines for deposit with the Clerk of Court, or with the Chartered Bank of India,
Australia and China, at Manila . . .
"3.On motion of the appellee dated March 4, 1947, the Court, by an order dated
April 5, 1947, directed Mr. Harden to remit to Mrs. Harden the sum of $2,500, to be
charged against her litis expensae. Upon similar motion, filed by appellee on or about
April 26, 1947, the Court ordered Mr. Harden, on May 13, 1947, to furnish Mrs.
Harden the sum of $5,000, under the same conditions.
4.On June 21, 1947, the defendants instituted Civil Case No. G. R. No. L-1499
of this Court, entitled "Fred M. Harden and Jose Salumbidesvs. Emilio Pea, Abelardo
Perez and Esperanza P. Harden" for the purpose of annulling and setting aside, by writ
of certiorari, the aforementioned orders of the lower court dated July 12, 1941,
November 20, 1946, and April 5 and May 13, 1947, and to restrain, in the meantime,
the enforcement thereof. After appropriate proceedings, in the course of which
appellee appeared as counsel for Mrs. Harden, and like counsel for the petitioners
therein, filed several lengthy, detailed pleadings and memoranda, decision was
rendered on November 21, 1950, denying the writ of certiorari prayed for.
5.On or about September 9, 1947, appellee filed a motion alleging that despite
the writ of preliminary injunction above mentioned, the defendants had, fraudulently
and without judicial consent, remitted abroad several sums of money aggregating
P1,000,608.66, and praying that Mr. Harden be ordered to return this sum to the
Philippines, within a stated period, said sum to be deposited with the account of the
Plaza Lunch at the Manila Branch of the Chartered Bank of India, Australia and China.
Mr. Harden objected to said motion. Appellee filed a rejoinder, to which Mr. Harden
replied. Appellee filed a rejoinder to the rejoinder. On October 7, 1947, the Court
granted appellee's motion. Mr. Harden sought a reconsideration, which was opposed
by the appellee on October 27, 1947, and denied by an order dated November 13,
1947. Mr. Harden moved, on November 18, 1947, for the suspension of this order,
which was immediately objected to by the appellee and then denied by the Court.
 6.Inasmuch as said order of November 13, 1947 had not been complied with,
appellee filed on November 27, 1947, a motion praying that Mr. Harden be declared in
contempt of court and punished accordingly. Meanwhile, or on November 24, 1947,
Mr. Harden had instituted case G. R. No. L-1816 of this Court against Hon. Emilio
Pea, as Judge of the Court of First Instance of Manila, and Mrs. Harden. In the
petition therein filed, Mr. Harden applied for a writ of certiorari annulling said orders
of Judge Pea of October 7 and November 13, 1947, and prayed that, pending
disposition of the case, a writ of preliminary injunction be issued restraining the
respondents therein from enforcing said orders, particularly through contempt
proceedings. Hence, the lower court deferred action on the aforementioned motion of
November 27, 1947. After due hearing, this Court, in a resolution dated February 12,
1948, refused to issue the writ of preliminary injunction prayed for. Subsequently, or
on November 21, 1950, decision was rendered denying the petition for a writ of
certiorari.
7.Soon after the issuance of our resolution in said case G. R. No. 1816, dated
February 12, 1948, or to be exact on March 27, 1948, the lower court issued an order
directing Mr. Harden to comply, within five (5) days from notice, with the order of
October 7, 1947. On April 6, 1948, appellee filed with the lower court the
corresponding formal charges against Mr. Harden for contempt of court. After due
hearing, Mr. Harden was, by an order of April 28, 1948, found guilty as charged and
ordered confined "until he complies with the aforementioned orders" of October 7,
1947 and March 27, 1948. On motion of Mr. Harden, said order of April 28, 1948 was
suspended until May 4, 1948, on which date he was arrested and placed in confinement
at the New Bilibid Prison, in Muntinglupa, Rizal. On July 10, 1948, he filed with this
Court a petition for a writ of habeas corpus against the Director of Prisons, (G. R. No.
L-2349, entitled "Fred M. Harden vs. The Director of Prisons"), which, in due course
was denied in a decision promulgated on October 22, 1948.
8.During the military occupation of the Philippines by the Japanese, the
appellee made representations with the Japanese Government to prevent the
commandeering of a business establishment belonging to Mr. and Mrs. Harden.
Moreover, he succeeded in persuading the Japanese to refrain from interning Mrs.
Harden and her daughter and to allow her to withdraw, from the former's deposit in a
local bank, from P200 to P250 a month, for their subsistence. He, likewise, lent her
money to meet her needs and spent the sum of P55,000 in the preservation of the
records and papers pertaining to the business and other properties of the conjugal
partnership of Mr. and Mrs. Harden.
9.Appellee assisted, also, the receiver, as his counsel and, in such capacity,
took all steps essential for the proper discharge of the duties of the former. Among
other things, appellee sought and obtained judicial authority for some important acts of
administration of, and disposition by, the receiver. He (appellee) secured judicial
intervention for the protection and preservation of the assets of the conjugal
partnership, including orders for the delivery of certificates of stock, the return thereof
and/or its deposit with the clerk of court. He, likewise, represented the receiver in
seeking war damage payments.
10.In civil case No. 6222 of the Court of First Instance of Manila, entitled
"Francisco Dalupan vs. Fred M. Harden" for the recovery of P113,837.17, it was
decided, through appellee's intervention, that the conjugal assets would bear the
payment of P22,767.43 only, the balance to be chargeable exclusively against Mr.
Harden's share of the conjugal partnership.
11.Appellee instituted civil case No. 6940 of the Court of First Instance of
Manila, entitled "Abelardo Perez vs. Chartered Bank of India, Australia and China and
Fred M. Harden", for the recovery of P1,000,608.66 and the return of stock certificates
of the Balatoc Mining Co., which had been sent abroad.
12.He (appellee) represented Mrs. Harden in connection with a million-peso
federal tax case against Mr. and Mrs. Harden.
13.Appellee successfully blocked Mr. Harden's attempts to withdraw: (1)
$53,000 and forward the same to the Collector of Internal Revenue of Los Angeles,
California; (2) $50,000.00, allegedly to defray expenses in resisting a new tax
assessment against him in the United States; and (3) P65,000 for his expenses.
Then too, the conjugal partnership had varried and extensive business interests
and its assets were worth almost P4,000,000. The pleadings, motions, oppositions,
rejoinders, and memoranda filed, and the evidence introduced, in the aforementioned
cases in which appellee was pitted against one of the most experienced and able
members of the Philippine Bar were numerous, extensive and exhaustive. For
instance, the record on appeal in one of those cases, namely, G. R. No. L-3687,
consisted of 966 pages.
In short, considering the character of the services rendered by the appellee, the
nature and importance of the issues in said litigations, the amount of labor, time (1941
to 1952) and trouble involved therein, the skill displayed in connection with said cases,
the value of the property affected by the controversy, the professional character and
standing of the appellee, the risks assumed and the results obtained, we are of the
opinion, and so hold, that the contract of services in question is neither harsh nor
oppressive or inequitable.
Under their second assignment of error, appellants maintain that:
"The lower court erred in failing to find as a fact borne out by the
evidence that the legal services of Attorney Claro M. Recto to Mrs.
Esperanza P. de Harden, payment, for which is sought by him in this case,
have already been paid by his immediate execution pending appeal of the
 decision in Civil Case No. CFI-R-59634 (SC-G.R. No. L- 3687), wherein
he collected the sum of P176,000.00 for all such legal services."
Said decision, however, states clearly that the aforementioned sum of P175,000
represents litis expensae, and the contract between the appellee and Mrs. Harden
explicitly declares that said litis expensae shall be "in addition to" appellee's share of
25% of the increase in the allowance of Mrs. Harden and his attorney's fees of 20% of
her share in the conjugal partnership. The second assignment of error is, therefore,
devoid of merit.
Appellants, further contend, that:
3.The lower court erred in holding that the inchoate share of the
wife, Esperanza P. de Harden, in the undissolved and unliquidated
conjugal partnership properties of the Harden spouses, is capable of
certain valuation before such dissolution and liquidation, and summarily
assessing the value of Mrs. Harden's share in such conjugal properties
without proper evidence.
4."The lower court erred in awarding 20% of such inchoate share
to Attorney Claro M. Recto from Mrs. Harden's interests in the Harden
conjugal properties, summarily assessing such 20% inchoate share as of a
value of P384,110.97, and ordering the payment of said sum to Attorney
Recto in pursuance of the provisions of paragraph 3 of the Contract of
Professional Services."
Appellants' arguments in support thereof may be summarized as follows: The
contract of services in question provides that appellee's contingent fees shall be 20% of
the share of Mrs. Harden in the conjugal partnership. Pursuant to law, the share of Mrs.
Harden shall be determined upon the liquidation of said partnership, which has not
taken place, as yet. What is more, it cannot be effected until the dissolution of the
marriage relation between Mr. and Mrs. Harden. Inasmuch as this relation subsists, it
follows that the amount of attorney's fees due to appellee herein should not have been
determined in the decision appealed from.
This line of argument overlooks the fact that said contract of services was
made, principally, in contemplation of a suit for divorce that, according to Mrs.
Harden, she intended to file before a competent court in California, "and of the
liquidation of the conjugal partnership between" her and Mr. Harden. Had she filed
said action for divorce and secured a decree of divorce, said conjugal partnership
would have been dissolved and then liquidated, and the share of Mrs. Harden therein
would have been fixed. However, this cannot take place, either now, or in the
foreseeable future, owing to the aforementioned agreements between Mr. and Mrs.
Harden, which were made for the evident purpose of defeating appellee's claim for
attorney's fees. In other words, the occurrence, within the time contemplated by the
parties bearing in mind the nature of, and the circumstances under which they
entered into, said contract of services of the event upon which the amount of said
fees depended, was rendered impossible by Mrs. Harden. Hence, whether such event
be regarded as a condition or as a period, she may not insist upon its occurrence, prior
to the enforcement of the rights of the herein appellee, for "the condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment" (Art. 1186, Civil
Code) and "the debtor shall lose every right to make use of the period" when he
"violates any undertaking, in consideration of which the creditor agreed to the period."
(Art. 1198, Civil Code.)
It should be noted, also, that the compensation agreed upon for appellee's
services, consists of three (3) parts, namely: (a) 25% of the increase in the allowance
of Mrs. Harden; (b) litis expensae; and (c) 20% of her share in the conjugal
partnership. The first part was dealt with in the first paragraph of their contract of
services. The second and third parts were the object of the second and third
paragraphs, respectively. The firstparagraph limited the rights of appellee thereunder to
two (2) years, in the event of termination of the case or amicable settlement thereof
within two (2) years from the filing of the complaint. No such limitation appears in the
second and third paragraphs of said contract. Hence, the same were intended by the
parties to be fully operative under any and all conditions.
It may not be amiss to add that the value of the properties involved has been
assessed, not summarily, but after due notice and full dress hearing, in the course of
which both parties introduced testimonial and documentary evidence. Appellants
presented Exhibits 1 to 58, whereas those of the appellee were so numerous that,
having begun with Exhibit A, his last piece of documentary evidence was marked
Exhibit 26 Y's. The transcript of the hearing, which lasted ten (10) days, covers over
220 pages.
The other assignments of error made by appellants herein are mere corollaries
of those already disposed of, and, hence, no further discussion thereof is necessary.
In conclusion, it appears that the assets of the conjugal partnership between Mr.
and Mrs. Harden are reasonably valued at P3,841,109.70. One-half (1/2) thereof,
representing the share of Mrs. Harden, is therefore, worth P1,920,554.85. Twenty
percentum (20%) of this sum is P384,110.97, which is the contingent fee due to the
appellee, apart from the litis expensae already paid to him. Inasmuch as the appellee
has collected, also, the sum of P80,000.00, on account of said contingent fees, there
results in his favor a balance of P304,110.97.
Subject to this qualification, the decision appealed from is hereby affirmed,
therefore, with costs against the appellants. So ordered.
 Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Reyes,
J. B. L., Endencia and Felix, JJ., concur.
THIRD DIVISION
[G.R. No. 154830. June 8, 2007.]
16. PIONEER CONCRETE PHILIPPINES, INC., PIONEER
PHILIPPINES HOLDINGS, and PHILIP J.
KLEPZIG, petitioners, vs. ANTONIO D. TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J p:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the
Decision 1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No.
54155 and its Resolution 2 of August 21, 2002 denying petitioners' Motion for
Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the
Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money and Damages
with Preliminary Attachment against Pioneer International Limited (PIL), Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G.
McDonald (McDonald) and Philip J. Klepzig (Klepzig). 3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing
under the laws of Australia and is principally engaged in the ready-mix concrete and
concrete aggregates business; PPHI is the company established by PIL to own and hold the
stocks of its operating company in the Philippines; PCPI is the company established by
PIL to undertake its business of ready-mix concrete, concrete aggregates and quarrying
operations in the Philippines; McDonald is the Chief Executive of the Hongkong office of
PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has
been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company
engaged in pre-mixed concrete and concrete aggregate production; he resigned from
Betonval in February 1996; in May 1996, PIL contacted Todaro and asked him if he was
available to join them in connection with their intention to establish a ready-mix concrete
plant and other related operations in the Philippines; Todaro informed PIL of his
availability and interest to join them; subsequently, PIL and Todaro came to an agreement
wherein the former consented to engage the services of the latter as a consultant for two to
three months, after which, he would be employed as the manager of PIL's ready-mix
concrete operations should the company decide to invest in the Philippines; subsequently,
PIL started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis. 4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the
complaint on the grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction
of the NLRC, and that the complaint should be dismissed on the basis of the doctrine
of forum non conveniens. 5 TIDcEH
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein
petitioners' respective motions to dismiss. 6 Herein petitioners, as defendants, filed an
Urgent Omnibus Motion 7 for the reconsideration of the trial court's Order of January 4,
1999 but the trial court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA. 9 On
October 31, 2000, the CA rendered its presently assailed Decision denying herein
petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the
CA denied it in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of
errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE
COMPLAINT STATES A CAUSE OF ACTION AGAINST
PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES
TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF
EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN
PRIVATE RESPONDENT AND PETITIONERS.
B.
 THE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND WITH
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
UPHELD THE JURISDICTION OF THE TRIAL COURT DESPITE
THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT
IT IS AN ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT
CONTRACT, AND HENCE, FALLS WITHIN THE EXCLUSIVE
JURISDICTION OF THE NATIONAL LABOR RELATIONS
COMMISSION.
C against Klepzig because PCPI and PPHI have personalities which are separate and distinct
THE COURT OF APPEALS DISREGARDED AND FAILED TO
CONSIDER THE PRINCIPLE OF "FORUM NON CONVENIENS" AS
A VALID GROUND FOR DISMISSING A COMPLAINT. 10
In their first assigned error, petitioners contend that there was no perfected employment
contract between PIL and herein respondent. Petitioners assert that the annexes to
respondent's complaint show that PIL's offer was for respondent to be employed as the
manager only of its pre-mixed concrete operations and not as the company's managing
director or CEO. Petitioners argue that when respondent reiterated his intention to become
the manager of PIL's overall business venture in the Philippines, he, in effect did not
accept PIL's offer of employment and instead made a counter-offer, which, however, was
not accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code,
one of the requisites for a contract to be perfected is the consent of the contracting parties;
that under Article 1319 of the same Code, consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract;
that the offer must be certain and the acceptance absolute; that a qualified acceptance
constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's
counter-offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of
Articles 19 and 21 of the Civil Code is baseless because it was shown that there was no
perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment
contract, petitioners contend that PCPI and PPHI, may not also be held liable because they
are juridical entities with personalities which are separate and distinct from PIL, even if
they are subsidiary corporations of the latter. Petitioners also aver that the annexes to
respondent's complaint show that the negotiations on the alleged employment contract
took place between respondent and PIL through its office in Hongkong. In other words,
PCPI and PPHI were not privy to the negotiations between PIL and respondent for the
possible employment of the latter; and under Article 1311 of the Civil Code, a contract is
not binding upon and cannot be enforced against one who was not a party to it even if he
be aware of such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is
simply acting in his capacity as president of PCPI and PPHI and settled is the rule that an
officer of a corporation is not personally liable for acts done in the performance of his
duties and within the bounds of the authority conferred on him. Furthermore, petitioners
argue that even if PCPI and PPHI are held liable, respondent still has no cause of action
from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims
for actual, moral and exemplary damages are solely premised on the alleged breach of
employment contract, the present case should be considered as falling within the exclusive
jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisdiction is authorized by law, courts
may refuse to entertain a case involving a foreign element where the matter can be better
tried and decided elsewhere, either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence there and the plaintiff
sought the forum merely to secure procedural advantage or to annoy or harass the
defendant. Petitioners also argue that one of the factors in determining the most convenient
forum for conflicts problem is the power of the court to enforce its decision. Petitioners
contend that since the majority of the defendants in the present case are not residents of the
Philippines, they are not subject to compulsory processes of the Philippine court handling
the case for purposes of requiring their attendance during trial. Even assuming that they
can be summoned, their appearance would entail excessive costs. Petitioners further assert
that there is no allegation in the complaint from which one can conclude that the evidence
to be presented during the trial can be better obtained in the Philippines. Moreover, the
events which led to the present controversy occurred outside the Philippines. Petitioners
conclude that based on the foregoing factual circumstances, the case should be dismissed
under the principle of forum non conveniens. IaHCAD
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that
the factual allegations in the complaint determine whether or not the complaint states a
cause of action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not
based on a contract of employment. Rather, it was based on petitioners' unwarranted
breach of their contractual obligation to employ respondent. This breach, respondent
argues, gave rise to an action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the
NLRC to acquire jurisdiction, the claim for damages must have a reasonable causal
connection with the employer-employee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and petitioners as
they both agreed that the latter shall employ him to manage and operate their ready-mix
concrete operations in the Philippines. Even assuming that there was no perfected contract,
respondent contends that his complaint alleges an alternative cause of action which is
based on the provisions of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the
question of whether a suit should be entertained or dismissed on the basis of the principle
of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial judge, who is in the best position to determine
whether special circumstances require that the court desist from assuming jurisdiction over
the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or
omission by which a party violates a right of another. A cause of action exists if the
following elements are present: (1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and, (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages. 11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan, 12 this Court held:
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.
Stated otherwise, may the court render a valid judgment upon the facts
alleged therein? The inquiry is into the sufficiency, not the veracity of the
material allegations. If the allegations in the complaint furnish sufficient
basis on which it can be maintained, it should not be dismissed regardless
of the defense that may be presented by the defendants. 13
Moreover, the complaint does not have to establish or allege facts proving the
existence of a cause of action at the outset; this will have to be done at the trial on the
merits of the case. 14 To sustain a motion to dismiss for lack of cause of action, the
complaint must show that the claim for relief does not exist, rather than that a claim
has been defectively stated, or is ambiguous, indefinite or uncertain. 15
Hence, in resolving whether or not the Complaint in the present case states a cause of
action, the trial court correctly limited itself to examining the sufficiency of the allegations
in the Complaint as well as the annexes thereto. It is proscribed from inquiring into the
truth of the allegations in the Complaint or the authenticity of any of the documents
referred or attached to the Complaint, since these are deemed hypothetically admitted by
the respondent.
This Court has reviewed respondent's allegations in its Complaint. In a nutshell,
respondent alleged that herein petitioners reneged on their contractual obligation to
employ him on a permanent basis. This allegation is sufficient to constitute a cause of
action for damages.
The issue as to whether or not there was a perfected contract between petitioners and
respondent is a matter which is not ripe for determination in the present case; rather, this
issue must be taken up during trial, considering that its resolution would necessarily entail
an examination of the veracity of the allegations not only of herein respondent as plaintiff
but also of petitioners as defendants.
The Court does not agree with petitioners' contention that they were not privy to the
negotiations for respondent's possible employment. It is evident from paragraphs 24 to 28
of the Complaint 16 that, on various occasions, Klepzig conducted negotiations with
respondent regarding the latter's possible employment. In fact, Annex "H" 17 of the
complaint shows that it was Klepzig who informed respondent that his company was no
longer interested in employing respondent. Hence, based on the allegations in the
Complaint and the annexes attached thereto, respondent has a cause of action against
herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-
employee relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction. 18 In the present case, no
employer-employee relationship exists between petitioners and respondent. In fact, in his
complaint, private respondent is not seeking any relief under the Labor Code, but seeks
payment of damages on account of petitioners' alleged breach of their obligation under
their agreement to employ him. It is settled that an action for breach of contractual
obligation is intrinsically a civil dispute. 19 In the alternative, respondent seeks redress on
the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that
the present action is within the realm of civil law, and jurisdiction over it belongs to the
regular courts. 20
With respect to the applicability of the principle of forum non conveniens in the present
case, this Court's ruling in Bank of America NT & SA v. Court of Appeals 21 is instructive,
to wit:
The doctrine of forum non conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of
global forum shopping, that is to prevent non-resident litigants from
choosing the forum or place wherein to bring their suit for malicious
reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly
venue. Under this doctrine, a court, in conflicts of law cases, may refuse
impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies
elsewhere.
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this
Court held that ". . . [a] Philippine Court may assume jurisdiction over the
case if it chooses to do so; provided, that the following requisites are met:
(1) that the Philippine Court is one to which the parties may conveniently
resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine
Court has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs.
Court of Appeals, that the doctrine of forum non conveniens should not
be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of
the Rules of Court does not include said doctrine as a ground. This
Court further ruled that while it is within the discretion of the trial
court to abstain from assuming jurisdiction on this ground, it should
do so only after vital facts are established, to determine whether
special circumstances require the court's desistance; and that the
propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more
properly considered a matter of defense. 22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly
justify the application of the doctrine of forum non conveniensare matters of defense, the
merits of which should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution
of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. No. 125078. May 30, 2011.]
17. BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO
P. ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA,
ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE
ALCANTARA, NUMERIANO S. ALCARIA, FERNANDO C.
ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL,
ANTONIO B. ALVARADO, ELEANOR AMOLATA, RODOLFO P.
ANCORDA, TRIFINO F. ANDRADA, BERT B. ANOCHE,
RAMON E. ANTECRISTO, ISAGANI D. ANTINO, DOMINGO
ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO
AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA,
ULYSES M. ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL,
MIGUEL G. ARINZOL, EDGARADO P. ARONG, RODRIGO D.R.
ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT,
NELSON M. BALLENA, EMNIANO BALMONTE, MAXIMO M.
BANGI, SALVADOR M. BANGI, HERMOGENES T. BARBECHO,
ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDR petitioners, vs. HON. TEODORO A. DIZON,
JR., Presiding Judge, Regional Trial Court, Branch 37, General
 Santos City, SHELL OIL CO., DOW CHEMICAL CO.,
OCCIDENTAL CHEMICAL CORP., STANDARD FRUIT CO.,
STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC.,
DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A.,
DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS
INTERNATIONAL, INC. and CHIQUITA BRANDS,
INC., respondents.
DECISION
LEONARDO-DE CASTRO, J p:
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the
Rules of Court, which arose out of two civil cases that were filed in different courts but
whose factual background and issues are closely intertwined.
The petitions in G.R. Nos. 125078 1 and 125598 2 both assail the Order 3 dated May 20,
1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case
No. 5617. The said Order decreed the dismissal of the case in view of the perceived lack
of jurisdiction of the RTC over the subject matter of the complaint. The petition in G.R.
No. 125598 also challenges the Orders dated June 4, 1996 4 and July 9, 1996, 5 which
held that the RTC of General Santos City no longer had jurisdiction to proceed with Civil
Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654, 6 127856, 7 and 128398 8 seek the
reversal of the Order 9 dated October 1, 1996 of the RTC of Davao City, Branch 16, in
Civil Case No. 24,251-96, which also dismissed the case on the ground of lack of
jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the
Resolutions dated February 10, 1997, 10 April 28, 1997 11 and March 10, 1999. 12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state
courts by citizens of twelve foreign countries, including the Philippines. The thousands of
plaintiffs sought damages for injuries they allegedly sustained from their exposure
to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while
working on farms in 23 foreign countries. The cases were eventually transferred to, and
consolidated in, the Federal District Court for the Southern District of Texas, Houston
Division. The cases therein that involved plaintiffs from the Philippines were "Jorge
Colindres Carcamo, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action No.
H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed
as Civil Action No. H-95-1356. The defendants in the consolidated cases prayed for the
dismissal of all the actions under the doctrine of forum non conveniens. DEScaT
In a Memorandum and Order dated July 11, 1995, the Federal District Court
conditionally granted the defendants' motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90
days after the entry of this Memorandum and Order provided that
defendants and third- and fourth-party defendants have:
(1)participated in expedited discovery in the United States . . .;
(2)either waived or accepted service of process and waived any
other jurisdictional defense within 40 days after the entry
of this Memorandum and Order in any action commenced
by a plaintiff in these actions in his home country or the
country in which his injury occurred. Any plaintiff
desiring to bring such an action will do so within 30 days
after the entry of this Memorandum and Order;
(3)waived within 40 days after the entry of this Memorandum and
Order any limitations-based defense that has matured since
the commencement of these actions in the courts of Texas;
(4)stipulated within 40 days after the entry of this Memorandum
and Order that any discovery conducted during the
pendency of these actions may be used in any foreign
proceeding to the same extent as if it had been conducted
in proceedings initiated there; and
(5)submitted within 40 days after the entry of this Memorandum
and Order an agreement binding them to satisfy any final
judgment rendered in favor of plaintiffs by a foreign court.
 xxx xxx xxx
Notwithstanding the dismissals that may result from this Memorandum
and Order, in the event that the highest court of any foreign country
finally affirms the dismissal for lack of jurisdiction of an action
commenced by a plaintiff in these actions in his home country or the
country in which he was injured, that plaintiff may return to this court
and, upon proper motion, the court will resume jurisdiction over the
action as if the case had never been dismissed for [forum non
conveniens]. 13
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078
and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from
General Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as
NAVIDA, et al.) filed a Joint Complaint 14 in the RTC of General Santos City on
August 10, 1995. The case was docketed as Civil Case No. 5617. Named as defendants
therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW); Occidental Chemical
Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co.,
Standard Fruit and Steamship Co. (hereinafter collectively referred to as DOLE); Chiquita
Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte Fresh
Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter collectively referred to as
DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds,
Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are hereinafter
collectively referred to as defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and injuries
to the reproductive systems which they allegedly suffered because of their exposure to
DBCP. They claimed, among others, that they were exposed to this chemical during the
early 1970's up to the early 1980's when they used the same in the banana plantations
where they worked at; and/or when they resided within the agricultural area where such
chemical was used. NAVIDA, et al., claimed that their illnesses and injuries were due to
the fault or negligence of each of the defendant companies in that they produced, sold
and/or otherwise put into the stream of commerce DBCP-containing products. According
to NAVIDA, et al., they were allowed to be exposed to the said products, which the
defendant companies knew, or ought to have known, were highly injurious to the former's
health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed
their Motions for Bill of Particulars. 15 During the pendency of the motions, on March 13,
1996, NAVIDA, et al., filed an Amended Joint Complaint, 16 excluding Dead Sea
Bromine Co., Ltd., Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical
Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of
Particulars. 17 On May 15, 1996, DOW filed an Answer with Counterclaim.18
On May 20, 1996, without resolving the motions filed by the parties, the RTC of General
Santos City issued an Order dismissing the complaint. First, the trial court determined
that it did not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES
FILED WITH THE REGIONAL TRIAL
COURT SHOULD BE DISMISSED FOR
LACK OF JURISDICTION
xxx xxx xxx
The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place
abroad and had occurred outside and beyond the territorial domain of the
Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the
stream of commerce.
Accordingly, the subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of
conduct engaged in by foreign defendants outside Philippine territory,
hence, outside and beyond the jurisdiction of Philippine Courts, including
the present Regional Trial Court. 19
Second, the RTC of General Santos City declared that the tort alleged by NAVIDA, et
al., in their complaint is a tort category that is not recognized in Philippine laws. Said the
trial court: IcaEDC
THE TORT ASSERTED IN THE
PRESENT COMPLAINT AGAINST
DEFENDANT FOREIGN COMPANIES IS
NOT WITHIN THE SUBJECT MATTER
JURISDICTION OF THE REGIONAL
TRIAL COURT, BECAUSE IT IS NOT A
TORT CATEGORY WITHIN THE
PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the
present complaint is product liability tort. When the averments in the
present complaint are examined in terms of the particular categories of
tort recognized in the Philippine Civil Code, it becomes stark clear that
such averments describe and identify the category of specific tort known
as product liability tort. This is necessarily so, because it is
the productmanufactured by defendant foreign companies, which is
asserted to be the proximate cause of the damages sustained by the
plaintiff workers, and the liability of the defendant foreign companies, is
premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over
the present case, if and only if the Civil Code of the Philippines, or a
suppletory special law prescribes a product liability tort, inclusive of and
comprehending the specific tort described in the complaint of the plaintiff
workers. 20
Third, the RTC of General Santos City adjudged that NAVIDA, et al., were coerced into
submitting their case to the Philippine courts, viz.:
FILING OF CASES IN THE PHILIPPINES
COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant
action, but rather were coerced to do so, merely to comply with the U.S.
District Court's Order dated July 11, 1995, and in order to keep open to
the plaintiffs the opportunity to return to the U.S. District Court. 21
Fourth, the trial court ascribed little significance to the voluntary appearance of the
defendant companies therein, thus:
THE DEFENDANTS' SUBMISSION TO
JURISDICTION IS CONDITIONAL AS IT
IS ILLUSORY
Defendants have appointed their agents authorized to accept service of
summons/processes in the Philippines pursuant to the agreement in the
U.S. court that defendants will voluntarily submit to the jurisdiction of
this court. While it is true that this court acquires jurisdiction over persons
of the defendants through their voluntary appearance, it appears that such
voluntary appearance of the defendants in this case is conditional. Thus in
the "Defendants' Amended Agreement Regarding Conditions of
Dismissal for Forum Non Conveniens" (Annex to the Complaint) filed
with the U.S. District Court, defendants declared that "(t)he authority of
each designated representative to accept service of process will become
effective upon final dismissal of these actions by the Court". The decision
of the U.S. District Court dismissing the case is not yet final and
executory since both the plaintiffs and defendants appealed therefrom
(par. 3(h), 3(i), Amended Complaint). Consequently, since the authority
of the agent of the defendants in the Philippines is conditioned on the
final adjudication of the case pending with the U.S. courts, the acquisition
of jurisdiction by this court over the persons of the defendants is also
conditional. . . . .
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at
the moment. 22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the
case in the Philippine courts violated the rules on forum shopping and litis pendencia. The
trial court expounded:
THE JURISDICTION FROWNS UPON
AND PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing
the case filed thereat. To allow the parties to litigate in this court when
they are actively pursuing the same cases in another forum, violates the
rule on 'forum shopping' so abhorred in this jurisdiction. . . . .
xxx xxx xxx
THE FILING OF THE CASE IN U.S.
DIVESTED THIS COURT OF ITS OWN
JURISDICTION
 Moreover, the filing of the case in the U.S. courts divested this court of its
own jurisdiction. This court takes note that the U.S. District Court did not
decline jurisdiction over the cause of action. The case was dismissed on
the ground of forum non conveniens, which is really a matter of venue.
By taking cognizance of the case, the U.S. District Court has, in essence,
concurrent jurisdiction with this court over the subject matter of this case.
It is settled that initial acquisition of jurisdiction divests another of its
own jurisdiction. . . . .
xxx xxx xxx
THIS CASE IS BARRED BY THE RULE
OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties,
same rights and interests, as in this case. There exists litis pendencia since
there are two cases involving the same parties and interests. The court
would like to emphasize that in accordance with the rule on litis
pendencia. . .; the subsequent case must be dismissed. Applying the
foregoing [precept] to the case-at-bar, this court concludes that since the
case between the parties in the U.S. is still pending, then this case is
barred by the rule on "litis pendencia." 23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with
these proceedings, would be violative of the constitutional provision on
the Bill of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16,
Article III, Constitution). The court has no other choice. To insist on
further proceedings with this case, as it is now presented, might accord
this court a charming appearance. But the same insistence would actually
thwart the very ends of justice which it seeks to achieve. DcCEHI
This evaluation and action is made not on account of but rather with due
consideration to the fact that the dismissal of this case does not
necessarily deprive the parties especially the plaintiffs of their
possible remedies. The court is cognizant that the Federal Court may
resume proceedings of that earlier case between the herein parties
involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now
considered DISMISSED. 24
On June 4, 1996, the RTC of General Santos City likewise issued an Order, 25 dismissing
DOW's Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration 26 of the
RTC Order dated May 20, 1996, while DOW filed a motion for reconsideration 27 of the
RTC Order dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint
Motion for Reconsideration 28 of the RTC Order dated May 20, 1996.
In an Order 29 dated July 9, 1996, the RTC of General Santos City declared that it had
already lost its jurisdiction over the case as it took into consideration the Manifestation of
the counsel of NAVIDA, et al., which stated that the latter had already filed a petition for
review on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration 30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to
assail the RTC Order dated May 20, 1996, which was docketed asG.R. No. 125078.
The RTC of General Santos City then issued an Order 31 dated August 14, 1996, which
merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no
longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review
on Certiorari, 32 challenging the orders of the RTC of General Santos City dated May 20,
1996, June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City
erred in ruling that it has no jurisdiction over the subject matter of the case as well as the
persons of the defendant companies.
In a Resolution 33 dated October 7, 1996, this Court resolved to consolidate G.R. No.
125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari, 34 which sought the reversal of the
RTC Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was
docketed as G.R. No. 126018. In a Resolution 35 dated November 13, 1996, the Court
dismissed the aforesaid petition for failure of CHIQUITA to show that the RTC committed
grave abuse of discretion. CHIQUITA filed a Motion for Reconsideration, 36 but the same
was denied through a Resolution 37 dated January 27, 1997.
Civil Case No. 24,251-96 before the
RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE,
DEL MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by
155 plaintiffs from Davao City. This case was docketed as Civil Case No. 24,251-96.
These plaintiffs (the petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et
al.) amended their Joint-Complaint on May 21, 1996. 38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in
the banana plantation and/or as residents near the said plantation, they were made to use
and/or were exposed to nematocides, which contained the chemical DBCP. According to
ABELLA, et al., such exposure resulted in "serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their reproductive
capacities." 39 ABELLA, et al., claimed that the defendant companies manufactured,
produced, sold, distributed, used, and/or made available in commerce, DBCP without
warning the users of its hazardous effects on health, and without providing instructions on
its proper use and application, which the defendant companies knew or ought to have
known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective motions for bill of
particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed
their respective Answers dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated
October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint for:
Damages filed by the plaintiffs against the defendants Shell Oil
Company, DOW Chemicals Company, Occidental Chemical Corporation,
Standard Fruit Company, Standard Fruit and Steamship, DOLE Food
Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita
Brands International, Del Monte Fresh Produce, N.A. and Del Monte
Tropical Fruits Co., all foreign corporations with Philippine
Representatives, the Court, as correctly pointed out by one of the
defendants, is convinced that plaintiffs "would have this Honorable Court
dismiss the case to pave the way for their getting an affirmance by the
Supreme Court" (#10 of Defendants' Del Monte Fresh Produce, N.A. and
Del Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996).
Consider these:
1)In the original Joint Complaint, plaintiffs state that: defendants
have no properties in the Philippines; they have no agents as well
(par. 18); plaintiffs are suing the defendants for tortuous acts
committed by these foreign corporations on their respective
countries, as plaintiffs, after having elected to sue in the place of
defendants' residence, are now compelled by a decision of a Texas
District Court to file cases under torts in this jurisdiction
for causes of actions which occurred abroad (par. 19); a petition
was filed by same plaintiffs against same defendants in the Courts
of Texas, USA, plaintiffs seeking for payment of damages based
on negligence, strict liability, conspiracy and international tort
theories (par. 27); upon defendants' Motion to Dismiss on Forum
non [conveniens], said petition was provisionally dismissed on
condition that these cases be filed in the Philippines or before 11
August 1995 (Philippine date; Should the Philippine Courts refuse
or deny jurisdiction, the U. S. Courts will reassume jurisdiction.)
11.In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995,
the Federal District Court issued a Memorandum and Order
conditionally dismissing several of the consolidated actions
including those filed by the Filipino complainants. One of the
conditions imposed was for the plaintiffs to file actions in their
home countries or the countries in which they were injured . . . .
Notwithstanding, the Memorandum and [O]rder further provided
that should the highest court of any foreign country affirm the
dismissal for lack of jurisdictions over these actions filed by the
plaintiffs in their home countries [or] the countries where they
were injured, the said plaintiffs may return to that court and, upon
proper motion, the Court will resume jurisdiction as if the case
had never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely on
the basis of the above but because it shares the opinion of legal experts
given in the interview made by the Inquirer in its Special report "Pesticide
Cause Mass Sterility," to wit:
 1.Former Justice Secretary Demetrio Demetria in a May 1995
opinion said: The Philippines should be an inconvenient
forum to file this kind of damage suit against foreign
companies since the causes of action alleged in the petition
do not exist under Philippine laws. There has been no
decided case in Philippine Jurisprudence awarding to those
adversely affected by DBCP. This means there is no
available evidence which will prove and disprove the
relation between sterility and DBCP.
2.Retired Supreme Court Justice Abraham Sarmiento opined that
while a class suit is allowed in the Philippines the device
has been employed strictly. Mass sterility will not qualify
as a class suit injury within the contemplation of
Philippine statute.
3.Retired High Court Justice Rodolfo Nocom stated that there is
simply an absence of doctrine here that permits these
causes to be heard. No product liability ever filed or tried
here.
Case ordered dismissed. 40
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by
ABELLA, et al., assails before this Court the above-quoted order of the RTC of Davao
City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No.
24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject
matter of the case since Articles 2176 and 2187 of the Civil Code are broad enough to
cover the acts complained of and to support their claims for damages. CaEIST
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal
luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis.
According to them, their cause of action is based on quasi-delict under Article 2176 of the
Civil Code. They also maintain that the absence of jurisprudence regarding the award of
damages in favor of those adversely affected by the DBCP does not preclude them from
presenting evidence to prove their allegations that their exposure to DBCP caused their
sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of
the Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its
motion for reconsideration, which contained an additional motion for the inhibition of the
presiding judge.
The presiding judge of Branch 16 then issued an Order 41 dated December 2, 1996,
voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to Branch
13 of the RTC of Davao City.
In an Order 42 dated December 16, 1996, the RTC of Davao City affirmed the Order
dated October 1, 1996, and denied the respective motions for reconsideration filed by
defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the
Orders dated October 1, 1996 and December 16, 1996 of the RTC of Davao City. This
case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the
case motu proprio as it acquired jurisdiction over the subject matter of the case as well as
over the persons of the defendant companies which voluntarily appeared before it.
CHIQUITA also claims that the RTC of Davao City cannot dismiss the case simply on the
basis of opinions of alleged legal experts appearing in a newspaper article.
Initially, this Court in its Resolution 43 dated July 28, 1997, dismissed the petition filed by
CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA,
however, filed a motion for reconsideration, which was granted by this Court in the
Resolution 44 dated October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this
Court assailing the above-mentioned orders of the RTC of Davao City. Its petition was
docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No.
24,251-96, as defined under the law and that the said court already obtained jurisdiction
over its person by its voluntary appearance and the filing of a motion for bill of particulars
and, later, an answer to the complaint. According to DEL MONTE, the RTC of Davao
City, therefore, acted beyond its authority when it dismissed the case motu proprio or
without any motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this
Court consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
 The Consolidated Motion to Drop
DOW, OCCIDENTAL, and SHELL
as Party-Respondents filed by
NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents). 45 The plaintiff claimants alleged that
they had amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime
in July 1997. This settlement agreement was evidenced by facsimiles of the "Compromise
Settlement, Indemnity, and Hold Harmless Agreement," which were attached to the said
motion. Pursuant to said agreement, the plaintiff claimants sought to withdraw their
petitions as against DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the
settlement entered into between the plaintiff claimants and DOW, OCCIDENTAL, and
SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties, this Court, in a
Resolution dated June 22, 1998, 46 required all the parties to submit their respective
memoranda.
CHIQUITA filed its Memorandum on August 28, 1998; 47 SHELL asked to be excused
from the filing of a memorandum alleging that it had already executed a compromise
agreement with the plaintiff claimants. 48 DOLE filed its Memorandum on October 12,
1998 49 while DEL MONTE filed on October 13, 1998. 50 NAVIDA, et al., and
ABELLA, et al., filed their Consolidated Memorandum on February 3, 1999; 51 and
DOW and OCCIDENTAL jointly filed a Memorandum on December 23, 1999. 52
The Motion to Withdraw Petition for
Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for
Review in G.R. No. 125598, 53 explaining that the said petition "is already moot and
academic and no longer presents a justiciable controversy" since they have already entered
into an amicable settlement with NAVIDA,et al. DOW and OCCIDENTAL added that
they have fully complied with their obligations set forth in the 1997 Compromise
Agreements.
DOLE filed its Manifestation dated September 6, 2004, 54 interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW
and OCCIDENTAL, as well as other settling defendant companies, should be retained as
defendants for purposes of prosecuting the cross-claims of DOLE, in the event that the
complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004, 55 stating that they
agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has
become moot and academic because Civil Case No. 5617 had already been amicably
settled by the parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition
for Review Filed by Petitioners in G.R. No. 125598, 56 stating that it has no objections to
the withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.
In a Resolution 57 dated October 11, 2004, this Court granted, among others, the motion
to withdraw petition for review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the
following issues for our consideration:
IN REFUTATION
I.THE COURT DISMISSED THE CASE DUE TO LACK OF
JURISDICTION.
a)The court did not simply dismiss the case because it was filed in
bad faith with petitioners intending to have the same
dismissed and returned to the Texas court.
b)The court dismissed the case because it was convinced that it
did not have jurisdiction.
IN SUPPORT OF THE PETITION
II.THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
MATTER OF THE CASE.
a.The acts complained of occurred within Philippine territory.
 b.Art. 2176 of the Civil Code of the Philippines is broad enough
to cover the acts complained of.
c.Assumption of jurisdiction by the U.S. District Court over
petitioner[s'] claims did not divest Philippine [c]ourts of
jurisdiction over the same. cICHTD
d.The Compromise Agreement and the subsequent Consolidated
Motion to Drop Party Respondents Dow, Occidental and
Shell does not unjustifiably prejudice remaining
respondents Dole, Del Monte and Chiquita. 58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of
General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617
and 24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft of
jurisdiction to determine and resolve the above-stated cases. All parties contend that the
RTC of General Santos City and the RTC of Davao City have jurisdiction over the action
for damages, specifically for approximately P2.7 million for each of the plaintiff
claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Specifically, the
use of and exposure to DBCP that was manufactured, distributed or otherwise put into the
stream of commerce by defendant companies happened in the Philippines. Said fact
allegedly constitutes reasonable basis for our courts to assume jurisdiction over the case.
Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the provisions of Chapter 2
of the Preliminary Title of the Civil Code, as well as Article 2176 thereof, are broad
enough to cover their claim for damages. Thus, NAVIDA, et al., and ABELLA, et
al., pray that the respective rulings of the RTC of General Santos City and the RTC of
Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that the said cases be
remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute
a quasi-delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states
that if there were no actionable wrongs committed under Philippine law, the courts a
quo should have dismissed the civil cases on the ground that the Amended Joint-
Complaints of NAVIDA, et al., and ABELLA, et al., stated no cause of action against the
defendant companies. DOLE also argues that if indeed there is no positive law defining
the alleged acts of defendant companies as actionable wrong, Article 9 of the Civil Code
dictates that a judge may not refuse to render a decision on the ground of insufficiency of
the law. The court may still resolve the case, applying the customs of the place and, in the
absence thereof, the general principles of law. DOLE posits that the Philippines is
the situs of the tortious acts allegedly committed by defendant companies as NAVIDA, et
al., and ABELLA, et al., point to their alleged exposure to DBCP which occurred in the
Philippines, as the cause of the sterility and other reproductive system problems that they
allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in
relying upon newspaper reports in dismissing Civil Case No. 24,251-96 given that
newspaper articles are hearsay and without any evidentiary value. Likewise, the alleged
legal opinions cited in the newspaper reports were taken judicial notice of, without any
notice to the parties. DOLE, however, opines that the dismissal of Civil Case Nos. 5617
and 24,251-96 was proper, given that plaintiff claimants merely prosecuted the cases with
the sole intent of securing a dismissal of the actions for the purpose of convincing the U.S.
Federal District Court to re-assume jurisdiction over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject
matter of the cases filed before them. The Amended Joint-Complaints sought
approximately P2.7 million in damages for each plaintiff claimant, which amount falls
within the jurisdiction of the RTC. CHIQUITA avers that the pertinent matter is the place
of the alleged exposure to DBCP, not the place of manufacture, packaging, distribution,
sale, etc., of the said chemical. This is in consonance with the lex loci delicti
commisi theory in determining the situs of a tort, which states that the law of the place
where the alleged wrong was committed will govern the action. CHIQUITA and the other
defendant companies also submitted themselves to the jurisdiction of the RTC by making
voluntary appearances and seeking for affirmative reliefs during the course of the
proceedings. None of the defendant companies ever objected to the exercise of jurisdiction
by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of Civil
Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao
City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction over
Civil Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law
and is determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiffs are entitled to all or some of the claims asserted
therein. 59 Once vested by law, on a particular court or body, the jurisdiction over the
subject matter or nature of the action cannot be dislodged by anybody other than by the
legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under
Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19.Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxx xxx xxx
(8)In all other cases in which the demand, exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses, and costs 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 abovementioned items exceeds Two hundred
thousand pesos (P200,000.00). 60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2.The exclusion of the term "damages of whatever kind" in determining
the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P.
Blg. 129, as amended by R.A. No. 7691, applies to cases where the
damages are merely incidental to or a consequence of the main cause of
action. However, in cases where the claim for damages is the main cause
of action, or one of the causes of action, the amount of such claim shall be
considered in determining the jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended
Joint-Complaints filed before the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that
after hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a)TO PAY EACH PLAINTIFF moral damages in the amount of One
Million Five Hundred Thousand Pesos (P1,500,000.00);
b)TO PAY EACH PLAINTIFF nominal damages in the amount of Four
Hundred Thousand Pesos (P400,000.00) each;
c)TO PAY EACH PLAINTIFF exemplary damages in the amount of Six
Hundred Thousand Pesos (P600,000.00);
d)TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand
Pesos (P200,000.00); and
e)TO PAY THE COSTS of the suit. 61
From the foregoing, it is clear that the claim for damages is the main cause of action and
that the total amount sought in the complaints is approximately P2.7 million for each of
the plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in
General Santos City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et
al., fall within the purview of the definition of the jurisdiction of the RTC under Batas
Pambansa Blg. 129. EaIDAT
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
4.The Defendants manufactured, sold, distributed, used, AND/OR MADE
AVAILABLE IN COMMERCE nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL
WAS USED AGAINST the parasite known as the nematode, which
plagued banana plantations, INCLUDING THOSE in the Philippines. AS
IT TURNED OUT, DBCP not only destroyed nematodes. IT ALSO
CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS EXPOSED
TO IT AFFECTING the human reproductive system as well.
5.The plaintiffs were exposed to DBCP in the 1970s up to the early
1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such
exposure, the plaintiffs suffered serious and permanent injuries TO
THEIR HEALTH, including, but not limited to, STERILITY and severe
injuries to their reproductive capacities.
6.THE DEFENDANTS WERE AT FAULT OR WERE
NEGLIGENT IN THAT THEY MANUFACTURED, produced, sold,
and/or USED DBCP and/or otherwise, PUT THE SAME into the
stream of commerce, WITHOUT INFORMING THE USERS OF
ITS HAZARDOUS EFFECTS ON HEALTH AND/OR WITHOUT
INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-
containing materials which THEY knew, or in the exercise of ordinary
care and prudence ought to have known, were highly harmful and
injurious to the Plaintiffs' health and well-being.
7.The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE
STREAM OF COMMERCE were negligent OR AT FAULT in that they,
AMONG OTHERS:
a.Failed to adequately warn Plaintiffs of the dangerous
characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b.Failed to provide plaintiffs with information as to what should
be reasonably safe and sufficient clothing and proper
protective equipment and appliances, if any, to protect
plaintiffs from the harmful effects of exposure to DBCP,
or to cause their subsidiaries or affiliates to do so;
c.Failed to place adequate warnings, in a language understandable
to the worker, on containers of DBCP-containing materials
to warn of the dangers to health of coming into contact
with DBCP, or to cause their subsidiaries or affiliates to do
so;
d.Failed to take reasonable precaution or to exercise reasonable
care to publish, adopt and enforce a safety plan and a safe
method of handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;
e.Failed to test DBCP prior to releasing these products for sale, or
to cause their subsidiaries or affiliates to do so; and
f.Failed to reveal the results of tests conducted on DBCP to each
plaintiff, governmental agencies and the public, or to cause
their subsidiaries or affiliate to do so.
8.The illnesses and injuries of each plaintiff are also due to the FAULT or
negligence of defendants Standard Fruit Company, Dole Fresh Fruit
Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita
Brands International, Inc. in that they failed to exercise reasonable care to
prevent each plaintiff's harmful exposure to DBCP-containing products
which defendants knew or should have known were hazardous to each
plaintiff in that they, AMONG OTHERS:
a.Failed to adequately supervise and instruct Plaintiffs in the safe
and proper application of DBCP-containing products;
b.Failed to implement proper methods and techniques of
application of said products, or to cause such to be
implemented;
c.Failed to warn Plaintiffs of the hazards of exposure to said
products or to cause them to be so warned;
d.Failed to test said products for adverse health effects, or to cause
said products to be tested;
e.Concealed from Plaintiffs information concerning the observed
effects of said products on Plaintiffs;
f.Failed to monitor the health of plaintiffs exposed to said
products;
g.Failed to place adequate labels on containers of said products to
warn them of the damages of said products; and
h.Failed to use substitute nematocides for said products or to
cause such substitutes to [be] used. 62 (Emphasis supplied
and words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led
to their exposure to nematocides containing the chemical DBCP. According to
NAVIDA, et al., and ABELLA, et al., such exposure to the said chemical caused ill
effects, injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff
claimants a quasi-delict, which under the Civil Code is defined as an act, or omission
which causes damage to another, there being fault or negligence. To be precise, Article
2176 of the Civil Code provides:
Article 2176.Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of
this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et
al., point to the acts and/or omissions of the defendant companies in manufacturing,
producing, selling, using, and/or otherwise putting into the stream of commerce,
nematocides which contain DBCP, "without informing the users of its hazardous effects
on health and/or without instructions on its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals, 64 this Court has always reminded that
jurisdiction of the court over the subject matter of the action is determined by the
allegations of the complaint, irrespective of whether or not the plaintiffs are entitled to
recover upon all or some of the claims asserted therein. The jurisdiction of the court
cannot be made to depend upon the defenses set up in the answer or upon the motion to
dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the
defendants. What determines the jurisdiction of the court is the nature of the action
pleaded as appearing from the allegations in the complaint. The averments therein and the
character of the relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies constitute
a quasi-delict which is the basis for the claim for damages filed by NAVIDA, et al., and
ABELLA, et al., with individual claims of approximately P2.7 million for each plaintiff
claimant, which obviously falls within the purview of the civil action jurisdiction of the
RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et
al., allegedly suffered resulted from their exposure to DBCP while they were employed in
the banana plantations located in the Philippines or while they were residing within the
agricultural areas also located in the Philippines. The factual allegations in the Amended
Joint-Complaints all point to their cause of action, which undeniably occurred in the
Philippines. The RTC of General Santos City and the RTC of Davao City obviously have
reasonable basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases on the
ground of lack of jurisdiction on the mistaken assumption that the cause of action narrated
by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and
beyond the territorial boundaries of the Philippines, i.e., "the manufacture of the
pesticides, their packaging in containers, their distribution through sale or other
disposition, resulting in their becoming part of the stream of commerce," 65 and, hence,
outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of the act
complained of, would be determinative of jurisdiction and venue for trial of cases.
In personal civil actions, such as claims for payment of damages, the Rules of Court allow
the action to be commenced and tried in the appropriate court, where any of the plaintiffs
or defendants resides, or in the case of a non-resident defendant, where he may be found,
at the election of the plaintiff. 66 HCDAcE
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et
al., and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are
all residents of the Philippines, either in General Santos City or in Davao City. Second, the
specific areas where they were allegedly exposed to the chemical DBCP are within the
territorial jurisdiction of the courts a quo wherein NAVIDA, et al., and ABELLA, et
al., initially filed their claims for damages. Third, the testimonial and documentary
evidence from important witnesses, such as doctors, co-workers, family members and
other members of the community, would be easier to gather in the Philippines.
Considering the great number of plaintiff claimants involved in this case, it is not far-
fetched to assume that voluminous records are involved in the presentation of evidence to
support the claim of plaintiff claimants. Thus, these additional factors, coupled with the
fact that the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the
defendant companies for damages occurred in the Philippines, demonstrate that, apart
from the RTC of General Santos City and the RTC of Davao City having jurisdiction over
the subject matter in the instant civil cases, they are, indeed, the convenient fora for trying
these cases. 67
The RTC of General Santos City
and the RTC of Davao City validly
acquired jurisdiction over the
persons of all the defendant
companies
It is well to stress again that none of the parties claims that the courts a quo lack
jurisdiction over the cases filed before them. All parties are one in asserting that the RTC
of General Santos City and the RTC of Davao City have validly acquired jurisdiction over
the persons of the defendant companies in the action below. All parties voluntarily,
unconditionally and knowingly appeared and submitted themselves to the jurisdiction of
the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he defendant's
voluntary appearance in the action shall be equivalent to service of summons." In this
connection, all the defendant companies designated and authorized representatives to
receive summons and to represent them in the proceedings before the courts a quo. All the
defendant companies submitted themselves to the jurisdiction of the courts a quo by
making several voluntary appearances, by praying for various affirmative reliefs, and by
actively participating during the course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan, 68 held that jurisdiction over the person of the defendant in civil cases is
acquired either by his voluntary appearance in court and his submission to its authority or
by service of summons. Furthermore, the active participation of a party in the proceedings
is tantamount to an invocation of the court's jurisdiction and a willingness to abide by the
resolution of the case, and will bar said party from later on impugning the court or body's
jurisdiction. 69
Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies, as well as over the subject matter
of the instant case. What is more, this jurisdiction, which has been acquired and has been
vested on the courts a quo,continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the "exercise of
jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the
decision rendered therein. Accordingly, where a court has jurisdiction over the persons of
the defendants and the subject matter, as in the case of the courts a quo, the decision on all
questions arising therefrom is but an exercise of such jurisdiction. Any error that the court
may commit in the exercise of its jurisdiction is merely an error of judgment, which does
not affect its authority to decide the case, much less divest the court of the jurisdiction
over the case. 70
Plaintiffs' purported bad faith in
filing the subject civil cases in
Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith
merely to procure a dismissal of the same and to allow them to return to the forum of their
choice, this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported by
evidence on record. This Court does not rule on allegations which are manifestly
conjectural, as these may not exist at all. This Court deals with facts, not fancies; on
realities, not appearances. When this Court acts on appearances instead of realities, justice
and law will be short-lived. 71 This is especially true with respect to allegations of bad
faith, in line with the basic rule that good faith is always presumed and bad faith must be
proved. 72
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao
City have jurisdiction over the subject matter of the amended complaints filed by
NAVIDA, et al., and ABELLA, et al., and that the courts a quo have also acquired
jurisdiction over the persons of all the defendant companies, it therefore, behooves this
Court to order the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General
Santos City and the RTC of Davao City, respectively.
On the issue of the dropping of
DOW, OCCIDENTAL and SHELL
as respondents in view of their
amicable settlement with NAVIDA,
et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and
SHELL be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil
Case Nos. 5617 and 24,251-96. The non-settling defendants allegedly manifested that they
intended to file their cross-claims against their co-defendants who entered into
compromise agreements. NAVIDA, et al., and ABELLA, et al., argue that the non-settling
defendants did not aver any cross-claim in their answers to the complaint and that they
subsequently sought to amend their answers to plead their cross-claims only after the
settlement between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL were
executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that the cross-claims are
already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of
NAVIDA, et al., and ABELLA, et al., since the latter's Amended Complaints cited several
instances of tortious conduct that were allegedly committed jointly and severally by the
defendant companies. This solidary obligation on the part of all the defendants allegedly
gives any co-defendant the statutory right to proceed against the other co-defendants for
the payment of their respective shares. Should the subject motion of NAVIDA, et al., and
ABELLA, et al., be granted, and the Court subsequently orders the remand of the action to
the trial court for continuance, CHIQUITA and DOLE would allegedly be deprived of
their right to prosecute their cross-claims against their other co-defendants. Moreover, a
third party complaint or a separate trial, according to CHIQUITA, would only unduly
delay and complicate the proceedings. CHIQUITA and DOLE similarly insist that the
motion of NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL and
OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case
Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective
memoranda, DEL MONTE filed a Manifestation and Motion 73 before the Court, stating
that similar settlement agreements were allegedly executed by the plaintiff claimants with
DEL MONTE and CHIQUITA sometime in 1999. Purportedly included in the agreements
were Civil Case Nos. 5617 and 24,251-96. Attached to the said manifestation were copies
of the Compromise Settlement, Indemnity, and Hold Harmless Agreement between DEL
MONTE and the settling plaintiffs, as well as the Release in Full executed by the
latter. 74 DEL MONTE specified therein that there were "only four (4) plaintiffs in Civil
Case No. 5617 who are claiming against the Del Monte parties" 75and that the latter have
executed amicable settlements which completely satisfied any claims against DEL
MONTE. In accordance with the alleged compromise agreements with the four plaintiffs
in Civil Case No. 5617, DEL MONTE sought the dismissal of the Amended Joint-
Complaint in the said civil case. Furthermore, in view of the above settlement agreements
with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that it no longer
wished to pursue its petition in G.R. No. 127856 and accordingly prayed that it be allowed
to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC
of General Santos City and the RTC of Davao City, respectively, the Court deems that the
Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and
ABELLA, et al., should likewise be referred to the said trial courts for appropriate
disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the parties,
by making reciprocal concessions, avoid a litigation or put an end to one already
commenced." Like any other contract, an extrajudicial compromise agreement is not
excepted from rules and principles of a contract. It is a consensual contract, perfected by
mere consent, the latter being manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. 76 Judicial approval is
not required for its perfection. 77 A compromise has upon the parties the effect and
authority of res judicata 78 and this holds true even if the agreement has not been
judicially approved. 79 In addition, as a binding contract, a compromise agreement
determines the rights and obligations of only the parties to it. 80
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of
Davao City should first receive in evidence and examine all of the alleged compromise
settlements involved in the cases at bar to determine the propriety of dropping any party as
a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed
by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and
SHELL in view of the latter companies' alleged compromise agreements with the plaintiff
claimants. However, in subsequent developments, DEL MONTE and CHIQUITA
supposedly reached their own amicable settlements with the plaintiff claimants, but DEL
MONTE qualified that it entered into a settlement agreement with only four of the plaintiff
claimants in Civil Case No. 5617. These four plaintiff claimants were allegedly the only
ones who were asserting claims against DEL MONTE. However, the said allegation of
DEL MONTE was simply stipulated in their Compromise Settlement, Indemnity, and
Hold Harmless Agreement and its truth could not be verified with certainty based on the
records elevated to this Court. Significantly, the 336 plaintiff claimants in Civil Case No.
5617 jointly filed a complaint without individually specifying their claims against DEL
MONTE or any of the other defendant companies. Furthermore, not one plaintiff claimant
filed a motion for the removal of either DEL MONTE or CHIQUITA as defendants in
Civil Case Nos. 5617 and 24,251-96. IaDcTC
There is, thus, a primary need to establish who the specific parties to the alleged
compromise agreements are, as well as their corresponding rights and obligations therein.
For this purpose, the courts a quo may require the presentation of additional evidence from
the parties. Thereafter, on the basis of the records of the cases at bar and the additional
evidence submitted by the parties, if any, the trial courts can then determine who among
the defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the same quasi-delict is solidary. A solidary obligation is one in
which each of the debtors is liable for the entire obligation, and each of the creditors is
entitled to demand the satisfaction of the whole obligation from any or all of the
debtors. 81
In solidary obligations, the paying debtor's right of reimbursement is provided for under
Article 1217 of the Civil Code, to wit:
 Art. 1217.Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall
be borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the corresponding liability of
the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to
answer for an obligation actually delivers payment to the creditor. As succinctly held
in Lapanday Agricultural Development Corporation v. Court of Appeals, 82 "[p]ayment,
which means not only the delivery of money but also the performance, in any other
manner, of the obligation, is the operative fact which will entitle either of the solidary
debtors to seek reimbursement for the share which corresponds to each of the [other]
debtors." 83
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on
the merits must necessarily be conducted first in order to establish whether or not
defendant companies are liable for the claims for damages filed by the plaintiff
claimants, which would necessarily give rise to an obligation to pay on the part of the
defendants.
At the point in time where the proceedings below were prematurely halted, no cross-
claims have been interposed by any defendant against another defendant. If and when such
a cross-claim is made by a non-settling defendant against a settling defendant, it is within
the discretion of the trial court to determine the propriety of allowing such a cross-claim
and if the settling defendant must remain a party to the case purely in relation to the cross
claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of
Appeals, 84 the Court had the occasion to state that "where there are, along with the
parties to the compromise, other persons involved in the litigation who have not taken part
in concluding the compromise agreement but are adversely affected or feel prejudiced
thereby, should not be precluded from invoking in the same proceedings an adequate relief
therefor." 85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales, 86 the Court upheld
the ruling of the trial court that, in a joint and solidary obligation, the paying debtor may
file a third-party complaint and/or a cross-claim to enforce his right to seek contribution
from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above
situation, if proper, is not affected by the compromise agreements allegedly entered into
by NAVIDA, et al., and ABELLA, et al., with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R.
Nos. 125078, 126654, and 128398. We REVERSE and SET ASIDEthe Order dated May
20, 1996 of the Regional Trial Court of General Santos City, Branch 37, in Civil Case No.
5617, and the Order dated October 1, 1996 of the Regional Trial Court of Davao City,
Branch 16, and its subsequent Order dated December 16, 1996 denying reconsideration in
Civil Case No. 24,251-96, and REMAND the records of this case to the respective
Regional Trial Courts of origin for further and appropriate proceedings in line with the
ruling herein that said courts have jurisdiction over the subject matter of the amended
complaints in Civil Case Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in
G.R. No. 127856. In view of the previous grant of the motion to withdraw the petition in
G.R. No. 125598, both G.R. Nos. 127856 and 125598 are considered CLOSED AND
TERMINATED.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Peralta * and Perez, JJ., concur.
THIRD DIVISION
[G.R. No. 149177. November 23, 2007.]
18. KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., petitioners, vs. MINORU
KITAMURA,respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the April 18, 2001 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
60827, and the July 25, 2001 Resolution 2 denying the motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a
Japanese consultancy firm providing technical and management support in the
infrastructure projects of foreign governments, 3 entered into an Independent
Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national
permanently residing in the Philippines. 4 The agreement provides that respondent was to
extend professional services to Nippon for a year starting on April 1, 1999. 5 Nippon then
assigned respondent to work as the project manager of the Southern Tagalog Access Road
(STAR) Project in the Philippines, following the company's consultancy contract with
the Philippine Government. 6
When the STAR Project was near completion, the Department of Public Works and
Highways (DPWH) engaged the consultancy services of Nippon, on January 28, 2000, this
time for the detailed engineering and construction supervision of the Bongabon-Baler
Road Improvement (BBRI) Project. 7Respondent was named as the project manager in
the contract's Appendix 3.1. 8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only up
to the substantial completion of the STAR Project on March 31, 2000, just in time for the
ICA's expiry. 9 cDSAEI
Threatened with impending unemployment, respondent, through his lawyer, requested a
negotiation conference and demanded that he be assigned to the BBRI project. Nippon
insisted that respondent's contract was for a fixed term that had already expired, and
refused to negotiate for the renewal of the ICA. 10
As he was not able to generate a positive response from the petitioners, respondent
consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance
and damages with the Regional Trial Court of Lipa City. 11
For their part, petitioners, contending that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss the complaint for lack of
jurisdiction. They asserted that the claim for improper pre-termination of respondent's ICA
could only be heard and ventilated in the proper courts of Japan following the principles
of lex loci celebrationis and lex contractus. 12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the
replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI
Project. 13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank 14 that
matters connected with the performance of contracts are regulated by the law prevailing at
the place of performance, 15 denied the motion to dismiss. 16 The trial court subsequently
denied petitioners' motion for reconsideration, 17 prompting them to file with the appellate
court, on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed as
CA-G.R. SP No. 60205]. 18 On August 23, 2000, the CA resolved to dismiss the petition
on procedural grounds for lack of statement of material dates and for insufficient
verification and certification against forum shopping. 19 An Entry of Judgment was later
issued by the appellate court on September 20, 2000. 20
Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still
within the reglementary period, a second Petition for Certiorariunder Rule 65 already
stating therein the material dates and attaching thereto the proper verification and
certification. This second petition, which substantially raised the same issues as those in
the first, was docketed as CA-G.R. SP No. 60827. 21 DTESIA
Ruling on the merits of the second petition, the appellate court rendered the assailed April
18, 2001 Decision 22 finding no grave abuse of discretion in the trial court's denial of the
motion to dismiss. The CA ruled, among others, that the principle of lex loci
celebrationis was not applicable to the case, because nowhere in the pleadings was the
validity of the written agreement put in issue. The CA thus declared that the trial court was
correct in applying instead the principle of lex loci solutionis. 23
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed
July 25, 2001 Resolution. 24
Remaining steadfast in their stance despite the series of denials, petitioners instituted the
instant Petition for Review on Certiorari 25 imputing the following errors to the appellate
court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE
THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE
 PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN
TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO
THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF
RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL
LAWS. 26
The pivotal question that this Court is called upon to resolve is whether the subject matter
jurisdiction of Philippine courts in civil cases for specific performance and damages
involving contracts executed outside the country by foreign nationals may be assailed
on the principles of lex loci celebrationis, lex contractus, the "state of the most
significant relationship rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters raised
by the respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No.
60205 has already barred the filing of the second petition docketed as CA-G.R. SP No.
60827 (fundamentally raising the same issues as those in the first one) and the instant
petition for review thereof. cDEICH
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the
petition's defective certification of non-forum shopping, it was a dismissal without
prejudice. 27 The same holds true in the CA's dismissal of the said case due to defects in
the formal requirement of verification 28 and in the other requirement in Rule 46 of the
Rules of Court on the statement of the material dates. 29 The dismissal being without
prejudice, petitioners can re-file the petition, or file a second petition attaching thereto the
appropriate verification and certification as they, in fact did and stating therein the
material dates, within the prescribed period 30 in Section 4, Rule 65 of the said Rules. 31
The dismissal of a case without prejudice signifies the absence of a decision on the merits
and leaves the parties free to litigate the matter in a subsequent action as though the
dismissed action had not been commenced. In other words, the termination of a case not
on the merits does not bar another action involving the same parties, on the same subject
matter and theory. 32
Necessarily, because the said dismissal is without prejudice and has no res judicata effect,
and even if petitioners still indicated in the verification and certification of the
second certiorari petition that the first had already been dismissed on procedural
grounds, 33 petitioners are no longer required by the Rules to indicate in their certification
of non-forum shopping in the instant petition for review of the second certiorari
petition, the status of the aforesaid first petition before the CA. In any case, an omission in
the certificate of non-forum shopping about any event that will not constitute res
judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant
the dismissal and nullification of the entire proceedings, considering that the evils sought
to be prevented by the said certificate are no longer present. 34
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon, thecertiorari petition filed with the
CA and not the instant petition. True, the Authorization 35 dated September 4, 2000,
which is attached to the secondcertiorari petition and which is also attached to the instant
petition for review, is limited in scope its wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company only in the petition filed with the
appellate court, and that authority cannot extend to the instant petition for review. 36 In a
plethora of cases, however, this Court has liberally applied the Rules or even suspended its
application whenever a satisfactory explanation and a subsequent fulfillment of the
requirements have been made. 37 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply 38 an updated Authorization 39 for
Hasegawa to act on behalf of the company in the instant petition, the Court finds the same
as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the
verification and certification. As respondent pointed out, and to which we agree,
Hasegawa is truly not authorized to act on behalf of Nippon in this case. The aforesaid
September 4, 2000 Authorization and even the subsequent August 17, 2001 Authorization
were issued only by Nippon's president and chief executive officer, not by the company's
board of directors. In not a few cases, we have ruled that corporate powers are exercised
by the board of directors; thus, no person, not even its officers, can bind the corporation, in
the absence of authority from the board. 40 Considering that Hasegawa verified and
certified the petition only on his behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office of the Ombudsman. 41 Substantial
compliance will not suffice in a matter that demands strict observance of the
Rules. 42 While technical rules of procedure are designed not to frustrate the ends of
justice, nonetheless, they are intended to effect the proper and orderly disposition of cases
and effectively prevent the clogging of court dockets. 43 CSTDIE
Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to
question the trial court's denial of their motion to dismiss. It is a well-established rule that
an order denying a motion to dismiss is interlocutory, and cannot be the subject of the
extraordinary petition for certiorari ormandamus. The appropriate recourse is to file an
answer and to interpose as defenses the objections raised in the motion, to proceed to trial,
and, in case of an adverse decision, to elevate the entire case by appeal in due
course. 44 While there are recognized exceptions to this rule, 45 petitioners' case does not
fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its
jurisdiction to hear and resolve the civil case for specific performance and damages filed
by the respondent. The ICA subject of the litigation was entered into and perfected in
Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language.
Thus, petitioners posit that local courts have no substantial relationship to the
parties 46 following the [state of the] most significant relationship rule in Private
International Law. 47
The Court notes that petitioners adopted an additional but different theory when they
elevated the case to the appellate court. In the Motion to Dismiss48 filed with the trial
court, petitioners never contended that the RTC is an inconvenient forum. They merely
argued that the applicable law which will determine the validity or invalidity of
respondent's claim is that of Japan, following the principles of lex loci
celebrationis and lex contractus. 49 While not abandoning this stance in their petition
before the appellate court, petitioners on certiorari significantly invoked the defense
of forum non conveniens. 50On petition for review before this Court, petitioners dropped
their other arguments, maintained the forum non conveniens defense, and introduced their
new argument that the applicable principle is the [state of the] most significant relationship
rule. 51
Be that as it may, this Court is not inclined to deny this petition merely on the basis of the
change in theory, as explained in Philippine Ports Authority v. City of Iloilo. 52 We only
pointed out petitioners' inconstancy in their arguments to emphasize their incorrect
assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are
involved: jurisdiction, choice of law, and recognition and enforcement of judgments.
Corresponding to these phases are the following questions: (1) Where can or should
litigation be initiated? (2) Which law will the court apply? and (3) Where can the resulting
judgment be enforced? 53 HDTISa
Analytically, jurisdiction and choice of law are two distinct concepts. 54 Jurisdiction
considers whether it is fair to cause a defendant to travel to this state; choice of law asks
the further question whether the application of a substantive law which will determine the
merits of the case is fair to both parties. The power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. While jurisdiction
and the choice of thelex fori will often coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts" for the other. 55 The question of
whether the law of a state can be applied to a transaction is different from the question of
whether the courts of that state have jurisdiction to enter a judgment. 56
In this case, only the first phase is at issue jurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the case and, in cases involving
property, over the res or the thing which is the subject of the litigation. 57 In assailing the
trial court's jurisdiction herein, petitioners are actually referring to subject matter
jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
authority which establishes and organizes the court. It is given only by law and in the
manner prescribed by law. 58 It is further determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein. 59 To succeed in its motion for the dismissal of an action for lack of jurisdiction
over the subject matter of the claim, 60 the movant must show that the court or tribunal
cannot act on the matter submitted to it because no law grants it the power to adjudicate
the claims. 61
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is
not properly vested by law with jurisdiction to hear the subject controversy for, indeed,
Civil Case No. 00-0264 for specific performance and damages is one not capable of
pecuniary estimation and is properly cognizable by the RTC of Lipa City. 62 What they
rather raise as grounds to question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the "state of the most significant relationship rule."
The Court finds the invocation of these grounds unsound. DCASIT
Lex loci celebrationis relates to the "law of the place of the ceremony" 63 or the law of the
place where a contract is made. 64 The doctrine of lex contractus or lex loci
contractus means the "law of the place where a contract is executed or to be
performed." 65 It controls the nature, construction, and validity of the contract 66 and it
may pertain to the law voluntarily agreed upon by the parties or the law intended by them
either expressly or implicitly. 67 Under the "state of the most significant relationship
rule," to ascertain what state law to apply to a dispute, the court should determine which
state has the most substantial connection to the occurrence and the parties. In a case
involving a contract, the court should consider where the contract was made, was
negotiated, was to be performed, and the domicile, place of business, or place of
incorporation of the parties. 68 This rule takes into account several contacts and evaluates
them according to their relative importance with respect to the particular issue to be
resolved. 69
Since these three principles in conflict of laws make reference to the law applicable to a
dispute, they are rules proper for the second phase, the choice of law. 70 They determine
which state's law is to be applied in resolving the substantive issues of a conflicts
problem. 71 Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law
rules are not only inapplicable but also not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that
they have not yet pointed out any conflict between the laws of Japan and ours. Before
determining which law should apply, first there should exist a conflict of laws
situation requiring the application of the conflict of laws rules. 72 Also, when the law
of a foreign country is invoked to provide the proper rules for the solution of a case,
the existence of such law must be pleaded and proved. 73
It should be noted that when a conflicts case, one involving a foreign element, is brought
before a court or administrative agency, there are three alternatives open to the latter in
disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the
internal law of the forum; or (3) assume jurisdiction over the case and take into account
or apply the law of some other State or States. 74 The court's power to hear cases and
controversies is derived from the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited by foreign sovereign law short of
treaties or other formal agreements, even in matters regarding rights provided by foreign
sovereigns. 75 EASIHa
Neither can the other ground raised, forum non conveniens, 76 be used to deprive the trial
court of its jurisdiction herein. FIRST, it is not a proper basis for a motion to dismiss
because Section 1, Rule 16 of the Rules of Court does not include it as a
ground. 77 SECOND, whether a suit should be entertained or dismissed on the basis of
the said doctrine depends largely upon the facts of the particular case and is addressed to
the sound discretion of the trial court. 78 In this case, the RTC decided to assume
jurisdiction. THIRD, the propriety of dismissing a case based on this principle requires a
factual determination; hence, this conflicts principle is more properly considered a matter
of defense. 79
Accordingly, since the RTC is vested by law with the power to entertain and hear the civil
case filed by respondent and the grounds raised by petitioners to assail that jurisdiction are
inappropriate, the trial and appellate courts correctly denied the petitioners' motion to
dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
SO ORDERED.
FIRST DIVISION
[G.R. No. 136804. February 19, 2003.]
19. MANUFACTURERS HANOVER TRUST CO. and/or
CHEMICAL BANK, petitioners, vs. RAFAEL MA.
GUERRERO, respondent.
Sycip Salazar Hernandez and Gatmaitan for petitioners.
P.C. Nolasco & Associates for respondent.
SYNOPSIS
Respondent filed a complaint for damages against petitioner bank for illegally withholding
taxes charged against interest on his checking account, returning a check due to signature
verification problems, and unauthorized conversion of his account. In answer thereto,
petitioner alleged that the issue should be limited to actual damages as respondent's
account is governed by the New York law. In support thereof, petitioner presented the
authenticated affidavit of New York Attorney Alyssa Walden. Thus, petitioner filed a
motion for partial summary judgment. ATICcS
Petitioner's motion for summary judgment is not proper as it does not demonstrate that
respondent's claims are sham, fictitious, or contrived. There can be no summary judgment
where material allegations of the pleadings are in dispute and can be resolved only by trial
on the merits. On the alleged foreign law applicable, the Walden affidavit and attached US
court decisions therein are not proper substantiation thereof for failure to comply with Sec.
24, Rule 132 on proof of foreign laws, records, and decisions.
 DECISION
CARPIO, J p:
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. 42310 2 affirming the trial court's 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
Guerrero's account is governed by New York law and this law does not permit any of
Guerrero's claims except actual damages. Subsequently, the Bank filed a Motion for
Partial Summary Judgment seeking the dismissal of Guerrero's claims for consequential,
nominal, temperate, moral and exemplary damages as well as attorney's 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 Bank's
Motion for Partial Summary Judgment. Alyssa Walden's affidavit ("Walden affidavit" for
brevity) stated that Guerrero's New York bank account stipulated that the governing law is
New York law and that this law bars all of Guerrero's claims except actual damages. The
Philippine Consular Office in New York authenticated the Walden affidavit. STHAaD
The RTC denied the Bank's 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 Bank's 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;
xxx xxx xxx."
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 Bank's 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
". . . HOLDING THAT [THE BANK'S] PROOF OF FACTS TO
SUPPORT ITS MOTION FOR SUMMARY JUDGMENT MAY NOT
BE GIVEN BY AFFIDAVIT;
. . . HOLDING THAT [THE BANK'S] 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 . . . .'" 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 attorney's 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 Court's 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, sham or 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. Guerrero's 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 Guerrero's complaint while
specific denials and affirmative defenses are set out in the Bank's answer. aHSTID
True, the court can determine whether there are genuine issues in a case based merely on
the affidavits or counter-affidavits submitted by the parties to the court. However, as
correctly ruled by the Court of Appeals, the Bank's motion for partial summary judgment
as supported by the Walden affidavit does not demonstrate that Guerrero's 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. 8 Foreign 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 Guerrero's 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
Appeals 10 which held that:
"xxx xxx xxx:
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 Derring's
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." (Italics supplied)
The Bank, however, cannot rely on Willamete 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:
"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
Bank's relationship with its depositors. In this case, it governs Guerrero's
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 Guerrero's 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 Dep't 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 Dep't
1989)Martin v. Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32
(2nd Dep't 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.
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 Dep't 1982), app. den. 59 N.Y.2d 601, 449
N.E.2d 1276, 463 N.Y.S.2d 1023 (1983). TADaCH
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 Dep't 1992); Stanisic v. Soho Landmark Assocs., 73
A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dep't 1991). There is no statute
that permits attorney's 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 . . . chester 11 v. Insurance Co. of
North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637 (2d Dep't
1980); Senior v. Manufacturers Hanover Trust Co., 110 A.D.2d 833, 488
N.Y.S.2d 241, 242 (2d Dep't 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 Dep't 1978)." 12
The Walden affidavit states conclusions from the affiant's 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 Bank's 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 Guerrero's 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." (Italics supplied)
There being substantial triable issues between the parties, the courts a quo correctly denied
the Bank's 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. DTEScI
This case has been delayed long enough by the Bank's 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.
Davide, Jr., C.J., Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., took no part.

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 Bank's 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 Bank's motion and the
Walden affidavit. A party should not be made to deny matters already averred in his
complaint.
 SECOND DIVISION
[G.R. No. 183622. February 8, 2012.]
20. MEROPE ENRIQUEZ VDA. DE CATALAN, petitioner, vs.
LOUELLA A. CATALAN-LEE, respondent.
RESOLUTION
SERENO, J p:
Before us is a Petition for Review assailing the Court of Appeals (CA) Decision 1 and
Resolution 2 regarding the issuance of letters of administration of the intestate estate of
Orlando B. Catalan.
The facts are as follows:
Orlando B. Catalan was a naturalized American citizen. After allegedly obtaining a
divorce in the United States from his first wife, Felicitas Amor, he contracted a second
marriage with MEROPE ENRIQUEZ VDA. DE CATALAN
On 18 November 2004, Orlando died intestate in the Philippines.
Thereafter, on 25 February 2005, petitioner filed with the Regional Trial Court (RTC) of
Burgos, Pangasinan a Petition for the issuance of letters of administration for her
appointment as administratrix of the intestate estate of Orlando. The case was docketed as
Special Proceedings (Spec. Proc.) No. 228.
On 3 March 2005, while Spec. Proc. No. 228 was pending, respondent Louella A.
Catalan-Lee, one of the children of Orlando from his first marriage, filed a similar
petition with the RTC docketed as Spec. Proc. No. 232.
The two cases were subsequently consolidated.
Petitioner prayed for the dismissal of Spec. Proc. No. 232 on the ground of litis
pendentia, considering that Spec. Proc. No. 228 covering the same estate was already
pending. HcaDIA
On the other hand, Louella alleged that petitioner was not considered an interested person
qualified to file a petition for the issuance of letters of administration of the estate of
Orlando. In support of her contention, respondent alleged that a criminal case for bigamy
was filed against Merope before Branch 54 of the RTC of Alaminos, Pangasinan, and
docketed as Crim. Case No. 2699-A.
Apparently, Felicitas Amor filed a Complaint for bigamy, alleging that Merope contracted
a second marriage to Orlando despite having been married to one Eusebio Bristol on 12
December 1959.
On 6 August 1998, the RTC had ACQUITTED petitioner of bigamy. 3 The trial court
ruled that since the deceased was a divorced American citizen, and since that divorce was
not recognized under Philippine jurisdiction, the MARRIAGE between him and petitioner
was NOT valid.
Furthermore, it took note of the action for declaration of nullity then pending action with
the trial court in Dagupan City filed by Felicitas Amor against the deceased and
petitioner. It considered the pending action to be a prejudicial question in determining
the guilt of Merope for the crime of bigamy.
Finally, the trial court found that, in the first place, Merope had never been married to
Eusebio Bristol.
On 26 June 2006, Branch 70 of the RTC of Burgos, Pangasinan dismissed the Petition for
the issuance of letters of administration filed by Merope and granted that of Louella.
Contrary to its findings in Crim. Case No. 2699-A, the RTC held that the marriage
between Merope and Eusebio Bristol was valid and subsisting when she married
Orlando. Without expounding, it reasoned further that her acquittal in the previous bigamy
case was fatal to her cause. Thus, the trial court held that Merope was not an interested
party who may file a petition for the issuance of letters of administration. 4
After the subsequent denial of her Motion for Reconsideration, petitioner elevated the
matter to the Court of Appeals (CA) via her Petition for Certiorari,alleging grave abuse of
discretion on the part of the RTC in dismissing her Petition for the issuance of letters of
administration. HCEcaT
Petitioner reiterated before the CA that the Petition filed by respondent should have been
dismissed on the ground of litis pendentia. She also insisted that, while a petition for
letters of administration may have been filed by an "uninterested person," the defect was
cured by the appearance of a real party-in-interest. Thus, she insisted that, to determine
who has a better right to administer the decedent's properties, the RTC should have first
required the parties to present their evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed Decision. First, it held that
petitioner undertook the wrong remedy. She should have instead filed a petition for review
rather than a petition for certiorari. Nevertheless, since the Petition for Certiorari was
filed within the fifteen-day reglementary period for filing a petition for review under Sec.
4 of Rule 43, the CA allowed the Petition and continued to decide on the merits of the
case. Thus, it ruled in this wise:
As to the issue of litis pendentia, we find it not applicable in the case.
For litis pendentia to be a ground for the dismissal of an action, there
must be: (a) identity of the parties or at least such as to represent the same
interest in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same acts, and (c) the identity in the
two cases should be such that the judgment which may be rendered in one
would, regardless of which party is successful, amount to res judicata in
the other. A petition for letters of administration is a special proceeding.
A special proceeding is an application or proceeding to establish the
status or right of a party, or a particular fact. And, in contrast to an
ordinary civil action, a special proceeding involves no defendant or
respondent. The only party in this kind of proceeding is the petitioner of
the applicant. Considering its nature, a subsequent petition for letters of
administration can hardly be barred by a similar pending petition
involving the estate of the same decedent unless both petitions are filed
by the same person. In the case at bar, the petitioner was not a party to the
petition filed by the private respondent, in the same manner that the latter
was not made a party to the petition filed by the former. The first element
of litis pendentiais wanting. The contention of the petitioner must
perforce fail.
Moreover, to yield to the contention of the petitioner would render
nugatory the provision of the Rules requiring a petitioner for letters of
administration to be an "interested party," inasmuch as any person, for
that matter, regardless of whether he has valid interest in the estate sought
to be administered, could be appointed as administrator for as long as he
files his petition ahead of any other person, in derogation of the rights of
those specifically mentioned in the order of preference in the appointment
of administrator under Rule 78, Section 6 of the Revised Rules of Court,
which provides:
xxx xxx xxx
The petitioner, armed with a marriage certificate, filed her petition for
letters of administration. As a spouse, the petitioner would have been
preferred to administer the estate of Orlando B. Catalan. However, a
marriage certificate, like any other public document, is only prima
facieevidence of the facts stated therein. The fact that the petitioner had
been charged with bigamy and was acquitted has not been disputed
by the petitioner. Bigamy is an illegal marriage committed by
contracting a second or subsequent marriage before the first marriage has
been dissolved or before the absent spouse has been declared
presumptively dead by a judgment rendered in a proper proceedings. The
deduction of the trial court that the acquittal of the petitioner in the
said case negates the validity of her subsequent marriage with
Orlando B. Catalan has not been disproved by her. There was not
even an attempt from the petitioner to deny the findings of the trial
court. There is therefore no basis for us to make a contrary finding. Thus,
not being an interested party and a stranger to the estate of Orlando B.
Catalan, the dismissal of her petition for letters of administration by the
trial court is in place.
xxx xxx xxx
WHEREFORE, premises considered, the petition is DISMISSED for
lack of merit. No pronouncement as to costs. AacDHE
SO ORDERED. 5 (Emphasis supplied)
Petitioner moved for a reconsideration of this Decision. 6 She alleged that the reasoning of
the CA was illogical in stating, on the one hand, that she was acquitted of bigamy, while,
on the other hand, still holding that her marriage with Orlando was invalid. She insists that
with her acquittal of the crime of bigamy, the marriage enjoys the presumption of validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special proceedings failed to appreciate the
finding of the RTC in Crim. Case No. 2699-A that petitioner was never married to Eusebio
Bristol. Thus, the trial court concluded that, because petitioner was acquitted of bigamy, it
follows that the first marriage with Bristol still existed and was valid. By failing to take
note of the findings of fact on the nonexistence of the marriage between petitioner and
Bristol, both the RTC and CA held that petitioner was not an interested party in the estate
of Orlando.
Second, it is imperative to note that at the time the bigamy case in Crim. Case No. 2699-A
was dismissed, we had already ruled that under the principles of comity, our jurisdiction
recognizes a valid divorce obtained by a spouse of foreign nationality. This doctrine was
established as early as 1985 in Van Dorn v. Romillo, Jr. 7 wherein we said:
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. 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. . . .
We reiterated this principle in Llorente v. Court of Appeals, 8 to wit:
In Van Dorn v. Romillo, Jr. we held 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. In
the same case, the Court ruled that aliens may obtain divorces
abroad, provided they are valid according to their national
law. CaTcSA
Citing this landmark case, the Court held in Quita v. Court of
Appeals, that once proven that respondent was no longer a Filipino
citizen when he obtained the divorce from petitioner, the ruling
in Van Dorn would become applicable and petitioner could "very
well lose her right to inherit" from him.
In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the
respondent in his country, the Federal Republic of Germany. There, we
stated that divorce and its legal effects may be recognized in the
Philippines insofar as respondent is concerned in view of the
nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals
must be reversed. We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and recognized in this
jurisdiction as a matter of comity. . . .
Nonetheless, the fact of divorce must still first be proven as we have enunciated in Garcia
v. Recio, 9 to wit:
Respondent is getting ahead of himself. Before a foreign judgment is
given presumptive evidentiary value, the document must first be
presented and admitted in evidence. A divorce obtained abroad is proven
by the divorce decree itself. Indeed the best evidence of a judgment is
the judgment itself. The decree purports to be a written act or record of
an act of an official body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or
document may be proven as a public or official record of a foreign
country by either (1) an official publication or (2) a copy thereof attested
by the officer having legal custody of the document. If the record is not
kept in the Philippines, such copy must be (a) accompanied by a
certificate issued by the proper diplomatic or consular officer in the
Philippine foreign service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his office.
The divorce decree between respondent and Editha Samson appears to be
an authentic one issued by an Australian family court. However,
appearance is not sufficient; compliance with the aforementioned rules
on evidence must be demonstrated. TCaADS
Fortunately for respondent's cause, when the divorce decree of May 18,
1989 was submitted in evidence, counsel for petitioner objected, not to its
admissibility, but only to the fact that it had not been registered in the
Local Civil Registry of Cabanatuan City. The trial court ruled that it was
admissible, subject to petitioner's qualification. Hence, it was admitted in
evidence and accorded weight by the judge. Indeed, petitioner's failure to
object properly rendered the divorce decree admissible as a written act of
the Family Court of Sydney, Australia.
Compliance with the quoted articles (11, 13 and 52) of the Family Code
is not necessary; respondent was no longer bound by Philippine personal
laws after he acquired Australian citizenship in 1992. Naturalization is the
 legal act of adopting an alien and clothing him with the political and civil
rights belonging to a citizen. Naturalized citizens, freed from the
protective cloak of their former states, don the attires of their adoptive
countries. By becoming an Australian, respondent severed his allegiance
to the Philippines and the vinculum juris that had tied him to Philippine
personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law falls
upon petitioner, because she is the party challenging the validity of a
foreign judgment. He contends that petitioner was satisfied with the
original of the divorce decree and was cognizant of the marital laws of
Australia, because she had lived and worked in that country for quite a
long time. Besides, the Australian divorce law is allegedly known by
Philippine courts; thus, judges may take judicial notice of foreign laws in
the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the "party who
alleges the existence of a fact or thing necessary in the prosecution or
defense of an action." In civil cases, plaintiffs have the burden of
proving the material allegations of the complaint when those are
denied by the answer; and defendants have the burden of proving the
material allegations in their answer when they introduce new
matters. Since the divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law validating it falls
squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take
judicial notice of foreign laws. Like any other facts, they must be
alleged and proved. Australian marital laws are not among those
matters that judges are supposed to know by reason of their judicial
function. The power of judicial notice must be exercised with caution,
and every reasonable doubt upon the subject should be resolved in
the negative. (Emphasis supplied) aTIEcA
It appears that the trial court no longer required petitioner to prove the validity of
Orlando's divorce under the laws of the United States and the marriage between Merope
and Orlando. Thus, there is a need to remand the proceedings to the trial court for
further reception of evidence to establish the fact of divorce.
Should petitioner prove the validity of the divorce and the subsequent marriage, she
has the preferential right to be issued the letters of administration over the estate.
Otherwise, letters of administration may be issued to respondent, who is undisputedly the
daughter or next of kin of the deceased, in accordance with Sec. 6 of Rule 78 of the
Revised Rules of Court.
This is consistent with our ruling in San Luis v. San Luis, 10 in which we said:
Applying the above doctrine in the instant case, the divorce decree
allegedly obtained by Merry Lee which absolutely allowed Felicisimo to
remarry, would have vested Felicidad with the legal personality to file the
present petition as Felicisimo's surviving spouse. However, the records
show that there is insufficient evidence to prove the validity of the
divorce obtained by Merry Lee as well as the marriage of respondent
and Felicisimo under the laws of the U.S.A. In Garcia v. Recio, the
Court laid down the specific guidelines for pleading and proving foreign
law and divorce judgments. It held that presentation solely of the divorce
decree is insufficient and that proof of its authenticity and due execution
must be presented. Under Sections 24 and 25 of Rule 132, a writing or
document may be proven as a public or official record of a foreign
country by either (1) an official publication or (2) a copy thereof
attested by the officer having LEGAL CUSTODY of the document. If
the record is not kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or
consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by
the seal of his office.
With regard to respondent's marriage to Felicisimo allegedly solemnized
in California, U.S.A., she submitted photocopies of the Marriage
Certificate and the annotated text of the Family Law Act of California
which purportedly show that their marriage was done in accordance with
the said law. As stated in Garcia, however, the Court cannot take judicial
notice of foreign laws as they must be alleged and proved.
Therefore, this case should be remanded to the trial court for further
reception of evidence on the divorce decree obtained by Merry Lee
and the marriage of respondent and Felicisimo. (Emphasis supplied)
Thus, it is imperative for the trial court to first determine the validity of the divorce to
ascertain the rightful party to be issued the letters of administration over the estate of
Orlando B. Catalan.
WHEREFORE, premises considered, the Petition is hereby PARTIALLY GRANTED.
The Decision dated 18 October 2007 and the Resolution dated 20 June 2008 of the Court
of Appeals are hereby REVERSED and SET ASIDE. Let this case be REMANDED to
Branch 70 of the Regional Trial Court of Burgos, Pangasinan for further proceedings in
accordance with this Decision. DcSEHT
SO ORDERED.
Carpio, Brion, Perez and Reyes, JJ., concur.
THIRD DIVISION
[G.R. No. 133743. February 6, 2007.]
21. EDGAR SAN LUIS, petitioner, vs. FELICIDAD SAN
LUIS, respondent.
[G.R. No. 134029. February 6, 2007]
RODOLFO SAN LUIS, petitioner, vs. FELICIDAD SAGALONGOS
alias FELICIDAD SAN LUIS, respondent.
DECISION
YNARES-SANTIAGO, J p:
Before us are consolidated petitions for review assailing the February 4, 1998
Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647, which reversed and set
aside the September 12, 1995 2 and January 31, 1996 3 Resolutions of the Regional Trial
Court of Makati City, Branch 134 in SP. Proc. No. M-3708; and its May 15, 1998
Resolution 4 denying petitioners' motion for reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San Luis
(Felicisimo), who was the former governor of the Province of Laguna. During his lifetime,
Felicisimo contracted three marriages. His first marriage was with Virginia Sulit on March
17, 1942 out of which were born six children, namely: Rodolfo, Mila, Edgar, Linda,
Emilita and Manuel. On August 11, 1963, Virginia predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he
had a son, Tobias. However, on October 15, 1971, Merry Lee, an American citizen, filed a
Complaint for Divorce 5 before the Family Court of the First Circuit, State of Hawaii,
United States of America (U.S.A.), which issued a Decree Granting ABSOLUTE
Divorce and Awarding Child Custody on December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed
Sagalongos, before Rev. Fr. William Meyer, Minister of the United Presbyterian at
Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had no children with
respondent but lived with her for 18 years from the time of their marriage up to his death
on December 18, 1992.
Thereafter, Felicidad sought the dissolution of their conjugal partnership assets and the
settlement of Felicisimo's estate. On December 17, 1993, she filed a petition for letters of
administration 8 before the Regional Trial Court of Makati City, docketed as SP. Proc. No.
M-3708 which was raffled to Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the
decedent was residing at 100 San Juanico Street, New Alabang Village, Alabang, Metro
Manila; that the decedent's surviving heirs are respondent as legal spouse, his six children
by his first marriage, and son by his second marriage; that the decedent left real properties,
both conjugal and exclusive, valued at P30,304,178.00 more or less; that the decedent does
not have any unpaid debts. Respondent prayed that the conjugal partnership assets be
liquidated and that letters of administration be issued to her. TAaIDH
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his
first marriage, filed a motion to dismiss 9 on the grounds of improper venue and failure
to state a cause of action. Rodolfo claimed that the petition for letters of administration
should have been filed in the Province of Laguna because this was Felicisimo's place of
residence prior to his death. He further claimed that Felicidad has no legal personality to
file the petition because she was only a mistress of Felicisimo since the latter, at the time
of his death, was still legally married to Merry Lee.
On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in
seeking the dismissal 10 of the petition. On February 28, 1994, the trial court issued an
Order 11 denying the two motions to dismiss.
Unaware of the denial of the motions to dismiss, Felicidad filed on March 5, 1994 her
opposition 12 thereto. She submitted documentary evidence showing that while Felicisimo
exercised the powers of his public office in Laguna, he regularly went home to their house
in New Alabang Village, Alabang, Metro Manila which they bought sometime in 1982.
Further, she presented the decree of absolute divorce issued by the Family Court of the
First Circuit, State of Hawaii to prove that the marriage of Felicisimo to Merry Lee had
already been dissolved. Thus, she claimed that Felicisimo had the legal capacity to marry
her by virtue of paragraph 2, 13 Article 26 of the Family Code and the doctrine laid down
in Van Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions
for reconsideration from the Order denying their motions to dismiss. 15 They asserted that
paragraph 2, Article 26 of the Family Code cannot be given retroactive effect to validate
respondent's bigamous marriage with Felicisimo because this would impair vested rights
in derogation of Article 256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a
motion to disqualify Acting Presiding Judge Anthony E. Santos from hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the motions for
reconsideration. It ruled that Felicidad, as widow of the decedent, possessed the legal
standing to file the petition and that venue was properly laid. Meanwhile, the motion for
disqualification was deemed moot and academic 18 because then Acting Presiding Judge
Santos was substituted by Judge Salvador S. Tensuan pending the resolution of said
motion.
Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On
even date, Edgar also filed a motion for reconsideration 20 from the Order denying their
motion for reconsideration arguing that it does not state the facts and law on which it was
based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for
inhibition. The case was re-raffled to Branch 134 presided by Judge Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their respective position
papers on the twin issues of venue and legal capacity of respondent to file the petition. On
May 5, 1995, Edgar manifested 23 that he is adopting the arguments and evidence set forth
in his previous motion for reconsideration as his position paper. Respondent and Rodolfo
filed their position papers on June 14, 24 and June 20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for letters of administration.
It held that, at the time of his death, Felicisimo was the duly elected governor and a
resident of the Province of Laguna. Hence, the petition should have been filed in Sta.
Cruz, Laguna and not in Makati City. It also ruled that respondent was without legal
capacity to file the petition for letters of administration because her marriage with
Felicisimo was bigamous, thus, void ab initio. It found that the decree of absolute divorce
dissolving Felicisimo's marriage to Merry Lee was not valid in the Philippines and did not
bind Felicisimo who was a Filipino citizen. It also ruled that paragraph 2, Article 26 of the
Family Code cannot be retroactively applied because it would impair the vested rights of
Felicisimo's legitimate children. CDTHSI
Respondent moved for reconsideration 26 and for the disqualification 27 of Judge
Arcangel but said motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set aside the orders of
the trial court in its assailed Decision dated February 4, 1998, the dispositive portion of
which states:
WHEREFORE, the Orders dated September 12, 1995 and January 31,
1996 are hereby REVERSED and SET ASIDE; the Orders dated
February 28 and October 24, 1994 are REINSTATED; and the records of
the case is REMANDED to the trial court for further proceedings. 29
The appellate court ruled that under Section 1, Rule 73 of the Rules of Court, the term
"place of residence" of the decedent, for purposes of fixing the venue of the settlement of
his estate, refers to the personal, actual or physical habitation, or actual residence or place
of abode of a person as distinguished from legal residence or domicile. It noted that
although Felicisimo discharged his functions as governor in Laguna, he actually resided in
Alabang, Muntinlupa. Thus, the petition for letters of administration was properly filed in
Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by
virtue of paragraph 2, Article 26 of the Family Code and the rulings in Van Dorn v.
Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that the marriage between
Felicisimo and Merry Lee was validly dissolved by virtue of the decree of absolute divorce
issued by the Family Court of the First Circuit, State of Hawaii. As a result, under
paragraph 2, Article 26, Felicisimo was capacitated to contract a subsequent marriage with
respondent. Thus
With the well-known rule express mandate of paragraph 2, Article 26,
of the Family Code of the Philippines, the doctrines in Van Dorn, Pilapil,
and the reason and philosophy behind the enactment of E.O. No. 227,
there is no justiciable reason to sustain the individual view sweeping
statement of Judge Arc[h]angel, that "Article 26, par. 2 of the Family
Code, contravenes the basic policy of our state against divorce in any
form whatsoever." Indeed, courts cannot deny what the law grants. All
that the courts should do is to give force and effect to the express mandate
of the law. The foreign divorce having been obtained by the Foreigner on
December 14, 1992, 32 the Filipino divorcee, "shall . . . have capacity to
 remarry under Philippine laws". For this reason, the marriage between the
deceased and petitioner should not be denominated as "a bigamous
marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the
surviving spouse can institute the judicial proceeding for the settlement of
the estate of the deceased. . . . 33
Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were
denied by the Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition for review
on certiorari. 35 Rodolfo later filed a manifestation and motion to adopt the said petition
which was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject
petition for letters of administration was improperly laid because at the time of his death,
Felicisimo was a resident of Sta. Cruz, Laguna. They contend that pursuant to our rulings
in Nuval v. Guray 37 andRomualdez v. RTC, Br. 7, Tacloban City, 38 "residence" is
synonymous with "domicile" which denotes a fixed permanent residence to which when
absent, one intends to return. They claim that a person can only have one domicile at any
given time. Since Felicisimo never changed his domicile, the petition for letters of
administration should have been filed in Sta. Cruz, Laguna.
Petitioners also contend that respondent's marriage to Felicisimo was void and bigamous
because it was performed during the subsistence of the latter's marriage to Merry Lee.
They argue that paragraph 2,
The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent
has legal capacity to file the subject petition for letters of administration. DScTaC
The petition lacks merit.
Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration
of the estate of Felicisimo should be filed in the Regional Trial Court of the province "in
which he resides at the time of his death." In the case of Garcia Fule v. Court of
Appeals, 40 we laid down the doctrinal rule for determining the residence as
contradistinguished from domicile of the decedent for purposes of fixing the venue of
the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides," like
the terms "residing" and "residence," is elastic and should be interpreted
in the light of the object or purpose of the statute or rule in which it is
employed. In the application of venue statutes and rules Section 1,
Rule 73 of the Revised Rules of Court is of such nature
residence rather than domicile is the significant factor. Even where the
statute uses the word "domicile" still it is construed as meaning residence
and not domicile in the technical sense. Some cases make a distinction
between the terms "residence" and "domicile" but as generally used in
statutes fixing venue, the terms are synonymous, and convey the same
meaning as the term "inhabitant." In other words, "resides" should be
viewed or understood in its popular sense, meaning, the personal, actual
or physical habitation of a person, actual residence or place of abode.
It signifies physical presence in a place and actual stay thereat. In this
popular sense, the term means merely residence, that is, personal
residence, not legal residence or domicile. Residence simply requires
bodily presence as an inhabitant in a given place, while domicile requires
bodily presence in that place and also an intention to make it one's
domicile. No particular length of time of residence is required though;
however, the residence must be more than temporary. 41 (Emphasis
supplied) STIcEA
It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of
the settlement of the estate of Felicisimo, is synonymous with "domicile." The rulings
in Nuval and Romualdez are inapplicable to the instant case because they involve election
cases. Needless to say, there is a distinction between "residence" for purposes of election
laws and "residence" for purposes of fixing the venue of actions. In election cases,
"residence" and "domicile" are treated as synonymous terms, that is, the fixed permanent
residence to which when absent, one has the intention of returning. 42However, for
purposes of fixing venue under the Rules of Court, the "residence" of a person is his
personal, actual or physical habitation, or actual residence or place of abode, which may
not necessarily be his legal residence or domicile provided he resides therein with
continuity and consistency. 43Hence, it is possible that a person may have his residence in
one place and domicile in another.
In the instant case, while petitioners established that Felicisimo was domiciled in Sta.
Cruz, Laguna, respondent proved that he also maintained a residence in Alabang,
Muntinlupa from 1982 up to the time of his death. Respondent submitted in evidence the
Deed of Absolute Sale 44 dated January 5, 1983 showing that the deceased purchased the
aforesaid property. She also presented billing statements 45 from the Philippine Heart
Center and Chinese General Hospital for the period August to December 1992 indicating
the address of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa." Respondent
also presented proof of membership of the deceased in the Ayala Alabang Village
Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from 1988 to 1990
sent by the deceased's children to him at his Alabang address, and the deceased's calling
cards 49 stating that his home/city address is at "100 San Juanico, Ayala Alabang Village,
Muntinlupa" while his office/provincial address is in "Provincial Capitol, Sta. Cruz,
Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for
purposes of fixing the venue of the settlement of his estate. Consequently, the subject
petition for letters of administration was validly filed in the Regional Trial Court 50 which
has territorial jurisdiction over Alabang, Muntinlupa. The subject petition was filed on
December 17, 1993. At that time, Muntinlupa was still a municipality and the branches of
the Regional Trial Court of the National Capital Judicial Region which had territorial
jurisdiction over Muntinlupa were then seated in Makati City as per Supreme Court
Administrative Order No. 3. 51 Thus, the subject petition was validly filed before the
Regional Trial Court of Makati City.
Anent the issue of respondent Felicidad's legal personality to file the petition for letters of
administration, we must first resolve the issue of whether a Filipino who is divorced by his
alien spouse abroad may validly remarry under the Civil Code, considering that Felicidad's
marriage to Felicisimo was solemnized on June 20, 1974, or before the Family Code took
effect on August 3, 1988. In resolving this issue, we need not retroactively apply the
provisions of the Family Code, particularly Art. 26, par. (2) considering that there is
sufficient jurisprudential basis allowing us to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a
foreigner and his Filipino wife, which marriage was subsequently dissolved through a
divorce obtained abroad by the latter. Claiming that the divorce was not valid under
Philippine law, the alien spouse alleged that his interest in the properties from their
conjugal partnership should be protected. The Court, however, recognized the validity
of the divorce and held that the alien spouse had no interest in the properties acquired
by the Filipino wife after the divorce. Thus:
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 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. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no
longer be considered married to the alien spouse. Further, she should not be required to
perform her marital duties and obligations. It held:
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. 54 (Emphasis added) AcaEDC
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court
recognized the validity of a divorce obtained abroad. In the said case, it was held that the
alien spouse is not a proper party in filing the adultery suit against his Filipino wife. The
Court stated that "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." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is
divorced by his naturalized foreign spouse, the ruling in Van Dornapplies. 58 Although
decided on December 22, 1998, the divorce in the said case was obtained in 1954 when the
Civil Code provisions were still in effect.
The significance of the Van Dorn case to the development of limited recognition of
divorce in the Philippines cannot be denied. The ruling has long been interpreted as
severing marital ties between parties in a mixed marriage and capacitating the Filipino
spouse to remarry as a necessary consequence of upholding the validity of a divorce
obtained abroad by the alien spouse. In his treatise, Dr. Arturo M. Tolentino cited Van
Dorn stating that "if the foreigner obtains a valid foreign divorce, the Filipino spouse shall
have capacity to remarry under Philippine law." 59 In Garcia v. Recio, 60 the Court
likewise cited the aforementioned case in relation to Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical background and legislative
intent behind paragraph 2, Article 26 of the Family Code were discussed, to wit:
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law
Executive Order No. 209, otherwise known as the "Family Code," which
took effect on August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the
laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code,
Executive Order No. 227 was likewise signed into law, amending Articles
26, 36, and 39 of the Family Code. A second paragraph was added to
Article 26. As so amended, it now provides:
ART. 26.All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the
alien spouse capacitating him or her to remarry, the Filipino spouse shall
have capacity to remarry under Philippine law. (Emphasis supplied)
xxx xxx xxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that
the intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-
Diy, a member of the Civil Code Revision Committee, is to avoid the
absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino
spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985
case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a
marriage between a Filipino citizen and a foreigner. The Court held
therein that a divorce decree validly obtained by the alien spouse is
valid in the Philippines, and consequently, the Filipino spouse is
capacitated to remarry under Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is
validly obtained abroad by the alien spouse. With the enactment of the Family Code and
paragraph 2, Article 26 thereof, our lawmakers codified the law already established
through judicial precedent. HAaECD
Indeed, when the object of a marriage is defeated by rendering its continuance intolerable
to one of the parties and productive of no possible good to the community, relief in some
way should be obtainable. 64 Marriage, being a mutual and shared commitment between
two parties, cannot possibly be productive of any good to the society where one is
considered released from the marital bond while the other remains bound to it. Such is the
state of affairs where the alien spouse obtains a valid divorce abroad against the Filipino
spouse, as in this case.
Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is
void under Philippine law insofar as Filipinos are concerned. However, in light of this
Court's rulings in the cases discussed above, the Filipino spouse should not be
discriminated against in his own country if the ends of justice are to be
served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court stated:
But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking
the meaning of the law, the first concern of the judge should be to
discover in its provisions the intent of the lawmaker. Unquestionably, the
 law should never be interpreted in such a way as to cause injustice as this
is never within the legislative intent. An indispensable part of that intent,
in fact, for we presume the good motives of the legislature, is to render
justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we must
keep them so. To be sure, there are some laws that, while generally valid,
may seem arbitrary when applied in a particular case because of its
peculiar circumstances. In such a situation, we are not bound, because
only of our nature and functions, to apply them just the same, in slavish
obedience to their language. What we do instead is find a balance
between the word and the will, that justice may be done even as the law is
obeyed.
As judges, we are not automatons. We do not and must not unfeelingly
apply the law as it is worded, yielding like robots to the literal command
without regard to its cause and consequence. "Courts are apt to err by
sticking too closely to the words of a law," so we are warned, by Justice
Holmes again, "where these words import a policy that goes beyond
them."
xxx xxx xxx
More than twenty centuries ago, Justinian defined justice "as the constant
and perpetual wish to render every one his due." That wish continues to
motivate this Court when it assesses the facts and the law in every case
brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way
that will render justice, presuming that it was the intention of the
lawmaker, to begin with, that the law be dispensed with justice. 69
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by
Merry Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad
with the legal personality to file the present petition as Felicisimo's surviving spouse.
However, the records show that there is insufficient evidence to prove the validity of
the divorce obtained by Merry Lee as well as the marriage of respondent and
Felicisimo under the laws of the U.S.A. In Garcia v. Recio, 70 the Court laid down the
specific guidelines for pleading and proving foreign law and divorce judgments. It held
that presentation solely of the divorce decree is insufficient and that proof of its
authenticity and due execution must be presented. Under Sections 24 and 25 of Rule 132,
a writing or document may be proven as a public or official record of a foreign country
by either (1) an official publication or (2) a copy thereof attested by the officer having
legal custody of the document. If the record is not kept in the Philippines, such copy
must be (a) accompanied by a certificate issued by the proper diplomatic or consular
officer in the Philippine foreign service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his office. 71
With regard to respondent's marriage to Felicisimo allegedly solemnized in California,
U.S.A., she submitted photocopies of the Marriage Certificate and the ANNOTATED
text 72 of the Family Law Act of California which purportedly show that their
marriage was done in accordance with the said law. As stated in Garcia, however, the
Court cannot take judicial notice of foreign laws as they must be alleged and proved. 73
Therefore, this case should be remanded to the trial court for further reception of
evidence on the divorce decree obtained by Merry Lee and the marriage of
respondent and Felicisimo.
Even assuming that Felicisimo was not capacitated to marry respondent in 1974,
nevertheless, we find that the latter has the legal personality to file the subject petition for
letters of administration, as she may be considered the co-owner of Felicisimo as regards
the properties that were acquired through their joint efforts during their
cohabitation. TIEHDC
Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be
granted to the surviving spouse of the decedent. However, Section 2, Rule 79 thereof also
provides in part:
SEC. 2.Contents of petition for letters of administration. A petition for
letters of administration must be filed by an interested person and must
show, as far as known to the petitioner: . . . .
An "interested person" has been defined as one who would be BENEFITED by the estate,
such as an heir, or one who has a claim against the estate, such as a creditor. The interest
must be material and direct, and not merely indirect or contingent. 75
In the instant case, respondent would qualify as an interested person who has a direct
interest in the estate of Felicisimo by virtue of their cohabitation, the existence of which
was not denied by petitioners. If she proves the validity of the divorce and Felicisimo's
capacity to remarry, but fails to prove that her marriage with him was validly performed
under the laws of the U.S.A., then she may be considered as a co-owner under Article
144 76 of the Civil Code. This provision governs the property relations between parties
who live together as husband and wife without the benefit of marriage, or their marriage is
void from the beginning. It provides that the property acquired by either or both of them
through their work or industry or their wages and salaries shall be governed by the rules on
co-ownership. In a co-ownership, it is not necessary that the property be acquired through
their joint labor, efforts and industry. Any property acquired during the union is prima
facie presumed to have been obtained through their joint efforts. Hence, the portions
belonging to the co-owners shall be presumed equal, unless the contrary is proven. 77
Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage,
the applicable provision would be Article 148 of the Family Code which has filled the
hiatus in Article 144 of the Civil Code by expressly regulating the property relations of
couples living together as husband and wife but are incapacitated to marry. 78 In Saguid v.
Court of Appeals, 79 we held that even if the cohabitation or the acquisition of property
occurred before the Family Code took effect, Article 148 governs. 80 The Court described
the property regime under this provision as follows:
The regime of limited co-ownership of property governing the union of
parties who are not legally capacitated to marry each other, but who
nonetheless live together as husband and wife, applies to properties
acquired during said cohabitation in proportion to their respective
contributions. Co-ownership will only be up to the extent of the proven
actual contribution of money, property or industry. Absent proof of the
extent thereof, their contributions and corresponding shares shall be
presumed to be equal.
xxx xxx xxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which
involved the issue of co-ownership of properties acquired by the parties to
a bigamous marriage and an adulterous relationship, respectively, we
ruled that proof of actual contribution in the acquisition of the property is
essential. . . .
As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an
affirmative issue. Contentions must be proved by competent evidence and
reliance must be had on the strength of the party's own evidence and not
upon the weakness of the opponent's defense. . . . 81
In view of the foregoing, we find that respondent's legal capacity to file the subject petition
for letters of administration may arise from her status as the surviving wife of Felicisimo
or as his co-owner under Article 144 of the Civil Code or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating
and affirming the February 28, 1994 Order of the Regional Trial Court which denied
petitioners' motion to dismiss and its October 24, 1994 Order which dismissed petitioners'
motion for reconsideration is AFFIRMED. Let this case be REMANDED to the trial court
for further proceedings.
SO ORDERED.
Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
SECOND DIVISION
[G.R. No. 196049. June 26, 2013.]
22. MINORU FUJIKI, petitioner, vs. MARIA PAZ GALELA
MARINAY, SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR
OF QUEZON CITY, and THE ADMINISTRATOR AND CIVIL
REGISTRAR GENERAL OF THE NATIONAL STATISTICS
OFFICE, respondents.
DECISION
CARPIO, J p:
The Case
This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107,
Quezon City, through a petition for review on certiorari under Rule 45 of the Rules of
Court on a pure question of law. The petition assails the Order 1 dated 31 January 2011 of
the RTC in Civil Case No. Q-11-68582 and its Resolution dated 2 March 2011 denying
petitioner's Motion for Reconsideration. The RTC dismissed the petition for "Judicial
Recognition of Foreign Judgment (or Decree of Absolute Nullity of Marriage)" based on
improper venue and the lack of personality of petitioner, Minoru Fujiki, to file the petition.
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria
Paz Galela Marinay (Marinay) in the Philippines 2 on 23 January 2004. The marriage did
not sit well with petitioner's parents. Thus, Fujiki could not bring his wife to Japan where
he resides. Eventually, they lost contact with each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first
marriage being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon
City, Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly
suffered physical abuse from Maekara. She left Maekara and started to contact Fujiki. 3
Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In
2010, Fujiki helped Marinay obtain a judgment from a family court in Japan which
declared the marriage between Marinay and Maekara void on the ground of bigamy. 4 On
14 January 2011, Fujiki filed a petition in the RTC entitled: "Judicial Recognition of
Foreign Judgment (or Decree of Absolute Nullity of Marriage)." Fujiki prayed that (1) the
Japanese Family Court judgment be recognized; (2) that the bigamous marriage
between Marinay and Maekara be declared void ab initio under Articles 35 (4) and 41 of
the Family Code of the Philippines; 5 and (3) for the RTC to direct the Local Civil
Registrar of Quezon City to annotate the Japanese Family Court judgment on the
Certificate of Marriage between Marinay and Maekara and to endorse such annotation to
the Office of the Administrator and Civil Registrar General in the National Statistics
Office (NSO). 6
The Ruling of the Regional Trial Court
A few days after the filing of the petition, the RTC immediately issued an Order
dismissing the petition and withdrawing the case from its active civil docket. 7 The RTC
cited the following provisions of the Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC):
Sec. 2.Petition for declaration of absolute nullity of void marriages.
(a)Who may file. A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife.
xxx xxx xxx
Sec. 4.Venue. The petition shall be filed in the Family Court of the
province or city where the petitioner or the respondent has been
residing for at least six months prior to the date of filing, or in the case
of a non-resident respondent, where he may be found in the Philippines,
at the election of the petitioner. . . .
The RTC ruled, without further explanation, that the petition was in "gross violation"
of the above provisions. The trial court based its dismissal on Section 5 (4) of A.M.
No. 02-11-10-SC which provides that "[f]ailure to comply with any of the preceding
requirements may be a ground for immediate dismissal of the petition." 8 Apparently,
the RTC took the view that only "the husband or the wife," in this case either Maekara
or Marinay, can file the petition to declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC
contemplated ordinary civil actions for declaration of nullity and annulment of
marriage. Thus, A.M. No. 02-11-10-SC does not apply. A petition for recognition of
foreign judgment is a special proceeding, which "seeks to establish a status, a right or a
particular fact," 9 and not a civil action which is "for the enforcement or protection of a
right, or the prevention or redress of a wrong." 10 In other words, the petition in the RTC
sought to establish (1) the status and concomitant rights of Fujiki and Marinay as husband
and wife and (2) the fact of the rendition of the Japanese Family Court judgment declaring
the marriage between Marinay and Maekara as void on the ground of bigamy. The
petitioner contended that the Japanese judgment was consistent with Article 35 (4) of the
Family Code of the Philippines 11 on bigamy and was therefore entitled to recognition by
Philippine courts. 12
In any case, it was also Fujiki's view that A.M. No. 02-11-10-SC applied only to void
marriages under Article 36 of the Family Code on the ground of psychological
incapacity. 13 Thus, Section 2 (a) of A.M. No. 02-11-10-SC provides that "a petition for
declaration of absolute nullity of void marriages may be filed solely by the husband or the
wife." To apply Section 2 (a) in bigamy would be absurd because only the guilty parties
would be permitted to sue. In the words of Fujiki, "[i]t is not, of course, difficult to realize
that the party interested in having a bigamous marriage declared a nullity would be the
husband in the prior, pre-existing marriage." 14 Fujiki had material interest and therefore
the personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of
the Rules of Court is applicable. Rule 108 is the "procedural implementation" of the Civil
Register Law (Act No. 3753) 15 in relation to Article 413 of the Civil Code. 16 The Civil
Register Law imposes a duty on the "successful petitioner for divorce or annulment of
marriage to send a copy of the final decree of the court to the local registrar of the
municipality where the dissolved or annulled marriage was solemnized." 17 Section 2 of
Rule 108 provides that entries in the civil registry relating to "marriages," "judgments of
annulments of marriage" and "judgments declaring marriages void from the beginning" are
subject to cancellation or correction. 18 The petition in the RTC sought (among others) to
annotate the judgment of the Japanese Family Court on the certificate of marriage between
Marinay and Maekara. CaAIES
Fujiki's motion for reconsideration in the RTC also asserted that the trial court "gravely
erred" when, on its own, it dismissed the petition based on improper venue. Fujiki stated
that the RTC may be confusing the concept of venue with the concept of jurisdiction,
because it is lack of jurisdiction which allows a court to dismiss a case on its own. Fujiki
cited Dacoycoy v. Intermediate Appellate Court 19 which held that the "trial court cannot
pre-empt the defendant's prerogative to object to the improper laying of the venue by motu
proprio dismissing the case." 20 Moreover, petitioner alleged that the trial court should not
have "immediately dismissed" the petition under Section 5 of A.M. No. 02-11-10-SC
because he substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioner's motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC applies because the petitioner, in
effect, prays for a decree of absolute nullity of marriage. 21 The trial court reiterated its
two grounds for dismissal, i.e., lack of personality to sue and improper venue under
Sections 2 (a) and 4 of A.M. No. 02-11-10-SC. The RTC considered Fujiki as a "third
person" 22 in the proceeding because he "is not the husband in the decree of divorce
issued by the Japanese Family Court, which he now seeks to be judicially recognized, . . .
." 23 On the other hand, the RTC did not explain its ground of impropriety of venue. It
only said that "[a]lthough the Court cited Sec. 4 (Venue) . . . as a ground for dismissal of
this case[,] it should be taken together with the other ground cited by the Court . . . which
is Sec. 2 (a) . . . ." 24
The RTC further justified its motu proprio dismissal of the petition based on Braza v. The
City Civil Registrar of Himamaylan City, Negros Occidental. 25The Court in Braza ruled
that "[i]n a special proceeding for correction of entry under Rule 108 (Cancellation or
Correction of Entries in the Original Registry), the trial court has no jurisdiction to nullify
marriages . . . ." 26 Braza emphasized that the "validity of marriages as well as legitimacy
and filiation can be questioned only in a direct action seasonably filed by the proper party,
and not through a collateral attack such as [a] petition [for correction of entry] . . . ." 27
The RTC considered the petition as a collateral attack on the validity of marriage between
Marinay and Maekara. The trial court held that this is a "jurisdictional ground" to dismiss
the petition. 28 Moreover, the verification and certification against forum shopping of the
petition was not authenticated as required under Section 5 29 of A.M. No. 02-11-10-SC.
Hence, this also warranted the "immediate dismissal" of the petition under the same
provision.
The Manifestation and Motion of the Office of the Solicitor General and
the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment on the petition for
review. 30 The public respondents, the Local Civil Registrar of Quezon City and the
Administrator and Civil Registrar General of the NSO, participated through the Office of
the Solicitor General. Instead of a comment, the Solicitor General filed a Manifestation
and Motion. 31
The Solicitor General agreed with the petition. He prayed that the RTC's "pronouncement
that the petitioner failed to comply with . . . A.M. No. 02-11-10-SC . . . be set aside" and
that the case be reinstated in the trial court for further proceedings. 32 The Solicitor
General argued that Fujiki, as the spouse of the first marriage, is an injured party who can
sue to declare the bigamous marriage between Marinay and Maekara void. The Solicitor
General citedJuliano-Llave v. Republic 33 which held that Section 2 (a) of A.M. No. 02-
11-10-SC does not apply in cases of bigamy. In Juliano-Llave, this Court
explained: SCHATc
[t]he subsequent spouse may only be expected to take action if he or she
had only discovered during the connubial period that the marriage was
bigamous, and especially if the conjugal bliss had already vanished.
Should parties in a subsequent marriage benefit from the bigamous
marriage, it would not be expected that they would file an action to
declare the marriage void and thus, in such circumstance, the "injured
spouse" who should be given a legal remedy is the one in a subsisting
previous marriage. The latter is clearly the aggrieved party as the
bigamous marriage not only threatens the financial and the property
ownership aspect of the prior marriage but most of all, it causes an
emotional burden to the prior spouse. The subsequent marriage will
always be a reminder of the infidelity of the spouse and the disregard of
the prior marriage which sanctity is protected by the Constitution. 34
The Solicitor General contended that the petition to recognize the Japanese Family Court
judgment may be made in a Rule 108 proceeding. 35 In Corpuz v. Santo Tomas, 36 this
Court held that "[t]he recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule 108 of the
Rules of Court) is precisely to establish the status or right of a party or a particular
fact." 37 WhileCorpuz concerned a foreign divorce decree, in the present case the
Japanese Family Court judgment also affected the civil status of the parties, especially
Marinay, who is a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to
record "[a]cts, events and judicial decrees concerning the civil status of persons" in the
civil registry as required by Article 407 of the Civil Code. In other words, "[t]he law
requires the entry in the civil registry of judicial decrees that produce legal consequences
upon a person's legal capacity and status . . . ." 38 The Japanese Family Court judgment
directly bears on the civil status of a Filipino citizen and should therefore be proven as a
fact in a Rule 108 proceeding.
Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing
a void marriage under Rule 108, citing De Castro v. De Castro 39and Nial v.
Bayadog 40 which declared that "[t]he validity of a void marriage may be collaterally
attacked." 41
Marinay and Maekara individually sent letters to the Court to comply with the directive for
them to comment on the petition. 42 Maekara wrote that Marinay concealed from him the
fact that she was previously married to Fujiki. 43 Maekara also denied that he inflicted any
form of violence on Marinay.44 On the other hand, Marinay wrote that she had no reason
to oppose the petition. 45 She would like to maintain her silence for fear that anything she
say might cause misunderstanding between her and Fujiki. 46 ScTaEA
The Issues
Petitioner raises the following legal issues:
(1)Whether the Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.
(2)Whether a husband or wife of a prior marriage can file a petition to recognize a foreign
judgment nullifying the subsequent marriage between his or her spouse and a foreign
citizen on the ground of bigamy.
(3)Whether the Regional Trial Court can recognize the foreign judgment in a proceeding
for cancellation or correction of entries in the Civil Registry under Rule 108 of the Rules
of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a
foreign judgment relating to the status of a marriage where one of the parties is a citizen of
a foreign country. Moreover, in Juliano-Llave v. Republic, 47 this Court held that the rule
in A.M. No. 02-11-10-SC that only the husband or wife can file a declaration of nullity or
annulment of marriage "does not apply if the reason behind the petition is bigamy." 48
I.
For Philippine courts to recognize a foreign judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign country, the petitioner only needs to prove
the foreign judgment as a fact under the Rules of Court. To be more specific, a copy of the
foreign judgment may be admitted in evidence and proven as a fact under Rule 132,
Sections 24 and 25, in relation to Rule 39, Section 48 (b) of the Rules of
Court. 49 Petitioner may prove the Japanese Family Court judgment through (1) an official
publication or (2) a certification or copy attested by the officer who has custody of the
judgment. If the office which has custody is in a foreign country such as Japan, the
certification may be made by the proper diplomatic or consular officer of the Philippine
foreign service in Japan and authenticated by the seal of office. 50 EaISTD
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign
judgment would mean that the trial court and the parties should follow its provisions,
including the form and contents of the petition, 51 the service of summons, 52 the
investigation of the public prosecutor, 53 the setting of pre-trial, 54 the trial 55 and
the judgment of the trial court. 56 This is absurd because it will litigate the case
anew. It will defeat the purpose of recognizing foreign judgments, which is "to limit
repetitive litigation on claims and issues." 57 The interpretation of the RTC is
tantamount to relitigating the case on the merits. In Mijares v. Raada, 58 this Court
explained that "[i]f every judgment of a foreign court were reviewable on the merits, the
plaintiff would be forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation." 59
A foreign judgment relating to the status of a marriage affects the civil status, condition
and legal capacity of its parties. However, the effect of a foreign judgment is not
automatic. To extend the effect of a foreign judgment in the Philippines, Philippine courts
must determine if the foreign judgment is consistent with domestic public policy and other
mandatory laws. 60 Article 15 of the Civil Code provides that "[l]aws 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." This is the rule of lex nationalii in
private international law. Thus, the Philippine State may require, for effectivity in the
Philippines, recognition by Philippine courts of a foreign judgment affecting its citizen,
over whom it exercises personal jurisdiction relating to the status, condition and legal
capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does not require
relitigation under a Philippine court of the case as if it were a new petition for declaration
of nullity of marriage. Philippine courts cannot presume to know the foreign laws under
which the foreign judgment was rendered. They cannot substitute their judgment on the
status, condition and legal capacity of the foreign citizen who is under the jurisdiction of
another state. Thus, Philippine courts can only recognize the foreign judgment as a
fact according to the rules of evidence. ECcTaS
Section 48 (b), Rule 39 of the Rules of Court provides that a foreign judgment or final
order against a person creates a "presumptive evidence of a right as between the parties
and their successors in interest by a subsequent title." Moreover, Section 48 of the Rules of
Court states that "the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact."
Thus, Philippine courts exercise limited review on foreign judgments. Courts are not
allowed to delve into the merits of a foreign judgment. Once a foreign judgment is
admitted and proven in a Philippine court, it can only be repelled on grounds external to its
merits, i.e., "want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact." The rule on limited review embodies the policy of efficiency and
the protection of party expectations, 61 as well as respecting the jurisdiction of other
states. 62
Since 1922 in Adong v. Cheong Seng Gee, 63 Philippine courts have recognized foreign
divorce decrees between a Filipino and a foreign citizen if they are successfully proven
under the rules of evidence. 64 Divorce involves the dissolution of a marriage, but the
recognition of a foreign divorce decree does not involve the extended procedure under
A.M. No. 02-11-10-SC or the rules of ordinary trial. While the Philippines does not have a
divorce law, Philippine courts may, however, recognize a foreign divorce decree under the
second paragraph of Article 26 of the Family Code, to capacitate a Filipino citizen to
remarry when his or her foreign spouse obtained a divorce decree abroad. 65
There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese
Family Court judgment nullifying the marriage between Marinay and Maekara on the
ground of bigamy. While the Philippines has no divorce law, the Japanese Family Court
judgment is fully consistent with Philippine public policy, as bigamous marriages are
declared void from the beginning under Article 35 (4) of the Family Code. Bigamy is a
crime under Article 349 of the Revised Penal Code. Thus, Fujiki can prove the existence
of the Japanese Family Court judgment in accordance with Rule 132, Sections 24 and 25,
in relation to Rule 39, Section 48 (b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact of the judgment, it
may be made in a special proceeding for cancellation or correction of entries in the
civil registry under Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of
Court provides that "[a] special proceeding is a remedy by which a party seeks to establish
a status, a right, or a particular fact." Rule 108 creates a remedy to rectify facts of a
person's life which are recorded by the State pursuant to the Civil Register Law or Act No.
3753. These are facts of public consequence such as birth, death or marriage, 66which the
State has an interest in recording. As noted by the Solicitor General, in Corpuz v. Sto.
Tomas this Court declared that "[t]he recognition of the foreign divorce decree may be
made in a Rule 108 proceeding itself, as the object of special proceedings (such as that in
Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or a
particular fact." 67 AIaHES
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. Any person interested in any act,
event, order or decree concerning the civil status of persons which
has been recorded in the civil register, may file a verified petition for
the cancellation or correction of any entry relating thereto, with the
Regional Trial Court of the province where the corresponding civil
registry is located. (Emphasis supplied)
Fujiki has the personality to file a petition to recognize the Japanese Family Court
judgment nullifying the marriage between Marinay and Maekara on the ground of
bigamy because the judgment concerns his civil status as married to Marinay. For
the same reason he has the personality to file a petition under Rule 108 to cancel the
entry of marriage between Marinay and Maekara in the civil registry on the basis of
the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material interest in maintaining
the integrity of the marriage he contracted and the property relations arising from it. There
is also no doubt that he is interested in the cancellation of an entry of a bigamous marriage
in the civil registry, which compromises the public record of his marriage. The interest
derives from the substantive right of the spouse not only to preserve (or dissolve, in
limited instances) 68 his most intimate human relation, but also to protect his property
interests that arise by operation of law the moment he contracts marriage. 69 These
property interests in marriage include the right to be supported "in keeping with the
financial capacity of the family" 70 and preserving the property regime of the marriage. 71
Property rights are already substantive rights protected by the Constitution, 72 but a
spouse's right in a marriage extends further to relational rights recognized under Title III
("Rights and Obligations between Husband and Wife") of the Family Code. 73 A.M. No.
02-11-10-SC cannot "diminish, increase, or modify" the substantive right of the spouse to
maintain the integrity of his marriage. 74 In any case, Section 2 (a) of A.M. No. 02-11-10-
SC preserves this substantive right by limiting the personality to sue to the husband or
the wife of the union recognized by law. DHSCTI
Section 2 (a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting
marriage to question the validity of a subsequent marriage on the ground of bigamy. On
the contrary, when Section 2 (a) states that "[a] petition for declaration of absolute nullity
of void marriage may be filed solely by the husband or the wife" 75 it refers to the
husband or the wife of the SUBSISTING marriage. Under Article 35 (4) of the Family
Code, bigamous marriages are void from the beginning. Thus, the parties in a bigamous
marriage are neither the husband nor the wife under the law. The husband or the wife of
the prior subsisting marriage is the one who has the personality to file a petition for
declaration of absolute nullity of void marriage under Section 2 (a) of A.M. No. 02-11-10-
SC.
Article 35 (4) of the Family Code, which declares bigamous marriages void from the
beginning, is the civil aspect of Article 349 of the Revised Penal Code,76 which penalizes
bigamy. Bigamy is a public crime. Thus, anyone can initiate prosecution for bigamy
because any citizen has an interest in the prosecution and prevention of crimes. 77 If
anyone can file a criminal action which leads to the declaration of nullity of a bigamous
marriage, 78 there is more reason to confer personality to sue on the husband or the wife
of a subsisting marriage. The prior spouse does not only share in the public interest of
prosecuting and preventing crimes, he is also personally interested in the purely civil
aspect of protecting his marriage.
When the right of the spouse to protect his marriage is violated, the spouse is clearly an
injured party and is therefore interested in the judgment of the suit. 79 Juliano-Llave ruled
that the prior spouse "is clearly the aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership aspect of the prior marriage but most of
all, it causes an emotional burden to the prior spouse." 80 Being a real party in interest, the
prior spouse is entitled to sue in order to declare a bigamous marriage void. For this
purpose, he can petition a court to recognize a foreign judgment nullifying the bigamous
marriage and judicially declare as a fact that such judgment is effective in the Philippines.
Once established, there should be no more impediment to cancel the entry of the bigamous
marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court
held that a "trial court has no jurisdiction to nullify marriages" in a special proceeding for
cancellation or correction of entry under Rule 108 of the Rules of Court. 81 Thus, the
"validity of marriage[] . . . can be questioned only in a direct action" to nullify the
marriage. 82 The RTC relied on Braza in dismissing the petition for recognition of foreign
judgment as a collateral attack on the marriage between Marinay and Maekara. EAcTDH
Braza is not applicable because Braza does not involve a recognition of a foreign
judgment nullifying a bigamous marriage where one of the parties is a citizen of the
foreign country.
To be sure, a petition for correction or cancellation of an entry in the civil registry cannot
substitute for an action to invalidate a marriage. A direct action is necessary to prevent
circumvention of the substantive and procedural safeguards of marriage under the Family
Code, A.M. No. 02-11-10-SC and other related laws. Among these safeguards are the
requirement of proving the limited grounds for the dissolution of
marriage, 83 support pendente lite of the spouses and children, 84 the liquidation, partition
and distribution of the properties of the spouses, 85 and the investigation of the public
prosecutor to determine collusion. 86 A direct action for declaration of nullity or
annulment of marriage is also necessary to prevent circumvention of the jurisdiction of the
Family Courts under the Family Courts Act of 1997 (Republic Act No. 8369), as a petition
for cancellation or correction of entries in the civil registry may be filed in the Regional
Trial Court "where the corresponding civil registry is located." 87 In other words, a
Filipino citizen cannot dissolve his marriage by the mere expedient of changing his
entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation of a civil registry
entry based on the recognition of a foreign judgment annulling a marriage where one of
the parties is a citizen of the foreign country. There is neither circumvention of the
substantive and procedural safeguards of marriage under Philippine law, nor of the
jurisdiction of Family Courts under R.A. No. 8369. A recognition of a foreign judgment is
not an action to nullify a marriage. It is an action for Philippine courts to recognize the
effectivity of a foreign judgment, which presupposes a case which was already tried
and decided under foreign law. The procedure in A.M. No. 02-11-10-SC does not apply
in a petition to recognize a foreign judgment annulling a bigamous marriage where one of
the parties is a citizen of the foreign country. Neither can R.A. No. 8369 define the
jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect
of a foreign divorce decree to a Filipino spouse without undergoing trial to determine the
validity of the dissolution of the marriage. The second paragraph of Article 26 of the
Family Code provides that "[w]here a marriage between a Filipino citizen and a foreigner
is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry
under Philippine law." In Republic v. Orbecido, 88 this Court recognized the legislative
intent of the second paragraph of Article 26 which is "to avoid the absurd situation where
the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is
no longer married to the Filipino spouse" 89 under the laws of his or her country. The
second paragraph of Article 26 of the Family Code only authorizes Philippine courts to
adopt the effects of a foreign divorce decree precisely because the Philippines does not
allow divorce. Philippine courts cannot try the case on the merits because it is tantamount
to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to address the anomaly
that results from a marriage between a Filipino, whose laws do not allow divorce, and a
foreign citizen, whose laws allow divorce. The anomaly consists in the Filipino spouse
being tied to the marriage while the foreign spouse is free to marry under the laws of his or
her country. The correction is made by extending in the Philippines the effect of the
foreign divorce decree, which is already effective in the country where it was rendered.
The second paragraph of Article 26 of the Family Code is based on this Court's decision
in Van Dorn v. Romillo 90 which declared that the Filipino spouse "should not be
discriminated against in her own country if the ends of justice are to be
served." 91 IDETCA
The principle in Article 26 of the Family Code applies in a marriage between a Filipino
and a foreign citizen who obtains a foreign judgment nullifying the marriage on the ground
of bigamy. The Filipino spouse may file a petition abroad to declare the marriage void on
the ground of bigamy. The principle in the second paragraph of Article 26 of the Family
Code applies because the foreign spouse, after the foreign judgment nullifying the
marriage, is capacitated to remarry under the laws of his or her country. If the foreign
judgment is not recognized in the Philippines, the Filipino spouse will be discriminated
the foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are
empowered to correct a situation where the Filipino spouse is still tied to the marriage
while the foreign spouse is free to marry. Moreover, notwithstanding Article 26 of the
Family Code, Philippine courts already have jurisdiction to extend the effect of a foreign
judgment in the Philippines to the extent that the foreign judgment does not contravene
domestic public policy. A critical difference between the case of a foreign divorce decree
and a foreign judgment nullifying a bigamous marriage is that bigamy, as a ground for the
nullity of marriage, is fully consistent with Philippine public policy as expressed in Article
35 (4) of the Family Code and Article 349 of the Revised Penal Code. The Filipino
spouse has the option to undergo full trial by filing a petition for declaration of
nullity of marriage under A.M. No. 02-11-10-SC, but this is not the only remedy
available to him or her. Philippine courts have jurisdiction to recognize a foreign
judgment nullifying a bigamous marriage, without prejudice to a criminal
prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are incompetent to substitute
their judgment on how a case was decided under foreign law. They cannot decide on the
"family rights and duties, or on the status, condition and legal capacity" of the foreign
citizen who is a party to the foreign judgment. Thus, Philippine courts are limited to the
question of whether to extend the effect of a foreign judgment in the Philippines. In a
foreign judgment relating to the status of a marriage involving a citizen of a foreign
country, Philippine courts only decide whether to extend its effect to the Filipino party,
under the rule of lex nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether the foreign judgment is
inconsistent with an overriding public policy in the Philippines; and (2) whether any
alleging party is able to prove an extrinsic ground to repel the foreign judgment, i.e., want
of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
If there is neither inconsistency with public policy nor adequate proof to repel the
judgment, Philippine courts should, by default, recognize the foreign judgment as part of
the comity of nations. Section 48 (b), Rule 39 of the Rules of Court states that the foreign
judgment is already "presumptive evidence of a right between the parties." Upon
recognition of the foreign judgment, this right becomes conclusive and the judgment
serves as the basis for the correction or cancellation of entry in the civil registry. The
recognition of the foreign judgment nullifying a bigamous marriage is a subsequent event
that establishes a new status, right and fact 92 that needs to be reflected in the civil
registry. Otherwise, there will be an inconsistency between the recognition of the
effectivity of the foreign judgment and the public records in the Philippines.
However, the recognition of a foreign judgment nullifying a bigamous marriage is without
prejudice to prosecution for bigamy under Article 349 of the Revised Penal Code. 93 The
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for
extinction of criminal liability under Articles 89 and 94 of the Revised Penal Code.
Moreover, under Article 91 of the Revised Penal Code, "[t]he term of prescription [of the
crime of bigamy] shall not run when the offender is absent from the Philippine
archipelago." CcHDSA
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to
address the questions on venue and the contents and form of the petition under
Sections 4 and 5, respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the
Resolution dated 2 March 2011 of the Regional Trial Court, Branch 107, Quezon City, in
Civil Case No. Q-11-68582 are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in accordance with
this Decision.
SO ORDERED.
Brion, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
SECOND DIVISION
[G.R. No. 172342. July 13, 2009.]
23. LWV CONSTRUCTION CORPORATION, petitioner, vs. MARCELO B.
DUPO, respondent.
DECISION
QUISUMBING, J p:
Petitioner LWV Construction Corporation appeals the Decision 1 dated December 6, 2005
of the Court of Appeals in CA-G.R. SP No. 76843 and its Resolution 2 dated April 12,
2006, denying the motion for reconsideration. The Court of Appeals had ruled that under
Article 87 of the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo
Dupo is entitled to a service award or longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
LWV CONSTRUCTION, a domestic corporation which recruits Filipino workers, hired
DUPO as Civil Structural Superintendent to work in Saudi Arabia for its principal,
Mohammad Al-Mojil Group/Establishment (MMG). On February 26, 1992, DUPO signed
his first overseas employment contract, renewable after one year. It was renewed five
times on the following dates: May 10, 1993, November 16, 1994, January 22, 1996, April
14, 1997, and March 26, 1998. All were fixed-period contracts for one year. The sixth and
last contract stated that DUPO's employment starts upon reporting to work and ends when
he leaves the work site. DUPO left Saudi Arabia on April 30, 1999 and arrived in the
Philippines on May 1, 1999.
On May 28, 1999, DUPO informed MMG, through the petitioner, that he needs to extend
his vacation because his son was hospitalized. He also sought a promotion with salary
adjustment. 3 In reply, MMG informed DUPO that his promotion is subject to
management's review; that his services are still needed; that he was issued a plane ticket
for his return flight to Saudi Arabia on May 31, 1999; and that his decision regarding his
employment must be made within seven days, otherwise, MMG "will be compelled to
cancel [his] slot". 4
On July 6, 1999, DUPO resigned. In his letter to MMG, he also stated:
xxx xxx xxx
I am aware that I still have to do a final settlement with the company and hope that during
my more than seven (7) [years] services, as the Saudi Law stated, I am entitled for a long
service award. 5 (Emphasis supplied.)
xxx xxx xxx
According to DUPO, when he followed up his claim for long service award on December
7, 2000, LWV CONSTRUCTION informed him that MMG did not respond. 6
On December 11, 2000, DUPO filed a complaint 7 for payment of service award against
LWV CONSTRUCTION before the National Labor Relations Commission (NLRC),
Regional Arbitration Branch, Cordillera Administrative Region, Baguio City. In support of
his claim, DUPO averred in his position paper that:
xxx xxx xxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5) years in a
company within the jurisdiction of Saudi Arabia, is entitled to the so-called long service
award which is known to others as longevity pay of at least one half month pay for
every year of service. In excess of five years an employee is entitled to one month pay for
every year of service. In both cases inclusive of all benefits and allowances.
This benefit was offered to complainant before he went on vacation, hence, this was
engrained in his mind. He reconstructed the computation of his long service award or
longevity pay and he arrived at the following computation exactly the same with the
amount he was previously offered [which is US$12,640.33]. 8 (Emphasis supplied.)
xxx xxx xxx
DUPO said that he did not grab the offer for he intended to return after his vacation.
For its part, LWV CONSTRUCTION offered payment and prescription as defenses.
LWV CONSTRUCTION maintained that MMG "pays its workers theirService Award or
Severance Pay every conclusion of their Labor Contracts pursuant to Article 87 of the
[Saudi Labor Law]". Under Article 87, "payment of the award is at the end or termination
of the Labor Contract concluded for a specific period". Based on the payroll, 9 DUPO was
already paid his service award or severance pay for his latest (sixth) employment contract.
LWV CONSTRUCTION added that under Article 13 10 of the Saudi Labor Law, the
action to enforce payment of the service award must be filed within one year from the
termination of a labor contract for a specific period. DUPO's six contracts ended when he
left Saudi Arabia on the following dates: April 15, 1993, June 8, 1994, December 18,
1995, March 21, 1997, March 16, 1998 and April 30, 1999. LWV CONSTRUCTION
concluded that the one-year prescriptive period had lapsed because DUPO filed his
complaint on December 11, 2000 or one year and seven months after his sixth contract
ended. 11 STcADa
In his June 18, 2001 Decision, 12 the Labor Arbiter ordered LWV CONSTRUCTION to
pay DUPO longevity pay of US$12,640.33 or P648,562.69 and attorney's fees of
P64,856.27 or a total of P713,418.96. 13
The Labor Arbiter ruled that DUPO's seven-year employment with MMG had sufficiently
oriented him on the benefits given to workers; that LWV CONSTRUCTION was unable
to convincingly refute DUPO's claim that MMG offered him longevity pay before he went
on vacation on May 1, 1999; and that DUPO's claim was not barred by prescription since
his claim on July 6, 1999, made a month after his cause of action accrued, interrupted the
prescriptive period under the Saudi Labor Law until his claim was categorically denied.
LWV CONSTRUCTION appealed. However, the NLRC dismissed the appeal and
affirmed the Labor Arbiter's decision. 14 The NLRC ruled that DUPO is entitled
to longevity pay which is different from severance pay.
Aggrieved, LWV CONSTRUCTION brought the case to the Court of Appeals through a
petition for certiorari under Rule 65 of the Rules of Court. The Court of Appeals denied
the petition and affirmed the NLRC. The Court of Appeals ruled that service award is the
same as longevity pay, and that the severance pay received by DUPO cannot be equated
with service award. The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack or in (sic) excess
of jurisdiction on the part of public DUPO NLRC, the petition is denied. The NLRC
decision dated November 29, 2002 as well as and (sic) its January 31, 2003 Resolution are
hereby AFFIRMED in toto.
SO ORDERED. 15
After its motion for reconsideration was denied, LWV CONSTRUCTION filed the instant
petition raising the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING
NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION ON THE PART OF PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING
THAT THE SERVICE AWARD OF THE RESPONDENT [HAS] NOT PRESCRIBED
WHEN HIS COMPLAINT WAS FILED ON DECEMBER 11, 2000. caCEDA
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING IN THE CASE AT BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING ARTICLE NO. 7 OF THE SAUDI LABOR AND WORKMEN LAW TO
SUPPORT ITS FINDING THAT THE BASIS OF THE SERVICE AWARD IS
LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN
EMPLOYEE. 16
Essentially, the issue is whether the Court of Appeals erred in ruling that DUPO is entitled
to a service award or longevity pay of US$12,640.33 under the provisions of the Saudi
Labor Law. Related to this issue are LWV CONSTRUCTION's defenses of payment and
prescription.
LWV CONSTRUCTION points out that the Labor Arbiter awarded longevity
pay although the Saudi Labor Law grants no such benefit, and the NLRC
confused longevity pay and service award. LWV CONSTRUCTION maintains that the
benefit granted by Article 87 of the Saudi Labor Law is service award which was already
paid by MMG each time DUPO's contract ended.
LWV CONSTRUCTION insists that prescription barred DUPO's claim for service
award as the complaint was filed one year and seven months after the sixth contract ended.
LWV CONSTRUCTION alleges that the Court of Appeals erred in ruling that DUPO's
July 6, 1999 claim interrupted the running of the prescriptive period. Such ruling is
contrary to Article 13 of the Saudi Labor Law which provides that no case or claim
relating to any of the rights provided for under said law shall be heard after the lapse of 12
months from the date of the termination of the contract.
DUPO counters that he is entitled to longevity pay under the provisions of the Saudi Labor
Law and quotes extensively the decision of the Court of Appeals. He points out that LWV
CONSTRUCTION has not refuted the Labor Arbiter's finding that MMG offered
him longevity pay of US$12,640.33 before his one-month vacation in the Philippines in
1999. Thus, he "submits that such offer indeed exists" as he sees no reason for MMG to
offer the benefit if no law grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals. We
find that DUPO's service award under Article 87 of the Saudi Labor Law has already been
paid. Our computation will show that the severance pay received by DUPO was
his service award.
Article 87 clearly grants a service award. It reads: HAEDIS
Article 87
Where the term of a labor contract concluded for a specified period comes to an
end or where the employer cancels a contract of unspecified period, the employer shall
pay to the workman an award for the period of his service to be computed on the basis
of half a month's pay for each of the first five years and one month's pay for each of the
subsequent years. The last rate of pay shall be taken as basis for the computation of the
award. For fractions of a year, the workman shall be entitled to an award which is
proportionate to his service period during that year. Furthermore, the workman shall be
entitled to the service award provided for at the beginning of this article in the following
cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his
control. 17 (Emphasis supplied.)
DUPO, however, has called the benefit other names such as long service
award and longevity pay. On the other hand, LWV CONSTRUCTION claimed that
the service award is the same as severance pay. Notably, the Labor Arbiter was unable to
specify any law to support his award of longevity pay. 18 He anchored the award on his
finding that DUPO's allegations were more credible because his seven-year employment at
MMG had sufficiently oriented him on the benefits given to workers. To the NLRC,
DUPO is entitled to service award or longevity pay under Article 87 and that longevity pay
is different from severance pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree
with DUPO that service award is the same as longevity pay, and wrong to agree with
LWV CONSTRUCTION that service award is the same as severance pay? And why
would it be correct to say that service award is severance pay, and wrong to call service
award as longevity pay?
We found the answer in the pleadings and evidence presented. DUPO's position paper
mentioned how his long service award or longevity pay is computed: half-month's pay per
year of service and one-month's pay per year after five years of service. Article 87 has the
same formula to compute the service award.
The payroll submitted by LWV CONSTRUCTION showed that DUPO
received severance pay of SR2,786 for his sixth employment contract covering the period
April 21, 1998 to April 29, 1999. 19 The computation below shows that
DUPO's severance pay of SR2,786 was his service award under Article 87.
Service Award = 1/2 (SR5,438) + (9 days/365 days) x 1/2 (SR5,438)
Service Award = SR2,786.04
DUPO's service award for the sixth contract is equivalent only to half-month's pay plus the
proportionate amount for the additional nine days of service he rendered after one year.
DUPO's employment contracts expressly stated that his employment ended upon his
departure from work. Each year he departed from work and successively new contracts
were executed before he reported for work anew. His service was not cumulative.
Pertinently, in Brent School, Inc. v. Zamora, 22 we said that "a fixed term is an essential
and natural appurtenance" of overseas employment contracts, 23 as in this case. We also
said in that case that under American law, "[w]here a contract specifies the period of its
duration, it terminates on the expiration of such period. A contract of employment for a
definite period terminates by its own terms at the end of such period." 24 As it is, Article
72 of the Saudi Labor Law is also of similar import. It reads: HIACEa
A labor contract concluded for a specified period shall terminate upon the expiry of its
term. If both parties continue to enforce the contract, thereafter, it shall be considered
renewed for an unspecified period. 25
Regarding DUPO's claim that he was offered US$12,640.33 as longevity pay before he
returned to the Philippines on May 1, 1999, we find that he was not candid on this
particular point. His categorical assertion about the offer being "engrained in his mind"
such that he "reconstructed the computation . . . and arrived at the . . . computation exactly
the same with the amount he was previously offered" is not only beyond belief. Such
assertion is also a stark departure from his July 6, 1999 letter to MMG where he could
only express his hope that he was entitled to a long service award and where he never
mentioned the supposed previous offer. Moreover, DUPO's claim that his monthly
compensation is SR10,248.92 26 is belied by the payroll which shows that he receives
SR5,438 per month.
We therefore emphasize that such payroll should have prompted the lower tribunals to
examine closely DUPO's computation of his supposed longevity pay before adopting that
computation as their own.
On the matter of prescription, however, we cannot agree with LWV CONSTRUCTION
that DUPO's action has prescribed under Article 13 of the Saudi Labor Law. What applies
is Article 291 of our Labor Code which reads:
ART. 291. Money claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the
time the cause of action accrued; otherwise they shall be forever barred.
xxx xxx xxx
In Cadalin v. POEA's Administrator, 27 we held that Article 291 covers all money claims
from employer-employee relationship and is broader in scope than claims arising from a
specific law. It is not limited to money claims recoverable under the Labor Code, but
applies also to claims of overseas contract workers. 28 The following ruling in Cadalin v.
POEA's Administrator is instructive:
First to be determined is whether it is the Bahrain law on prescription of action based on
the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the
governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"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" . . . .
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]). ScCIaA
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.
xxx xxx xxx
However, the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum has a "borrowing statute". Said statute has the
practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws, 152-153 [1938]). A "borrowing statute" directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law
(Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes", one
form provides that an action barred by the laws of the place where it accrued, will not be
enforced in the forum even though the local statute has not run against it (Goodrich and
Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is
of this kind. Said Section provides:
"If by the laws of the state or country where the cause of action arose, the action is barred,
it is also barred in the Philippine Islands."
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article
2270 of said Code repealed only those provisions of the Code of Civil Procedure as to
which were inconsistent with it. There is no provision in the Civil Code of the Philippines,
which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure
(Paras, Philippine Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil
Procedure] cannot be enforced ex proprio vigore insofar as it ordains the application in
this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's public
policy . . . . To enforce the one-year prescriptive period of the Amiri Decree No. 23 of
1976 as regards the claims in question would contravene the public policy on the
protection to labor. 29
xxx xxx xxx
Thus, in our considered view, DUPO's complaint was filed well within the three-year
prescriptive period under Article 291 of our Labor Code. This point, however, has
already been mooted by our finding that DUPO's service award had been paid, albeit the
payroll termed such payment as severance pay.
WHEREFORE, the petition is GRANTED. The assailed Decision dated December 6,
2005 and Resolution dated April 12, 2006, of the Court of Appeals in CA-G.R. SP No.
76843, as well as the Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case
No. RAB-CAR-12-0649-00 and the Decision dated November 29, 2002 and Resolution
dated January 31, 2003 of the NLRC in NLRC CA No. 028994-01 (NLRC RAB-CAR-12-
0649-00) are REVERSED and SET ASIDE. The Complaint of DUPO is hereby
DISMISSED. DTaSIc
No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 178551. October 11, 2010.]
24. ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF
PUBLIC HEALTH-KUWAIT, petitioners,vs. MA. JOSEFA ECHIN, respondent.
DECISION
CARPIO MORALES, J p:
Josefina Echin was hired by ATCI Overseas Corporation in behalf of its principal-co-
ATCI Corporation, the Ministry of Public Health of Kuwait (the Ministry), for the
position of medical technologist under a two-year contract, denominated as a
Memorandum of Agreement (MOA), with a monthly salary of US$1,200.00.
Under the MOA, 1 all newly-hired employees undergo a probationary period of one (1)
year and are covered by Kuwait's Civil Service Board Employment Contract No. 2.
ECHIN was deployed on February 17, 2000 but was terminated from employment on
February 11, 2001, she not having allegedly passed the probationary period.
As the Ministry denied ECHIN's request for reconsideration, she returned to the
Philippines on March 17, 2001, shouldering her own air fare.
On July 27, 2001, ECHIN filed with the National Labor Relations Commission (NLRC) a
complaint 2 for illegal dismissal against ATCI Corporation ATCI as the local recruitment
agency, represented by ATCI Corporation, Amalia Ikdal (Ikdal), and the Ministry, as the
foreign principal.
By Decision 3 of November 29, 2002, the Labor Arbiter, finding that ATCI Corporations
neither showed that there was just cause to warrant ECHIN's dismissal nor that she failed
to qualify as a regular employee, held that ECHIN was illegally dismissed and accordingly
ordered ATCI Corporations to pay her US$3,600.00, representing her salary for the three
months unexpired portion of her contract.
On appeal of ATCI Corporations ATCI and Ikdal, the NLRC affirmed the Labor Arbiter's
decision by Resolution 4 of January 26, 2004. ATCI Corporations' motion for
reconsideration having been denied by Resolution 5 of April 22, 2004, they appealed to
the Court of Appeals, contending that their principal, the Ministry, being a foreign
government agency, is immune from suit and, as such, the immunity extended to them;
and that ECHIN was validly dismissed for her failure to meet the performance rating
within the one-year period as required under Kuwait's Civil Service Laws. ATCI
Corporations further contended that Ikdal should not be liable as an officer of ATCI
Corporation ATCI.
By Decision 6 of March 30, 2007, the appellate court affirmed the NLRC Resolution.
In brushing aside ATCI Corporations' contention that they only acted as agent of the
Ministry and that they cannot be held jointly and solidarily liable with it, the appellate
court noted that under the law, a private employment agency shall assume all
responsibilities for the implementation of the contract of employment of an overseas
worker, hence, it can be sued jointly and severally with the foreign principal for any
violation of the recruitment agreement or contract of employment. ATcaHS
As to Ikdal's liability, the appellate court held that under Sec. 10 of Republic Act No.
8042, the "Migrant and Overseas Filipinos' Act of 1995," corporate officers, directors and
partners of a recruitment agency may themselves be jointly and solidarily liable with the
recruitment agency for money claims and damages awarded to overseas workers.
ATCI Corporations' motion for reconsideration having been denied by the appellate court
by Resolution 7 of June 27, 2007, the present petition for review on certiorari was filed.
ATCI Corporations maintain that they should not be held liable because ECHIN's
employment contract specifically stipulates that her employment shall be governed by the
Civil Service Law and Regulations of Kuwait. They thus conclude that it was patent
error for the labor tribunals and the appellate court to apply the Labor Code
provisions governing probationary employment in deciding the present case.
Further, ATCI Corporations argue that even the Philippine Overseas Employment Act
(POEA) Rules relative to master employment contracts (Part III, Sec. 2 of the POEA Rules
and Regulations) accord respect to the "customs, practices, company policies and labor
laws and legislation of the host country."
Finally, ATCI Corporations posit that assuming arguendo that Philippine labor laws are
applicable, given that the foreign principal is a government agency which is immune
from suit, as in fact it did not sign any document agreeing to be held jointly and solidarily
liable, ATCI Corporation ATCI cannot likewise be held liable, more so since the
Ministry's liability had not been judicially determined as jurisdiction was not acquired over
it.
The petition fails.
ATCI Corporation ATCI, as a private recruitment agency, cannot evade responsibility
for the money claims of Overseas Filipino workers (OFWs) which it deploys abroad by
the mere expediency of claiming that its foreign principal is a government agency
clothed with immunity from suit, or that such foreign principal's liability must first be
established before it, as agent, can be held jointly and solidarily liable.
In providing for the joint and solidary liability of private recruitment agencies with their
foreign principals, Republic Act No. 8042 precisely affords the OFWs with a recourse and
assures them of immediate and sufficient payment of what is due them.Skippers United
Pacific v. Maguad 8 explains:
. . . [T]he obligations covenanted in the recruitment agreement entered into by and
between the local agent and its foreign principal are not coterminous with the term of
such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement do
not at all end, but the same extends up to and until the expiration of the employment
contracts of the employees recruited and employed pursuant to the said recruitment
agreement. Otherwise, this will render nugatory the very purpose for which the law
governing the employment of workers for foreign jobs abroad was enacted. (emphasis
supplied)
The imposition of joint and solidary liability is in line with the policy of the state to protect
and alleviate the plight of the working class. 9 Verily, to allow ATCI Corporations to
simply invoke the immunity from suit of its foreign principal or to wait for the judicial
determination of the foreign principal's liability before ATCI Corporation can be held
liable renders the law on joint and solidary liability inutile.
As to ATCI Corporations' contentions that Philippine labor laws on probationary
employment are not applicable since it was expressly provided in ECHIN's employment
contract, which she voluntarily entered into, that the terms of her engagement shall be
governed by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA
Rules accord respect to such rules, customs and practices of the host country, the same
was not substantiated.
Indeed, a contract freely entered into is considered the law between the parties who can
establish stipulations, clauses, terms and conditions as they may deem convenient,
including the laws which they wish to govern their respective obligations, as long as they
are not contrary to law, morals, good customs, public order or public policy.
It is hornbook principle, however, that the party invoking the application of a foreign law
has the burden of proving the law, under the doctrine of processual presumption which, in
this case, ATCI Corporations failed to discharge. The Court's ruling in EDI-Staffbuilders
Int'l. v. NLRC 10 illuminates:
In the present case, the employment contract signed by Gran specifically states that
Saudi Labor Laws will govern matters not provided for in the contract (e.g., specific
causes for termination, termination procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern all
matters relating to the termination of the employment of Gran. HcACTE
In international law, the party who wants to have a foreign law applied to a dispute
or case HAS THE BURDEN OF PROVING THE FOREIGN LAW. The foreign law
is treated as a question of fact to be properly pleaded and proved as the judge or
labor arbiter cannot take judicial notice of a foreign law. He is presumed to know only
domestic or forum law.
Unfortunately for ATCI Corporation, it did not prove the pertinent Saudi laws on
the matter; thus, the International Law doctrine of presumed-identity
approach or processual presumption comes into play. Where a foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the
same as ours. Thus, we apply Philippine labor laws in determining the issues
presented before us. (emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence, they must not only be
alleged; they must be proven. To prove a foreign law, the party invoking it must present a
copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of
Court which reads:
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. (emphasis
supplied)
SEC. 25.What attestation of copy must state. Whenever a copy of a document or
record is attested for the purpose of the evidence, 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. The attestation must be under the official seal of the attesting officer,
if there be any, or if he be the clerk of a court having a seal, under the seal of such court.
To prove the Kuwaiti law, ATCI Corporations submitted the following: MOA between
ECHIN and the Ministry, as represented by ATCI, which provides that the employee is
subject to a probationary period of one (1) year and that the host country's Civil Service
Laws and Regulations apply; a translated copy 11 (Arabic to English) of the termination
letter to ECHIN stating that she did not pass the probation terms, without specifying the
grounds therefor, and a translated copy of the certificate of termination, 12 both of which
documents were certified by Mr. Mustapha Alawi, Head of the Department of Foreign
Affairs-Office of Consular Affairs Inslamic Certification and Translation Unit; and
ECHIN's letter 13 of reconsideration to the Ministry, wherein she noted that in her first
eight (8) months of employment, she was given a rating of "Excellent" albeit it changed
due to changes in her shift of work schedule.
These documents, whether taken singly or as a whole, do not sufficiently prove that
ECHIN was validly terminated as a probationary employee under Kuwaiti civil service
laws. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly
authenticated and translated by Embassy officials thereat, as required under the
Rules, what ATCI Corporations submitted were mere certifications attesting only to
the correctness of the translations of the MOA and the termination letter which does
not prove at all that Kuwaiti civil service laws differ from Philippine laws and that
under such Kuwaiti laws, ECHIN was validly terminated. Thus the subject
certifications read:
xxx xxx xxx
This is to certify that the herein attached translation/s from Arabic to English/Tagalog and
or vice versa was/were presented to this Office for review and certification and the same
WAS/WERE FOUND TO BE IN ORDER. This Office, however, assumes no
responsibility as to the contents of the document/s.
This certification is being issued upon request of the interested party for whatever legal
purpose it may serve. (emphasis supplied)
Respecting Ikdal's joint and solidary liability as a corporate officer, the same is in order
too following the express provision of R.A. 8042 on money claims, viz.:
SEC. 10.Money Claims. Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual moral, exemplary and other forms of
damages. cHDAIS
The liability of the principal/employer and the recruitment/placement agency for any and
all claims under this section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to be filed by the recruitment/placement
agency, as provided by law, shall be answerable for all money claims or damages that may
be awarded to the workers. If the recruitment/placement agency is a juridical
being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages. (emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SECOND DIVISION
[G.R. No. 120135. March 31, 2003.]
25. BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL,
LTD., petitioners, vs. COURT OF APPEALS, HON. MANUEL PADOLINA,
EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents.
Agcaoili & Associates for petitioner.
William R. Veto for respondent.
SYNOPSIS
The Litonjuas were engaged in the shipping business and owned two vessels, through their
wholly-owned corporations. With their business doing well, the petitioner banks induced
them to increase the number of their ships in operation, offering them easy loans to acquire
said vessels. Thereafter, petitioners acquired, through Litonjuas' corporations as
borrowers, four additional vessels which were registered in the names of their
corporations. The Litonjuas claimed, among others, that petitioners as trustees did not
fully render an account of all the income derived from the operation of the vessels as well
as the proceeds of the subsequent foreclosure sale and that the loans acquired for the
purchase of the four additional vessels matured and remained unpaid, prompting
petitioners to have all the six vessels, including the two vessels originally owned by the
private respondents, foreclosed and sold at public auction. Petitioners filed a motion to
dismiss on grounds of forum non conveniens and lack of cause of action against them, but
the same was denied by the trial court. The Court of Appeals denied petitioners' petition
for review on certiorari and motion for reconsideration. Hence, this petition.
In denying the petition, the Supreme Court ruled that it is not the lack or absence of cause
of action that is a ground for dismissal of the complaint, but rather the fact that the
complaint states no cause of action. Failure to state a cause of action refers to the
insufficiency of allegation in the pleading, unlike lack of cause of action which refers to
the insufficiency of factual basis for the action. In the case at bar, the complaint contains
the three elements of a cause of action.
The Court further ruled that whether a suit should be entertained or dismissed on the basis
of the doctrine of forum non conveniens depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that a
Philippine Court may assume jurisdiction over the case if it chooses to do so; provided,
that the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is
likely to have the power to enforce its decision. Evidently, all these requisites are present
in the instant case.
DECISION
AUSTRIA-MARTINEZ, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
November 29, 1994 decision of the Court of Appeals 1 and the April 28, 1995 resolution
denying petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity)
filed a Complaint 2 before the Regional Trial Court of Pasig against the Bank of America
NT&SA and Bank of America International, Ltd. (defendant banks for brevity) alleging
that: they were engaged in the shipping business; they owned two vessels: Don Aurelio
and El Champion, through their wholly-owned corporations; they deposited their
revenues from said business together with other funds with the branches of said banks in
the United Kingdom and Hongkong up to 1979; with their business doing well, the
defendant banks induced them to increase the number of their ships in operation,
offering them easy loans to acquire said vessels; 3thereafter, the defendant banks
acquired, through their (Litonjuas') corporations as the borrowers: (a) El Carrier 4 ;
(b) El General 5 ; (c) El Challenger 6 ; and (d) El Conqueror 7 ; the vessels were registered
in the names of their corporations; the operation and the funds derived therefrom were
placed under the complete and exclusive control and disposition of the BANK OF
AMERICAs; 8 and the possession of the vessels was also placed by defendant banks in
the hands of persons selected and designated by them (defendant banks). 9
The Litonjuas claimed that defendant banks as trustees did not fully render an account
of all the income derived from the operation of the vessels as well as of the proceeds of
the subsequent foreclosure sale; 10 because of the breach of their fiduciary duties
and/or negligence of the BANK OF AMERICAs and/or the persons designated by them in
the operation of private respondents' six vessels, the revenues derived from the
operation of all the vessels declined drastically; the loans acquired for the purchase of
the four additional vessels then matured and remained unpaid, prompting defendant
banks to have all the six vessels, including the two vessels originally owned by the
private respondents, foreclosed and sold at public auction to answer for the obligations
incurred for and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable
amounts of their own personal funds equivalent to ten percent (10%) of the acquisition
cost of the four vessels and were left with the unpaid balance of their loans with defendant
banks. 11 The Litonjuas prayed for the accounting of the revenues derived in the operation
of the six vessels and of the proceeds of the sale thereof at the foreclosure proceedings
instituted by BANK OF AMERICAs; damages for breach of trust; exemplary damages
and attorney's fees. 12
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and
lack of cause of action against them. 13
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss,
thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to Dismiss is
hereby DENIED. The defendant is therefore, given a period of ten (10) days to file its
Answer to the complaint.
"SO ORDERED." 14
Instead of filing an answer the defendant banks went to the Court of Appeals on a
"Petition for Review on Certiorari" 15 which was aptly treated by the appellate court as a
petition for certiorari. They assailed the above-quoted order as well as the subsequent
denial of their Motion for Reconsideration. 16 The appellate court dismissed the petition
and denied BANK OF AMERICAs' Motion for Reconsideration. 17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT
THE SEPARATE PERSONALITIES OF THE PRIVATE RESPONDENTS (MERE
STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL
BORROWERS) CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION
THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE
THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT MANDATORY, THERE
ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING
WHETHER THE CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE
CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF THE
COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT
IN THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN ACTION MAY BE
THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY THE
PRIVATE RESPONDENT. COROLLARY TO THIS, THE RESPONDENT COURT OF
APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENTS
ARE GUILTY OF FORUM SHOPPING." 18
As to the first assigned error: BANK OF AMERICAs argue that the borrowers and the
registered owners of the vessels are the foreign corporations and not private
respondents Litonjuas who are mere stockholders; and that the revenues derived from the
operations of all the vessels are deposited in the accounts of the corporations. Hence,
BANK OF AMERICAs maintain that these foreign corporations are the legal entities
that have the personalities to sue and not herein private respondents; that private
respondents, being mere shareholders, have no claim on the vessels as owners since
they merely have an inchoate right to whatever may remain upon the dissolution of the
said foreign corporations and after all creditors have been fully paid and satisfied; 19 and
that while private respondents may have allegedly spent amounts equal to 10% of the
acquisition costs of the vessels in question, their 10% however represents their
investments as stockholders in the foreign corporations. 20
Anent the second assigned error, BANK OF AMERICAs posit that while the application
of the principle of forum non conveniens is discretionary on the part of the Court, said
discretion is limited by the guidelines pertaining to the private as well as public
interest factors in determining whether plaintiffs' choice of forum should be
disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert 21 and Piper Aircraft Co. vs.
Reyno, 22 to wit:
"Private interest factors include: (a) the relative ease of access to sources of proof; (b)
the availability of compulsory process for the attendance of unwilling witnesses; (c)
the cost of obtaining attendance of willing witnesses; or (d) all other practical
problems that make trial of a case easy, expeditious and inexpensive. Public interest
factors include: (a) the administrative difficulties flowing from court congestion; (b)
the local interest in having localized controversies decided at home; (c) the avoidance
of unnecessary problems in conflict of laws or in the application of foreign law; or (d)
the unfairness of burdening citizens in an unrelated forum with jury duty." 23
In support of their claim that the local court is not the proper forum, BANK OF
AMERICAs allege the following:
"i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are
based in Hongkong and England. As such, the evidence and the witnesses are not readily
available in the Philippines;
"ii) The loan transactions were obtained, perfected, performed, consummated and
partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged
vessels were part of an offshore fleet, not based in the Philippines;
"iv) All the loans involved were granted to the Private Respondents'
foreign CORPORATIONS;
"v) The Restructuring Agreements were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged vessels and the application of the sales
proceeds occurred and transpired outside the Philippines, and the deliveries of the sold
mortgaged vessels were likewise made outside the Philippines;
"vii) The revenues of the vessels and the proceeds of the sales of these vessels
were ALL deposited to the Accounts of the foreign CORPORATIONS abroad; and
"viii) Bank of America International Ltd. is not licensed nor engaged in trade or
business in the Philippines." 24
BANK OF AMERICAs argue further that the loan agreements, security documentation
and all subsequent restructuring agreements uniformly, unconditionally and expressly
provided that they will be governed by the laws of England; 25 that Philippine Courts
would then have to apply English law in resolving whatever issues may be presented to it
in the event it recognizes and accepts herein case; that it would then be imposing a
significant and unnecessary expense and burden not only upon the parties to the
transaction but also to the local court. BANK OF AMERICAs insist that the
inconvenience and difficulty of applying English law with respect to a wholly foreign
transaction in a case pending in the Philippines may be avoided by its dismissal on the
ground of forum non conveniens. 26
Finally, BANK OF AMERICAs claim that private respondents have already waived
their alleged causes of action in the case at bar for their refusal to contest the foreign
civil cases earlier filed by the BANK OF AMERICAs against them in Hongkong and
England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench Division
Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN TRANSPORT
NAVIGATION, SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER
SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATORS CORP. SA; (f)
EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K.
LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2245) against (a) EL CHALLENGER S.A., (b)
ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA
and (d) AURELIO KATIPUNAN LITONJUA.
"3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039 of
1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER S.A.,
(c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA
CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR.,
and (h) EDUARDO KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No. 4040 of
1992); against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER S.A.,
(c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS
CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f) LITONJUA
CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR.,
and (h) EDUARDO KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by the pendency of
another action or by litis pendentia as shown above. 27
On the other hand, private respondents contend that certain material facts and pleadings
are omitted and/or misrepresented in the present petition for certiorari; that the
prefatory statement failed to state that part of the security of the foreign loans were
mortgages on a 39-hectare piece of real estate located in the Philippines; 28 that while the
complaint was filed only by the stockholders of the corporate borrowers, the latter are
wholly-owned by the private respondents who are Filipinos and therefore under
Philippine laws, aside from the said corporate borrowers being but their alter-egos, they
have interests of their own in the vessels. 29 Private respondents also argue that the
dismissal by the Court of Appeals of the petition forcertiorari was justified because there
was neither allegation nor any showing whatsoever by the BANK OF AMERICAs that
they had no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of
law from the Order of the trial judge denying their Motion to Dismiss; that the remedy
available to the BANK OF AMERICAs after their Motion to Dismiss was denied was to
file an Answer to the complaint; 30 that as upheld by the Court of Appeals, the decision of
the trial court in not applying the principle of forum non conveniens is in the lawful
exercise of its discretion. 31 Finally, private respondents aver that the statement of BANK
OF AMERICAs that the doctrine of res judicata also applies to foreign judgment is merely
an opinion advanced by them and not based on a categorical ruling of this Court; 32 and
that herein private respondents did not actually participate in the proceedings in the
foreign courts. 33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss CANNOT be the
subject of petition for certiorari. BANK OF AMERICAs should have filed an answer to
the complaint, proceed to trial and await judgment before making an appeal. As repeatedly
held by this Court:
"An order denying a motion to dismiss is interlocutory and cannot be the subject of the
extraordinary petition forcertiorari or mandamus. The remedy of the aggrieved party is to
file an answer and to interpose as defenses the objections raised in his motion to dismiss,
proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in
due course. . . . Under certain situations, recourse to certiorari or mandamus is considered
appropriate, i.e., (a) when the trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or (c)
appeal would not prove to be a speedy and adequate remedy as when an appeal would not
promptly relieve a defendant from the injurious effects of the patently mistaken order
maintaining the plaintiff's baseless action and compelling the defendant needlessly to go
through a protracted trial and clogging the court dockets by another futile case." 34
Records show that the trial court acted within its jurisdiction when it issued the assailed
Order denying BANK OF AMERICAs' motion to dismiss. Does the denial of the motion
to dismiss constitute a patent grave abuse of discretion? Would appeal, under the
circumstances, not prove to be a speedy and adequate remedy? We will resolve said
questions in conjunction with the issues raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the
complaint on the ground that plaintiffs have no cause of action against defendants since
plaintiffs are merely stockholders of the corporations which are the registered owners of
the vessels and the borrowers of BANK OF AMERICAs?
No. BANK OF AMERICAs' argument that private respondents, being mere stockholders
of the foreign corporations, have no personalities to sue, and therefore, the complaint
should be dismissed, is untenable. A case is dismissible for lack of personality to sue upon
proof that the plaintiff is not the real party-in-interest. Lack of personality to sue can be
used as a ground for a Motion to Dismiss based on the fact that the complaint, on the face
thereof, evidently states no cause of action.35 In San Lorenzo Village Association, Inc. vs.
Court of Appeals, 36 this Court clarified that a complaint states a cause of action where
it contains three essential elements of a cause of action, namely: (1) the legal right of the
plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of
the defendant in violation of said legal right. If these elements are absent, the complaint
becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of
action. 37 To emphasize, it is not the lack or absence of cause of action that is a ground
for dismissal of the complaint but rather the fact that the complaint states NO cause of
action. 38 "Failure to state a cause of action" refers to the insufficiency of allegation in
the pleading, unlike "lack of cause of action" which refers to the insufficiency of factual
basis for the action. "Failure to state a cause of action" may be raised at the earliest stages
of an action through a motion to dismiss the complaint, while "lack of cause of action"
may be raised any time after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented. 39
In the case at bar, the complaint contains the three elements of a cause of action. It
alleges that: (1) plaintiffs, herein private respondents, have the right to demand for an
accounting from defendants (herein BANK OF AMERICAs), as trustees by reason of
the fiduciary relationship that was created between the parties involving the vessels in
question; (2) BANK OF AMERICAs have the obligation, as trustees, to render such an
accounting; and (3) BANK OF AMERICAs failed to do the same.
BANK OF AMERICAs insist that they do not have any obligation to the private
respondents as they are mere stockholders of the corporation; that the corporate entities
have juridical personalities separate and distinct from those of the private respondents.
Private respondents maintain that the corporations are wholly owned by them and
prior to the incorporation of such entities, they were clients of BANK OF AMERICAs
which induced them to acquire loans from said BANK OF AMERICAs to invest on
the additional ships.
We agree with private respondents. As held in the San Lorenzo case, 40
". . . assuming that the allegation of facts constituting plaintiffs' cause of action is not as
clear and categorical as would otherwise be desired, any uncertainty thereby arising should
be so resolved as to enable a full inquiry into the merits of the action."
As this Court has explained in the San Lorenzo case, such a course, would preclude
multiplicity of suits which the law abhors, and conduce to the definitive determination and
termination of the dispute. To do otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be indecisive and would not end the
controversy, since the institution of another action upon a revised complaint would not be
foreclosed. 41
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient',
emerged in private international law to deter the practice of global forum shopping, 42 that
is to prevent non-resident litigants from choosing the forum or place wherein to bring their
suit for malicious reasons, such as to secure procedural advantages, to annoy and harass
the defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under
this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere. 43
Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion
of the trial court. 44 In the case of Communication Materials and Design, Inc. vs. Court
of Appeals, 45 this Court held that ". . . [a] Philippine Court may assume jurisdiction over
the case if it chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is likely to have power to enforce its
decision." 46 Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of
Appeals, 47 that the doctrine of forum non conveniens should not be used as a ground for
a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the court's
desistance; and that the propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly considered a matter
of defense. 48
Third issue. Are private respondents guilty of forum shopping because of the pendency of
foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a
final judgment in one case will amount to res judicata in the other. 49 Parenthetically,
for litis pendentia to be a ground for the dismissal of an action there must be: (a) identity
of the parties or at least such as to represent the same interest in both actions; (b) identity
of rights asserted and relief prayed for, the relief being founded on the same acts; and (c)
the identity in the two cases should be such that the judgment which may be rendered in
one would, regardless of which party is successful, amount to res judicata in the other. 50
In case at bar, not all the requirements for litis pendentia are present. While there may be
identity of parties, notwithstanding the presence of other respondents, 51 as well as the
reversal in positions of plaintiffs and defendants 52 , still the other requirements necessary
for litis pendentia were not shown by BANK OF AMERICA. It merely mentioned that
civil cases were filed in Hongkong and England without however showing the identity of
rights asserted and the reliefs sought for as well as the presence of the elements of res
judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
. . . [T]he BANK OF AMERICAs, by simply enumerating the civil actions instituted
abroad involving the parties herein . . ., failed to provide this Court with relevant and clear
specifications that would show the presence of the above-quoted elements or requisites
for res judicata. While it is true that the BANK OF AMERICAs in their motion for
reconsideration (CA Rollo, p. 72), after enumerating the various civil actions instituted
abroad, did aver that "Copies of the foreign judgments are hereto attached and made
integral parts hereof as Annexes 'B', 'C', 'D' and `E'", they failed, wittingly or
inadvertently, to include a single foreign judgment in their pleadings submitted to this
Court as annexes to their petition. How then could We have been expected to rule on this
issue even if We were to hold that foreign judgments could be the basis for the application
of the aforementioned principle of res judicata? 53
Consequently, both courts correctly denied the dismissal of herein subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against BANK OF AMERICAs. TIcEDC
SO ORDERED.
SECOND DIVISION
[G.R. No. 145587. October 26, 2007.]
26. EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.
DECISION
VELASCO, JR., J p:
The Case
This Petition for Review on Certiorari 1 seeks to set aside the October 18, 2000
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the
January 15, 1999 Decision 3 and September 30, 1999 Resolution 4 rendered by the
National Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-
2194, ordering Expertise Search International (ESI), EDI-Staffbuilders International, Inc.
(EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar S.
Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas
Filipino Workers (OFWs). 5 ESI is another recruitment agency which collaborated
with EDI to process the documentation and deployment of private respondent to Saudi
Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for
OAB, in Riyadh, Kingdom of Saudi Arabia. 6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of
qualified applicants for the position of "Computer Specialist." 7 In a facsimile
transmission dated November 29, 1993, OAB informed EDI that, from the
applicants'curricula vitae submitted to it for evaluation, it selected Gran for the position of
"Computer Specialist." The faxed letter also stated that if Gran agrees to the terms and
conditions of employment contained in it, one of which was a monthly salary of SR (Saudi
Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an employment contract 9 that
granted him a monthly salary of USD 850.00 for a period of two years. Gran was then
deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary his
employment contract stated USD 850.00; while his Philippine Overseas Employment
Agency (POEA) Information Sheet indicated USD 600.00 only. However, through the
assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his employment was
terminated through OAB's July 9, 1994 letter, 11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily on your
salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment agency[,] vide
OAB letter ref. F-5751-93, dated October 3, 1993. 12
3. Insubordination or disobedience to Top Management Order and/or instructions (non-
submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing
his final pay, and on the same day, he executed a Declaration 13 releasing OAB from any
financial obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against
ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty
Corporation with the NLRC, National Capital Region, Quezon City, which was docketed
as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision, 14 Labor Arbiter Manuel R. Caday, to whom Gran's
case was assigned, ruled that there was neither underpayment nor illegal
dismissal. ICDcEA
The Labor Arbiter reasoned that there was no underpayment of salaries since according to
the POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary
was USD 600.00, and in his Confirmation of Appointment as Computer Specialist, his
monthly basic salary was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no
claim for unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to
refute EDI's allegations; namely, (1) that Gran did not submit a single activity report of his
daily activity as dictated by company policy; (2) that he was not qualified for the job as
computer specialist due to his insufficient knowledge in programming and lack of
knowledge in ACAD system; (3) that Gran refused to follow management's instruction for
him to gain more knowledge of the job to prove his worth as computer specialist; (4) that
Gran's employment contract had never been substituted; (5) and that Gran was paid a
monthly salary of USD 850.00, and USD 350.00 monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work
due to insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal 15 on April 6, 1998 with the NLRC, Third Division.
However, it appears from the records that Gran failed to furnish EDI with a copy of his
Appeal Memorandum. SETAcC
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is
actually "reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor
Code. This scheme constituted misrepresentation through the conspiracy between EDI and
ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW's
employment. In addition, it was found that Gran did not commit any act that constituted a
legal ground for dismissal. The alleged non-compliance with contractual stipulations
relating to Gran's salary and contract duration, and the absence of pre-qualification
requirements cannot be attributed to Gran but to EDI, which dealt directly with OAB. In
addition, the charge of insubordination was not substantiated, and Gran was not even
afforded the required notice and investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the
dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise Search
International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali Bin Bechr Est.
(OAB) are hereby ordered jointly and severally liable to pay the complainant Eleazar Gran
the Philippine peso equivalent at the time of actual payment of SIXTEEN THOUSAND
ONE HUNDRED FIFTY US DOLLARS (US$16,150.00) representing his salaries for the
unexpired portion of his contract.
SO ORDERED. 16
Gran then filed a Motion for Execution of Judgment 17 on March 29, 1999 with the NLRC
and petitioner receiving a copy of this motion on the same date. 18
To prevent the execution, petitioner filed an Opposition 19 to Gran's motion arguing that
the Writ of Execution cannot issue because it was not notified of the appellate proceedings
before the NLRC and was not given a copy of the memorandum of appeal nor any
opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition,
petitioner filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision
after receiving a copy of the Decision on August 16, 1999. 20
The NLRC then issued a Resolution 21 denying petitioner's Motion for Reconsideration,
ratiocinating that the issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there was "no cogent
reason or patent or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA.
Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in
giving due course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's
petition. CIDTcH
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of
his appeal memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a
jurisdictional defect which would justify the dismissal of his appeal."22 The court also
held that petitioner EDI failed to prove that private respondent was terminated for a valid
cause and in accordance with due process; and that Gran's Declaration releasing OAB
from any monetary obligation had no force and effect. The appellate court ratiocinated that
EDI had the burden of proving Gran's incompetence; however, other than the termination
letter, no evidence was presented to show how and why Gran was considered to be
incompetent. The court held that since the law requires the recruitment agencies to subject
OFWs to trade tests before deployment, Gran must have been competent and qualified;
otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a
"Daily Activity Report," the appellate court found that EDI failed to show that the
submission of the "Daily Activity Report" was a part of Gran's duty or the company's
policy. The court also held that even if Gran was guilty of insubordination, he should have
just been suspended or reprimanded, but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide
by the twin notice requirement. The court found that Gran was terminated on the same
day he received the termination letter, without having been apprised of the bases of his
dismissal or afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding
benefits to which he was entitled. The appellate court found that the Declaration was in the
form of a quitclaim, and as such is frowned upon as contrary to public policy especially
where the monetary consideration given in the Declaration was very much less than what
he was legally entitled to his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition
to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL
MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT
TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS. NLRC
RULING, AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE IN THE
INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO
TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED
PORTION OF HIS CONTRACT. 23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his
Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide
Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum
constitutes a jurisdictional defect and a deprivation of due process that would warrant a
rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal
to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission, 24 this Court set aside the order of
the NLRC which dismissed an appeal on the sole ground that the appellant did not furnish
the appellee a memorandum of appeal contrary to the requirements of Article 223 of the
New Labor Code and Section 9, Rule XIII of its Implementing Rules and
Regulations. SEHaTC
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an
appeal to the NLRC based on the ground that "there is no showing whatsoever that a copy
of the appeal was served by the appellant on the appellee" 25 was annulled. The Court
ratiocinated as follows:
The failure to give a copy of the appeal to the adverse party was a mere formal lapse, an
excusable neglect. Time and again We have acted on petitions to review decisions of the
Court of Appeals even in the absence of proof of service of a copy thereof to the Court of
Appeals as required by Section 1 of Rule 45, Rules of Court. We act on the petitions and
simply require the petitioners to comply with the rule. 26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor
Union-FFW v. National Labor Relations Commission, 27 Pagdonsalan v. NLRC, 28 and
in Sunrise Manning Agency, Inc. v. NLRC. 29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party
with a copy of the appeal is treated only as a formal lapse, an excusable neglect, and
hence, not a jurisdictional defect. Accordingly, in such a situation, the appeal should not
be dismissed; however, it should not be given due course either. As enunciated in J.D.
Magpayo, the duty that is imposed on the NLRC, in such a case, is to require the
appellant to comply with the rule that the opposing party should be provided with a
copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable,
the abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum
constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the
Appeal Memorandum. The NLRC then ordered Gran to present proof of service. In
compliance with the order, Gran submitted a copy of Camp Crame Post Office's list of
mail/parcels sent on April 7, 1998. 30 The post office's list shows that private respondent
Gran sent two pieces of mail on the same date: one addressed to a certain Dan O. de
Guzman of Legaspi Village, Makati; and the other appears to be addressed to Neil B.
Garcia (or Gran), 31 of Ermita, Manila both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of
the Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of
service in proceedings before the NLRC:
Section 5. 32 Proof and completeness of service. The return is prima facie proof of the
facts indicated therein.Service by registered mail is complete upon receipt by the
addressee or his agent; but if the addressee fails to claim his mail from the post office
within five (5) days from the date of first notice of the postmaster, service shall take effect
after such time. (Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when the
addressee or his agent received the mail or after five (5) days from the date of first notice
of the postmaster. However, the NLRC Rules do not state what would constitute proper
proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service: AHacIS
Section 13. Proof of service. Proof of personal service shall consist of a written
admission of the party served or the official return of the server, or the affidavit of the
party serving, containing a full statement of the date, place and manner of service. If the
service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing
of facts showing compliance with section 7 of this Rule. If service is made by registered
mail, proof shall be made by such affidavit and registry receipt issued by the mailing
office. The registry return card shall be filed immediately upon its receipt by the
sender, or in lieu thereof the unclaimed letter together with the certified or sworn
copy of the notice given by the postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not
conclusive proof that he had served a copy of his appeal memorandum to EDI, nor is it
conclusive proof that EDI received its copy of the Appeal Memorandum. He should have
submitted an affidavit proving that he mailed the Appeal Memorandum together with the
registry receipt issued by the post office; afterwards, Gran should have immediately filed
the registry return card.
Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not
have simply accepted the post office's list of mail and parcels sent; but it should have
required Gran to properly furnish the opposing parties with copies of his Appeal
Memorandum as prescribed in J.D. Magpayo and the other cases. The NLRC should
not have proceeded with the adjudication of the case, as this constitutes grave abuse of
discretion.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a
copy of the Appeal Memorandum before rendering judgment reversing the dismissal of
Gran's complaint constitutes an evasion of the pertinent NLRC Rules and established
jurisprudence. Worse, this failure deprived EDI of procedural due process guaranteed by
the Constitution which can serve as basis for the nullification of proceedings in the appeal
before the NLRC. One can only surmise the shock and dismay that OAB, EDI, and ESI
experienced when they thought that the dismissal of Gran's complaint became final, only
to receive a copy of Gran's Motion for Execution of Judgment which also informed them
that Gran had obtained a favorable NLRC Decision. This is not level playing field and
absolutely unfair and discriminatory against the employer and the job recruiters. The rights
of the employers to procedural due process cannot be cavalierly disregarded for they too
have rights assured under the Constitution.
However, instead of annulling the dispositions of the NLRC and remanding the case for
further proceedings we will resolve the petition based on the records before us to avoid a
protracted litigation. 33
The second and third issues have a common matter whether there was just cause for
Gran's dismissal hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable
by reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the
local recruiter/agent, and the foreign employer/principal are governed by the
employment contract. A contract freely entered into is considered law between the
parties; and hence, should be respected. In formulating the contract, the parties may
establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public
policy. 34 HAaDcS
In the present case, the employment contract signed by Gran specifically states that Saudi
Labor Laws will govern matters not provided for in the contract (e.g. specific causes for
termination, termination procedures, etc.). Being the law intended by the parties (lex loci
intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating
to the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of PROVING the foreign law. The foreign law is treated as a question
of fact to be properly pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus,
the International Law doctrine ofpresumed-identity approach or processual
presumption comes into play. 36 Where a foreign law is not pleaded or, even if pleaded,
is not proved, the presumption is that foreign law is the same as ours. 37 Thus, we
apply Philippine labor laws in determining the issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to
incompetence and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that
the employer should prove that the dismissal of employees or personnel is legal and
just.
Section 33 of Article 277 of the Labor Code 38 states that:
ART. 277. MISCELLANEOUS PROVISIONS 39
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to
the requirement of notice under Article 283 of this Code, the employer shall furnish the
worker whose employment is sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to guidelines set by
the Department of Labor and Employment. Any decision taken by the employer shall be
without prejudice to the right of the workers to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer. . . .
In many cases, it has been held that in termination disputes or illegal dismissal cases, the
employer has the burden of proving that the dismissal is for just and valid causes; and
failure to do so would necessarily mean that the dismissal was not justified and therefore
illegal. 40 Taking into account the character of the charges and the penalty meted to an
employee, the employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal. 41 This is consistent with the
principle of security of tenure as guaranteed by the Constitution and reinforced by Article
277 (b) of the Labor Code of the Philippines. 42 aEAIDH
In the instant case, petitioner claims that private respondent Gran was validly dismissed
for just cause, due to incompetence and insubordination or disobedience. To prove its
allegations, EDI submitted two letters as evidence. The first is the July 9, 1994 termination
letter, 43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of OAB. The
second is an unsigned April 11, 1995 letter 44 from OAB addressed to EDI and ESI,
which outlined the reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because
he had "insufficient knowledge in programming and zero knowledge of [the] ACAD
system." 45 Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed to submit the required
"Daily Activity Reports." 46 However, other than the abovementioned letters, no other
evidence was presented to show how and why Gran was considered incompetent,
insubordinate, or disobedient. Petitioner EDI had clearly failed to overcome the
burden of proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient
knowledge in programming and zero knowledge of the ACAD system" based only on the
above mentioned letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be
shown by weighing it against a standard, benchmark, or criterion. However, EDI
failed to establish any such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful
disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the following twin elements
must concur: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties
which he had been engaged to discharge. 47
EDI failed to discharge the burden of proving Gran's insubordination or willful
disobedience. As indicated by the second requirement provided for in Micro Sales
Operation Network, in order to justify willful disobedience, we must determine whether
the order violated by the employee is reasonable, lawful, made known to the employee,
and pertains to the duties which he had been engaged to discharge. In the case at bar,
petitioner failed to show that the order of the company which was violated the
submission of "Daily Activity Reports" was part of Gran's duties as a Computer
Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company
policy, Gran's job description, or any other document that would show that the "Daily
Activity Reports" were required for submission by the employees, more particularly
by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies
and not the foreign employer, they should have adduced additional evidence to
convincingly show that Gran's employment was validly and legally terminated. The
burden devolves not only upon the foreign-based employer but also on the employment or
recruitment agency for the latter is not only an agent of the former, but is also solidarily
liable with the foreign principal for any claims or liabilities arising from the dismissal of
the worker. 48 aTADCE
Thus, petitioner failed to prove that Gran was justifiably dismissed due to
incompetence, insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC, 49 as used by the CA in its Decision,
is not applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the
petitioners were subjected to trade tests required by law to be conducted by the recruiting
agency to insure employment of only technically qualified workers for the foreign
principal." 50 The CA, using the ruling in the said case, ruled that Gran must have passed
the test; otherwise, he would not have been hired. Therefore, EDI was at fault when it
deployed Gran who was allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand,
Gran misrepresented himself in hiscurriculum vitae as a Computer Specialist; thus, he was
not qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out
incompetent applicants from the pool of available workers. It is supposed to reveal
applicants with false educational backgrounds, and expose bogus qualifications. Since EDI
deployed Gran to Riyadh, it can be presumed that Gran had passed the required trade test
and that Gran is qualified for the job. Even if there was no objective trade test done by
EDI, it was still EDI's responsibility to subject Gran to a trade test; and its failure to do so
only weakened its position but should not in any way prejudice Gran. In any case, the
issue is rendered moot and academic because Gran's incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and
regulations shall govern the relationship between Gran and EDI. Thus, our laws and rules
on the requisites of due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was
allowed to work and improve his capabilities for five months prior to his
termination. 51 EDI also claims that the requirements of due process, as enunciated
inSantos Jr. v. NLRC, 52 and Malaya Shipping Services, Inc. v. NLRC, 53 cited by the CA
in its Decision, were properly observed in the present case.
This position is untenable.
In Agabon v. NLRC, 54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the employer must
give the employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation. EAHcCT
Under the twin notice requirement, the employees must be given two (2) notices before
their employment could be terminated: (1) a first notice to apprise the employees of their
fault, and (2) a second notice to communicate to the employees that their employment is
being terminated. In between the first and second notice, the employees should be given a
hearing or opportunity to defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing
Gran fell short of the two notice requirement. While it furnished Gran the written notice
informing him of his dismissal, it failed to furnish Gran the written notice apprising him of
the charges against him, as prescribed by the Labor Code. 56 Consequently, he was denied
the opportunity to respond to said notice. In addition, OAB did not schedule a hearing or
conference with Gran to defend himself and adduce evidence in support of his defenses.
Moreover, the July 9, 1994 termination letter was effective on the same day. This shows
that OAB had already condemned Gran to dismissal, even before Gran was furnished the
termination letter. It should also be pointed out that OAB failed to give Gran the chance to
be heard and to defend himself with the assistance of a representative in accordance with
Article 277 of the Labor Code. Clearly, there was no intention to provide Gran with due
process. Summing up, Gran was notified and his employment arbitrarily terminated on the
same day, through the same letter, and for unjustified grounds. Obviously, Gran was not
afforded due process.
Pursuant to the doctrine laid down in Agabon, 57 an employer is liable to pay nominal
damages as indemnity for violating the employee's right to statutory due process. Since
OAB was in breach of the due process requirements under the Labor Code and its
regulations, OAB, ESI, and EDI, jointly and solidarily, are liable to Gran in the amount of
PhP30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of employment,
in cases arising before the effectivity of R.A. No. 8042 58 (Migrant Workers and Overseas
Filipinos Act) on August 25, 1995, that when the contract is for a fixed term and the
employees are dismissed without just cause, they are entitled to the payment of their
salaries corresponding to the unexpired portion of their contract. 59 On the other hand, for
cases arising after the effectivity of R.A. No. 8042, when the termination of employment is
without just, valid or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or
for three (3) months for every year of the unexpired term whichever is less. 60
In the present case, the employment contract provides that the employment contract shall
be valid for a period of two (2) years from the date the employee starts to work with the
employer. 61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7,
1994; 62 hence, his employment contract is until February 7, 1996. Since he was illegally
dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled
to backwages corresponding to the unexpired portion of his contract, which was equivalent
to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran. The
relevant portions of the Declaration are as follows: aEDCAH
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL
SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY EIGHT
ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES
I RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY
FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN
WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY
SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more
particularly those executed by employees. This requirement was clearly articulated by
Chief Justice Artemio V. Panganiban in Land and Housing Development Corporation v.
Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of
workers should be strictly scrutinized to protect the weak and the disadvantaged. The
waivers should be carefully examined, in regard not only to the words and terms
used, but also the factual circumstances under which they have been
executed. 63(Emphasis supplied.)
This Court had also outlined in Land and Housing Development
Corporation, citing Periquet v. NLRC, 64 the parameters for valid compromise
agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there
is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for
the quitclaim is credible and reasonable, the transaction must be recognized as a valid
and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is
unreasonably low. As correctly pointed out by the court a quo, the payment of SR
2,948.00 is even lower than his monthly salary of SR 3,190.00 (USD 850.00). In addition,
it is also very much less than the USD 16,150.00 which is the amount Gran is legally
entitled to get from petitioner EDI as backwages. AcHCED
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for
Gran's salary for the services he rendered to OAB as Computer Specialist. If the
Declaration is a quitclaim, then the consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00) although possibly less than the estimated
Gran's salaries for the remaining duration of his contract and other benefits as employee of
OAB. A quitclaim will understandably be lower than the sum total of the amounts and
benefits that can possibly be awarded to employees or to be earned for the remainder of
the contract period since it is a compromise where the employees will have to forfeit a
certain portion of the amounts they are claiming in exchange for the early payment of a
compromise amount. The court may however step in when such amount is unconscionably
low or unreasonable although the employee voluntarily agreed to it. In the case of the
Declaration, the amount is unreasonably small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show
that Gran did not voluntarily and freely execute the document. Consider the following
chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to pay his
plane ticket; 65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and
constrained to receive the amount of SR 2,948.00 even if it was against his will since
he was told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but
to sign the Declaration as he needed the amount of SR 2,948.00 for the payment of his
ticket. He could have entertained some apprehensions as to the status of his stay or safety
in Saudi Arabia if he would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion
which should be construed against the employer, OAB. An adhesion contract is contrary to
public policy as it leaves the weaker party the employee in a "take-it-or-leave-it"
situation. Certainly, the employer is being unjust to the employee as there is no meaningful
choice on the part of the employee while the terms are unreasonably favorable to the
employer. 66
Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under
Philippine laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement; TCHEDA
2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English,
Filipino, or in the dialect known to the employees that by signing the waiver or
quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are
due them under the law; and
4. A statement that the employees signed and executed the document voluntarily, and had
fully understood the contents of the document and that their consent was freely given
without any threat, violence, duress, intimidation, or undue influence exerted on their
person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect
known to the employee. There should be two (2) witnesses to the execution of the
quitclaim who must also sign the quitclaim. The document should be subscribed and
sworn to under oath preferably before any administering official of the Department of
Labor and Employment or its regional office, the Bureau of Labor Relations, the NLRC or
a labor attach in a foreign country. Such official shall assist the parties regarding the
execution of the quitclaim and waiver. 67 This compromise settlement becomes final and
binding under Article 227 of the Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of
Labor Relations or the regional office of the DOLE, shall be final and binding upon the
parties and the NLRC or any court "shall not assume jurisdiction over issues involved
therein except in case of non-compliance thereof or if there is prima facie evidence that
the settlement was obtained through fraud, misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor
contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon
to govern said contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP
No. 56120 of the Court of Appeals affirming the January 15, 1999 Decision and
September 30, 1999 Resolution of the NLRC is AFFIRMED with the MODIFICATION
that petitioner EDI-Staffbuilders International, Inc. shall pay the amount of PhP30,000.00
to respondent Gran as nominal damages for non-compliance with statutory due process.
No costs.
FIRST DIVISION
[G.R. No. 128803. September 25, 1998.]
27. ASIAVEST LIMITED, petitioner, vs. THE COURT OF APPEALS and
ANTONIO HERAS, respondents.
DECISION
DAVIDE, JR, J p:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision 1 of Branch 107 of the Regional Trial Court
of Quezon City in Civil Case No. Q-52452; thus:,
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the
defendant Antonio Heras praying that said defendant be ordered to pay to the
ASIAVEST LTD the amounts awarded by the Hong Kong Court Judgment dated
December 28, 1984 and amended on April 13, 1987 to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment with
legal interest from December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to
December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees, litigation expenses and cost, with
interest thereon from the date of the judgment until fully paid.
On March 3, 1988 the HERAS filed a Motion to Dismiss. However, before the court could
resolve the said motion, a fire which partially razed the Quezon City Hall Building on June
11, 1988 totally destroyed the office of this Court, together with all its records, equipment
and properties. On July 26, 1988, the ASIAVEST LIMITED, through counsel filed a
Motion for Reconstitution of Case Records. The Court, after allowing the HERAS to react
thereto, granted the said Motion and admitted the annexes attached thereto as the
reconstituted records of this case per Order dated September 6, 1988. Thereafter, the
Motion to Dismiss, the resolution of which had been deferred, was denied by the Court in
its Order of October 4, 1988.
On October 19, 1988 HERAS filed his Answer. The case was then set for pre-trial
conference. At the conference, the parties could not arrive at any settlement. However,
they agreed on the following stipulations of facts:
1. The HERAS admits the existence of the judgment dated December 28, 1984 as well as
its amendment dated April 13, 1987, but not necessarily the authenticity or validity
thereof;
2. The ASIAVEST LIMITED is not doing business and is not licensed to do business in
the Philippines;
3. The residence of HERAS, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong
Kong Court has been repelled by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud or clear mistake of law or fact, such as to overcome the presumption
established in Section 50, Rule 39 of the Rules of Court in favor of foreign judgments.
In view of the admission by the HERAS of the existence of the aforementioned judgment
(Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order
of January 18, 1989) as well as the legal presumption in favor of the ASIAVEST
LIMITED as provided for in paragraph (b), Sec. 50, (Ibid.), the ASIAVEST LIMITED
presented only documentary evidence to show rendition, existence, and authentication of
such judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B", with their
submarkings). In addition, the ASIAVEST LIMITED presented testimonial and
documentary evidence to show its entitlement to attorney's fees and other expenses of
litigation . . .
On the other hand, the HERAS presented two witnesses, namely, Fortunata dela Vega and
Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a
statement of claim of Asiavest Limited was ever served in the office of the Navegante
Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of
summons was either served on the HERAS at his residence in New Manila, Quezon City.
Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during
his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping
business in Hong Kong; that she was in-charge of all his letters and correspondence,
business commitments, undertakings, conferences and appointments, until October 1984
when Mr. Heras left Hong Kong for good; that she was also the Officer-in-Charge or
Office Manager of Navegante Shipping Agency LTD, a Hong Kong registered and based
company acting as ships agent, up to and until the company closed shop sometime in the
first quarter of 1985 when shipping business collapsed worldwide; that the said Company
held office at 34-35 Connaught Road, Central Hong Kong and later transferred to Caxton
House at Duddel Street, Hong Kong, until the company closed shop in 1985; and that she
was certain of such facts because she held office at Caxton House up to the first quarter of
1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a
representative of the law office of the HERAS's counsel who made a verification of the
record of the case filed by the ASIAVEST LIMITED in Hong Kong against the HERAS
as well as the procedure in serving Court processes in Hong Kong.
In his affidavit (Exh. "2") which constitutes his direct testimony the said witness stated
that:
The HERAS was sued on the basis of his personal guarantee of the obligations of
Compania Hermanos de Navegacion S.A. There is no record that a writ of summons
was served on the person of the HERAS in Hong Kong, or that any such attempt at
service was made. Likewise, there is no record that a copy of the judgment of the High
Court was furnished or served on the HERAS; anyway, it is not a legal requirement
to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor (lawyer) of the claimant or
ASIAVEST LIMITED. In Hong Kong there are no Court personnel who serve writs of
summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not contested, the claimant or the
ASIAVEST LIMITED is not required to present proof of his claim or complaint nor
present evidence under oath of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision rendered by the Court in
Hong Kong [to] make a recitation of the facts or the law upon which the claim is based.
d) There is no necessity to furnish the HERAS with a copy of the Judgment or decision
rendered against him.
e) In an action based on a guarantee, there is no established legal requirement or
obligation under Hong Kong laws that the creditor must first bring proceedings
against the principal debtor. The creditor can immediately go against the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned by the law
firm of the HERAS's counsel as an expert witness and to verify the records of the Hong
Kong case he had been acting as counsel for the HERAS in a number of commercial
matters; that there was an application for service of summons upon the HERAS outside the
jurisdiction of Hong Kong; that there was an order of the Court authorizing service upon
Heras outside of Hong Kong, particularly in Manila or any other place in the Philippines
(p. 9, TSN, 2/14/90); that there must be adequate proof of service of summons otherwise
the Hong Kong Court will refuse to render judgment (p. 10, ibid); that the mere fact that
the Hong Kong Court rendered judgment, it can be presumed that there was service of
summons; that in this case, it is not just a presumption because there was an affidavit
stating that service was effected in [sic] a particular man here in Manila; that such affidavit
was filed by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December
1984 and stated in essence that "on Friday the 23rd of November 1984 he served the 4th
HERAS at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio
Lopez, the son-in-law of the 4th HERAS the copy of the writ and Mr. Lopez informed me
and I barely believed that he would bring the said writ to the attention of the 4th "HERAS"
(pp. 11-12, ibid.); that upon filing of that affidavit the Court was asked and granted
judgment against the 4th HERAS; and that if the summons or claim is not contested, the
claimant of the ASIAVEST LIMITED is not required to present proof of his claim or
complaint or present evidence under oath of the claim in order to obtain judgment; and
that such judgment can be enforced in the same manner as a judgment rendered after full
hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had
the burden to prove want of jurisdiction over his person. HERAS failed to discharge that
burden. He did not testify to state categorically and under oath that he never received
summons. Even his own witness Lousich admitted that HERAS was served with summons
in his Quezon City residence. As to De la Vega's testimony regarding non-service of
summons, the same was hearsay and had no probative value. prLL
As to HERAS' contention that the Hong Kong court judgment violated the Constitution
and the procedural laws of the Philippines because it contained no statements of the facts
and the law on which it was based, the trial court ruled that since the issue related to
procedural matters, the law of the forum, i.e., Hong Kong laws, should govern. As
testified by the expert witness Lousich, such legalities were not required under Hong Kong
laws. The trial court also debunked HERAS' contention that the principle of excussion
under Article 2058 of the Civil Code of the Philippines was violated. It declared that
matters of substance are subject to the law of the place where the transaction
occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and
given effect in this jurisdiction for failure of HERAS to overcome the legal presumption in
favor of the foreign judgment It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering HERAS to pay to the ASIAVEST
LIMITED the following sums or their equivalents in Philippine currency at the time of
payment: US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per
annum from October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with
legal interests on the aggregate amount from December 28, 1984, and to pay attorneys fees
in the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial
costs and an increase in attorney's fees in the amount of US$19,346.45 with interest until
full payment of the said obligations. On the other hand, HERAS no longer opposed the
motion and instead appealed the decision to the Court of Appeals, which docketed the
appeal as CA-G.R. CV No. 29513.
In its order 2 of 2 November 1990, the trial court granted ASIAVEST's motion for
reconsideration by increasing the award of attorney's fees to "US$19,345.65 OR ITS
EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS
SUIT," provided that ASIAVEST would pay the corresponding filing fees for the increase.
ASIAVEST appealed the order requiring prior payment of filing fees. However, it later
withdrew its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the
trial court and dismissing ASIAVEST's complaint without prejudice. It underscored the
fact that a foreign judgment does not of itself have any extraterritorial application. For it to
be given effect, the foreign tribunal should have acquired jurisdiction over the person and
the subject matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure
such as those relating to service of summons upon the HERAS are governed by the lex
fori, which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to
Lousich's testimony that under the Hong Kong law, the substituted service of summons
upon HERAS effected the Philippines by the clerk of Sycip Salazar Hernandez &
Gatmaitan firm would be valid provided that it was done in accordance with Philippine
laws. It then stressed that where the action is in personam and the HERAS is in the
Philippines, the summons should be personally served on the HERAS pursuant to Section
7, Rule 14 of the Rules of Court. 4Substituted service may only be availed of where the
HERAS cannot be promptly served in person, the fact of impossibility of personal service
should be explained in the proof of service. It also found as persuasive HERAS' argument
that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law
office, who was not authorized by the judge of the court issuing the summons, ASIAVEST
should have asked for leave of the local courts to have the foreign summons served by the
sheriff or other court officer of the place where service was to be made, or for special
reasons by any person authorized by the judge. cdasia
The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-
resident is unavailing to give jurisdictionin an action against him personally for money
recovery." Summons should have been personally served on HERAS in Hong Kong, for,
as claimed by ASIAVEST, HERAS was physically present in Hong Kong for nearly 14
years. Since there was not even an attempt to serve summons on HERAS in Hong Kong,
the Hong Kong Supreme Court did not acquire jurisdiction over HERAS. Nonetheless, it
did not totally foreclose the claim of ASIAVEST; thus:
While we are not fully convinced that [HERAS] has a meritorious defense against
[ASIAVEST's] claims or that [HERAS] ought to be absolved of any liability, nevertheless,
in view of the foregoing discussion, there is a need to deviate from the findings of the
lower court in the interest of justice and fair play This, however, is without prejudice to
whatever action [ASIAVEST] might deem proper in order to enforce its claims against
[HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted and that our courts are not
bound to give effect to foreign judgments which contravene our laws and the principle of
sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in
ruling that
I.
. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE
'SUPPORTING THE VALIDITY OF THE JUDGMENT';
II.
. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER
PHILIPPINE LAW;
III.
. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN
HONG KONG;
IV.
. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE
OF PHILIPPINE COURTS;
V.
. . . THE FOREIGN JUDGMENT 'CONTRAVENES PHILIPPINE LAWS, THE
PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE
PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the
governing law at the time this case was decided by the trial court and respondent Court of
Appeals, a foreign judgment against a person rendered by a court having jurisdiction to
pronounce the judgment is presumptive evidence of a right as between the parties and their
successors in interest by the subsequent title. However, the judgment may be repelled by
evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence
of proof to the contrary, a court, or judge acting as such, whether in the Philippines or
elsewhere, is presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it
on grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is
on the party challenging the foreign judgment HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment.
On the other hand, ASIAVEST presented evidence to prove rendition, existence, and
authentication of the judgment by the proper officials. The judgment is thus presumed to
be valid and binding in the country from which it comes, until the contrary is
shown. 6 Consequently, the first ground relied upon by ASIAVEST has merit. The
presumption of validity accorded foreign judgment would be rendered meaningless
were the party seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong
Supreme Court did not acquire jurisdiction over the person of HERAS. This involves the
issue of whether summons was properly and validly served on HERAS. It is settled that
matters of remedy and procedure such as those relating to the service of process upon the
HERAS are governed by the lex fori or the law of the forum, 7 i.e., the law of Hong
Kong in this case. HERAS insisted that according to his witness Mr. Lousich, who was
presented as an expert on Hong Kong laws, there was no valid service of summons on
him.
In his counter-affidavit, 8 which served as his direct testimony per agreement of the
parties, 9 Lousich declared that the record of the Hong Kong case failed to show that a
writ of summons was served upon HERAS in Hong Kong or that any such attempt was
made. Neither did the record show that a copy of the judgment of the court was served on
HERAS. He stated further that under Hong Kong laws (a) a writ of summons could be
served by the solicitor of the claimant or ASIAVEST LIMITED; and (b) where the said
writ or claim was not contested, the claimant or ASIAVEST LIMITED was not required to
present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong
court authorized service of summons on HERAS outside of its jurisdiction, particularly in
the Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of
the Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served
summons on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a
copy with HERAS's son-in-law Dionisio Lopez. 10 On redirect examination, Lousich
declared that such service of summons would be valid under Hong Kong laws provided
that it was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the qualification of
Mr. Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132
of the New Rules of Evidence, the record of public documents of a sovereign authority,
tribunal, official body, or public officer may be proved by (1) an official publication
thereof or (2) a copy attested by the officer having the legal custody thereof, which must
be accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. The certificate may be issued by the secretary of the embassy or
legation, consul general, consul, vice consul, or consular agent, or 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 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.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law.
An authority 12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamettee Iron and Steel Works
v. Muzzal, 13 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., 14upheld 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 Derring's 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." 15 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. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific
law of Hong Kong in respect of service of summons either in actions in rem or in
personam, and where the HERAS is either a resident or nonresident of Hong Kong. In
view of the absence of proof of the Hong Kong law on this particular issue, the
presumption of identity or similarity or the so-called processual presumption shall come
into play. It will thus be presumed that the Hong Kong law on the matter is similar to the
Philippine law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine first whether
the action is in personam, in rem, orquasi in rem because the rules on service of summons
under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the
action. prcd
An action in personam is an action against a person on the basis of his personal liability.
An action in rem is an action against the thing itself instead of against the person. 19 An
action quasi in rem is one wherein an individual is named as HERAS and the purpose of
the proceeding is to subject his interest therein to the obligation or lien burdening the
property. 20
In an action in personam, jurisdiction over the person of the HERAS is necessary for the
court to validly try and decide the case. Jurisdiction over the person of a resident HERAS
who does not voluntarily appear in court can be acquired by personal service of
summons as provided under Section 7, Rule 14 of the Rules of Court. If he cannot be
personally served with summons within a reasonable time, substituted service may be
made in accordance with Section 8 of said Rule. If he is temporarily out of the country,
any of the following modes of service may he resorted to: (1) substituted service set forth
in Section 8; 21 (2) personal service outside the country, with leave of court; (3)
service by publication also with leave of court; 22or (4) any other manner the court
may deem sufficient. 23
However, in an action in personam wherein the HERAS is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons
within the state is essential to the acquisition of jurisdiction over her person. 24 This
method of service is possible if such HERAS is physically present in the country. If he
is not found therein, the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against him. 25 An exception was laid
down in Gemperle v. Schenker 26 wherein a non-resident was served with summons
through his wife, who was a resident of the Philippines and who was his representative and
attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere
offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of
the HERAS is not a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Nonetheless, summons must be served upon the HERAS
not for the purpose of vesting the court with jurisdiction but merely for satisfying the due
process requirements. 27 Thus, where the HERAS is a non-resident who is not found
in the Philippines AND (1) the action affects the personal status of the ASIAVEST
LIMITED; (2) the action relates to, or the subject matter of which is property in the
Philippines in which the HERAS has or claims a lien or interest; (3) the action seeks the
exclusion of the HERAS from any interest in the property located in the Philippines; or (4)
the property of the HERAS has been attached in the Philippines service of summons
may be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem
sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it
was based on his personal guarantee of the obligation of the principal debtor. Before we
can apply the foregoing rules, we must determine first whether HERAS was a resident of
Hong Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until
1985, 29 testified that HERAS was the President and part owner of a shipping company in
Hong Kong during all those times that she served as his secretary. He had in his employ a
staff of twelve. 30 He had "business commitments, undertakings, conferences, and
appointments until October 1984 when [he] left Hong Kong for good." 31 HERAS's other
witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS "for a
number of commercial matters." 32 ASIAVEST then infers that HERAS was a resident of
Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his Answer 34 to
ASIAVEST's complaint for the enforcement of the Hong Kong court judgment, HERAS
maintained that the Hong Kong court did not have jurisdiction over him because the
fundamental rule is that jurisdiction in personam over non-resident HERASs, so as to
sustain a money judgment, must be based upon personal service of summons within
the state which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: "The
question of Hong Kong court's 'want of jurisdiction' is therefore a triable issue if it is to be
pleaded by the HERAS to 'repel' the foreign judgment. Facts showing jurisdictional lack
(e.g. that the Hong Kong suit was in personam, that HERAS was not a resident of Hong
Kong when the suit was filed or that he did not voluntarily submit to the Hong Kong
court's jurisdiction) should be alleged and proved by the HERAS." 37
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of
jurisdiction over his person was corroborated by ASIAVEST's allegation in the complaint
that he "has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines." He
then concluded that such Judicial admission amounted to evidence that he was and is not a
resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts,
among which was that "the residence of HERAS, Antonio Heras, is New Manila,
Quezon City." 39
We note that the residence of HERAS insofar as the action for the enforcement of the
Hong Kong court judgment is concerned, was never in issue. He never challenged the
service of summons on him through a security guard in his Quezon City residence
and through a lawyer in his office in that city. In his Motion to Dismiss, he did not
question the jurisdiction of the Philippine court over his person on the ground of invalid
service of summons. What was in issue was his residence as far as the Hong Kong suit was
concerned. We therefore conclude that the stipulated fact that HERAS "is a resident of
New Manila, Quezon City, Philippines" refers to his residence at the time jurisdiction over
his person was being sought by the Hong Kong court. With that stipulation of fact,
ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him
was, indisputably, one in personam, summons should have been personally served on
him in Hong Kong. The extraterritorial service in the Philippines was therefore invalid
and did not confer on the Hong Kong court jurisdiction over his person. It follows that the
Hong Kong court judgment cannot be given force and effect here in the Philippines for
having been rendered without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so
in November 1984 when the extraterritorial service of summons was attempted to be made
on him. As declared by his secretary, which statement was not disputed by ASIAVEST,
HERAS left Hong Kong in October 1984 "for good." 40 His absence in Hong Kong must
have been the reason why summons was not served on him therein; thus, ASIAVEST was
constrained to apply for leave to effect service in the Philippines, and upon obtaining a
favorable action on the matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan
law firm to serve the summons here in the Philippines.
In Brown v. Brown, 41 the HERAS was previously a resident of the Philippines. Several
days after a criminal action for concubinage was filed against him, he abandoned the
Philippines. Later, a proceeding quasi in rem was instituted against him. Summons in the
latter case was served on the HERAS's attorney-in-fact at the latter's address. The Court
held that under the facts of the case, it could not be said that the HERAS was "still a
resident of the Philippines because he ha[d] escaped to his country and [was] therefore an
absentee in the Philippines." As such, he should have been "summoned in the same
manner as one who does not reside and is not found in the Philippines."
Similarly, HERAS, who was also an absentee, should have been served with summons in
the same manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the
Rules of Court providing for extraterritorial service will not apply because the suit against
him was in personam. Neither can we apply Section 18, which allows extraterritorial
service on a resident HERAS who is temporarily absent from the country, because even if
HERAS be considered as a resident of Hong Kong, the undisputed fact remains that he left
Hong Kong not only "temporarily" but "for good." cdll
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the
petition in this case and AFFIRMING the assailed Judgment of the Court of Appeals in
CA-G.R. CV No. 29513.
No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 186571. August 11, 2010.]
28. GERBERT R. CORPUZ, petitioner, vs. DAISYLYN TIROL STO.
TOMAS and The SOLICITOR GENERAL, respondents.
DECISION
BRION, J p:
Before the Court is a direct appeal from the decision 1 of the Regional Trial
Court (RTC) of Laoag City, Branch 11, elevated via a petition for review
oncertiorari 2 under Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired
Canadian citizenship through naturalization on November 29, 2000. 3 On January 18,
2005, Gerbert married respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig
City. 4 Due to work and other professional commitments, Gerbert left for Canada soon
after the wedding. He returned to the Philippines sometime in April 2005 to surprise
Daisylyn, but was shocked to discover that his wife was having an affair with another
man. Hurt and disappointed, Gerbert returned to Canada and filed a petition for
divorce. The Superior Court of Justice, Windsor, Ontario, Canada granted Gerbert's
petition for divorce on December 8, 2005. The divorce decree took effect a month
later, on January 8, 2006. 5
Two years after the divorce, Gerbert has moved on and has found another
Filipina to love. Desirous of marrying his new Filipina fiance in the Philippines,
Gerbert went to the Pasig City Civil Registry Office and registered the Canadian
divorce decree on his and Daisylyn's marriage certificate. Despite the registration of
the divorce decree, an official of the National Statistics Office (NSO) informed Gerbert
that the marriage between him and Daisylyn still subsists under Philippine law; to be
enforceable, the foreign divorce decree must first be judicially recognized by a
competent Philippine court, pursuant to NSO Circular No. 4, series of 1982. 6 IHDCcT
Accordingly, Gerbert filed a petition for judicial recognition of foreign
divorce and/or declaration of marriage as dissolved (petition) with the RTC.
Although summoned, Daisylyn did not file any responsive pleading but submitted
instead a notarized letter/manifestation to the trial court. She offered no opposition to
Gerbert's petition and, in fact, alleged her desire to file a similar case herself but was
prevented by financial and personal circumstances. She, thus, requested that she be
considered as a party-in-interest with a similar prayer to Gerbert's.
 In its October 30, 2008 decision, 7 the RTC denied Gerbert's petition. The
RTC concluded that Gerbert was not the proper party to institute the action for judicial
recognition of the foreign divorce decree as he is a naturalized Canadian citizen. It
ruled that only the Filipino spouse can avail of the remedy, under the second
paragraph of Article 26 of the Family Code, 8 in order for him or her to be able to
remarry under Philippine law. 9 Article 26 of the Family Code reads:
Art. 26. All marriages solemnized outside the Philippines, in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained abroad
by the alien spouse capacitating him or her to remarry, the Filipino
spouse shall likewise have capacity to remarry under Philippine law.
This conclusion, the RTC stated, is consistent with the legislative intent behind the
enactment of the second paragraph of Article 26 of the Family Code, as determined by
the Court in Republic v. Orbecido III; 10 the provision was enacted to "avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse." 11
THE PETITION
From the RTC's ruling, 12 Gerbert filed the present petition. 13
Gerbert asserts that his petition before the RTC is essentially for declaratory
relief, similar to that filed in Orbecido; he, thus, similarly asks for a determination of
his rights under the second paragraph of Article 26 of theFamily Code. Taking into
account the rationale behind the second paragraph of Article 26 of the Family Code, he
contends that the provision applies as well to the benefit of the alien spouse. He claims
that the RTC ruling unduly stretched the doctrine in Orbecido by limiting the standing
to file the petition only to the Filipino spouse an interpretation he claims to be
contrary to the essence of the second paragraph of Article 26 of the Family Code. He
considers himself as a proper party, vested with sufficient legal interest, to institute the
case, as there is a possibility that he might be prosecuted for bigamy if he marries his
Filipina fiance in the Philippines since two marriage certificates, involving him,
would be on file with the Civil Registry Office. The Office of the Solicitor General and
Daisylyn, in their respective Comments, 14both support Gerbert's position. SAcaDE
Essentially, the petition raises the issue of whether the second paragraph of Article 26 of
the Family Code extends to aliens the right to petition a court of this jurisdiction for the
recognition of a foreign divorce decree.
THE COURT'S RULING
The alien spouse can claim no right
under the second paragraph of
Article 26 of the Family Code as the
substantive right it establishes is in
favor of the Filipino spouse
The resolution of the issue requires a review of the legislative history and intent
behind the second paragraph of Article 26 of the Family Code.
The Family Code recognizes only two types of defective marriages
void 15 and voidable 16 marriages. In both cases, the basis for the judicial declaration
of absolute nullity or annulment of the marriage exists before orat the time of the
marriage. Divorce, on the other hand, contemplates the dissolution of the lawful union
for cause arising after the marriage. 17 Our family laws do not recognize absolute
divorce between Filipino citizens. 18
Recognizing the reality that divorce is a possibility in marriages between a
Filipino and an alien, President Corazon C. Aquino, in the exercise of her legislative
powers under the Freedom Constitution, 19 enacted Executive Order No. (EO) 227,
amending Article 26 of the Family Code to its present wording, as follows:
Art. 26. All marriages solemnized outside the Philippines, in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained abroad
by the alien spouse capacitating him or her to remarry, the Filipino
spouse shall likewise have capacity to remarry under Philippine law.
Through the second paragraph of Article 26 of the Family Code, EO 227 effectively
incorporated into the law this Court's holding in Van Dorn v. Romillo,
Jr. 20 and Pilapil v. Ibay-Somera. 21 In both cases, the Court refused to acknowledge
the alien spouse's assertion of marital rights after a foreign court's divorce decree
between the alien and the Filipino. The Court, thus, recognized that the foreign divorce
had already severed the marital bond between the spouses. The Court reasoned in Van
Dorn v. Romillo that:
To maintain . . . that, under our laws, [the Filipino spouse] has to be
considered still married to [the alien spouse] and still subject to a
wife's obligations . . . cannot be just. [The Filipino spouse] should not
be obliged to live together with, observe respect and fidelity, and render
support to [the alien spouse]. 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. 22 aCHDST
As the RTC correctly stated, the provision was included in the law "to avoid
the absurd situation where the Filipino spouse remains married to the alien spouse
who, after obtaining a divorce, is no longer married to the Filipino spouse." 23 The
legislative intent is for the benefit of the Filipino spouse, by clarifying his or her
marital status, settling the doubts created by the divorce decree. Essentially, the
second paragraph of Article 26 of theFamily Code provided the Filipino spouse a
substantive right to have his or her marriage to the alien spouse considered as
dissolved, capacitating him or her to remarry. 24 Without the second paragraph of
Article 26 of theFamily Code, the judicial recognition of the foreign decree of divorce,
whether in a proceeding instituted precisely for that purpose or as a related issue in
another proceeding, would be of no significance to the Filipino spouse since our laws
do not recognize divorce as a mode of severing the marital bond; 25Article 17 of the
Civil Code provides that the policy against absolute divorces cannot be subverted by
judgments promulgated in a foreign country. The inclusion of the second paragraph in
Article 26 of the Family Code provides the direct exception to this rule and serves as
basis for recognizing the dissolution of the marriage between the Filipino spouse and
his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of
the Family Code is not limited to the recognition of the foreign divorce decree. If the
court finds that the decree capacitated the alien spouse to remarry, the courts can
declare that the Filipino spouse is likewise capacitated to contract another
marriage. No court in this jurisdiction, however, can make a similar declaration for the
alien spouse (other than that already established by the decree), whose status and legal
capacity are generally governed by his national law. 26
Given the rationale and intent behind the enactment, and the purpose of the
second paragraph of Article 26 of the Family Code, the RTC was correct in limiting
the applicability of the provision for the benefit of the Filipino spouse. In other words,
only the Filipino spouse can invoke the second paragraph of Article 26 of the Family
Code; the alien spouse can claim no right under this provision.
The foreign divorce decree is
presumptive evidence of a right that
clothes the party with legal interest to
petition for its recognition in this
jurisdiction
We qualify our above conclusion i.e., that the second paragraph of Article
26 of the Family Code bestows no rights in favor of aliens with the complementary
statement that this conclusion is not sufficient basis to dismiss Gerbert's petition before
the RTC. In other words, the unavailability of the second paragraph of Article 26 of
the Family Code to aliens does not necessarily strip Gerbert of legal interest to petition
the RTC for the recognition of his foreign divorce decree. The foreign divorce decree
itself, after its authenticity and conformity with the alien's national law have been duly
proven according to our rules of evidence, serves as a presumptive evidence of right in
favor of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides
for the effect of foreign judgments. This Section states: aTEScI
SEC. 48. Effect of foreign judgments or final orders. The effect of a
judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the
judgment or final order is conclusive upon the title of the
thing; and
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a
right as between the parties and their successors in
interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of
a want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.
To our mind, direct involvement or being the subject of the foreign judgment is
sufficient to clothe a party with the requisite interest to institute an action before our
courts for the recognition of the foreign judgment. In a divorce situation, we have
declared, no less, that the divorce obtained by an alien abroad may be recognized in
the Philippines, provided the divorce is valid according to his or her national law. 27
The starting point in any recognition of a foreign divorce judgment is the
acknowledgment that our courts do not take judicial notice of foreign judgments and
laws. Justice Herrera explained that, as a rule, "no sovereign is bound to give effect
within its dominion to a judgment rendered by a tribunal of another country." 28 This
means that the foreign judgment and its authenticity must be proven as facts under our
rules on evidence, together with the alien's applicable national law to show the effect
of the judgment on the alien himself or herself. 29 The recognition may be made in an
action instituted specifically for the purpose or in another action where a party invokes
the foreign decree as an integral aspect of his claim or defense.
In Gerbert's case, since both the foreign divorce decree and the national law of
the alien, recognizing his or her capacity to obtain a divorce, purport to be official acts
of a sovereign authority, Section 24, Rule 132 of the Rules of Court comes into play.
This Section requires proof, either by (1) official publications or (2) copies attested by
the officer having legal custody of the documents. If the copies of official records are
not kept in the Philippines, these must be (a) accompanied by a certificate issued by
the proper diplomatic or consular officer in the Philippine foreign service stationed in
the foreign country in which the record is kept and (b) authenticated by the seal of his
office.
The records show that Gerbert attached to his petition a copy of the divorce
decree, as well as the required certificates proving its authenticity, 30but failed to
include a copy of the Canadian law on divorce. 31 Under this situation, we can, at this
point, simply dismiss the petition for insufficiency of supporting evidence, unless we
deem it more appropriate to remand the case to the RTC to determine whether the
divorce decree is consistent with the Canadian divorce law. DCASIT
We deem it more appropriate to take this latter course of action, given the
Article 26 interests that will be served and the Filipina wife's (Daisylyn's) obvious
conformity with the petition. A remand, at the same time, will allow other interested
parties to oppose the foreign judgment and overcome a petitioner's presumptive
evidence of a right by proving want of jurisdiction, want of notice to a party, collusion,
fraud, or clear mistake of law or fact. Needless to state, every precaution must be taken
to ensure conformity with our laws before a recognition is made, as the foreign
judgment, once recognized, shall have the effect of res judicata 32 between the parties,
as provided in Section 48, Rule 39 of the Rules of Court. 33
In fact, more than the principle of comity that is served by the practice of
reciprocal recognition of foreign judgments between nations, the res judicata effect of
the foreign judgments of divorce serves as the deeper basis for extending judicial
recognition and for considering the alien spouse bound by its terms. This same effect,
as discussed above, will not obtain for the Filipino spouse were it not for the
substantive rule that the second paragraph of Article 26 of the Family Code provides.
Considerations beyond the
recognition of the foreign divorce
decree
As a matter of "housekeeping" concern, we note that the Pasig City
Civil Registry Office has already recorded the divorce decree on Gerbert and
Daisylyn's marriage certificate based on the mere presentation of the
decree. 34 We consider the recording to be legally improper; hence, the need to draw
attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that "[a]cts, events and judicial decrees
concerning the civil status of persons shall be recorded in the civil register." The law
requires the entry in the civil registry of judicial decrees that produce legal
consequences touching upon a person's legal capacity and status, i.e., those affecting
"all his personal qualities and relations, more or less permanent in nature, not
ordinarily terminable at his own will, such as his being legitimate or illegitimate, or his
being married or not." 35
A judgment of divorce is a judicial decree, although a foreign one, affecting a
person's legal capacity and status that must be recorded. In fact,Act No. 3753 or
the Law on Registry of Civil Status specifically requires the registration of divorce
decrees in the civil registry:
Sec. 1. Civil Register. A civil register is established for recording
the civil status of persons, in which shall be entered:
(a) births;
(b) deaths;
(c) marriages;
(d) annulments of marriages;
(e) divorces; EHDCAI
(f) legitimations;
 (g) adoptions;
(h) acknowledgment of natural children;
(i) naturalization; and
(j) changes of name.
xxx xxx xxx
Sec. 4. Civil Register Books. The local registrars shall keep and
preserve in their offices the following books, in which they shall,
respectively make the proper entries concerning the civil status of
persons:
(1) Birth and death register.
(2) Marriage register, in which shall be entered not only the
marriages solemnized but also divorces and dissolved
marriages.
(3) Legitimation, acknowledgment, adoption, change of name and
naturalization register.
But while the law requires the entry of the divorce decree in the civil registry, the law
and the submission of the decree by themselves do not ipso factoauthorize the
decree's registration. The law should be read in relation with the requirement of a
judicial recognition of the foreign judgment before it can be given res judicata effect.
In the context of the present case, no judicial order as yet exists recognizing the foreign
divorce decree. Thus, the Pasig City Civil Registry Office acted totally out of turn and
without authority of law when it annotated the Canadian divorce decree on Gerbert and
Daisylyn's marriage certificate, on the strength alone of the foreign decree presented
by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of
a court recognition, as it cited NSO Circular No. 4, series of 1982, 36 and Department
of Justice Opinion No. 181, series of 1982 37 both of which required a final order
from a competent Philippine court before a foreign judgment, dissolving a marriage,
can be registered in the civil registry, but it, nonetheless, allowed the registration of the
decree. For being contrary to law, the registration of the foreign divorce decree without
the requisite judicial recognition is patently void and cannot produce any legal effect.
Another point we wish to draw attention to is that the recognition that the RTC
may extend to the Canadian divorce decree does not, by itself, authorize
the cancellation of the entry in the civil registry. A petition for recognition of a foreign
judgment is not the proper proceeding, contemplated under the Rules of Court, for the
cancellation of entries in the civil registry. STHDAc
Article 412 of the Civil Code declares that "no entry in a civil register shall be
changed or corrected, without judicial order." The Rules of Court supplements Article
412 of the Civil Code by specifically providing for a special remedial proceeding by
which entries in the civil registry may be judicially cancelled or corrected. Rule 108 of
the Rules of Court sets in detail the jurisdictional and procedural requirements that
must be complied with before a judgment, authorizing the cancellation or correction,
may be annotated in the civil registry. It also requires, among others, that the verified
petition must be filed with the RTC of the province where the corresponding
civil registry is located; 38 that the civil registrar and all persons who have or claim
any interest must be made parties to the proceedings; 39 and that the time and place for
hearing must be published in a newspaper of general circulation. 40As these basic
jurisdictional requirements have not been met in the present case, we cannot consider
the petition Gerbert filed with the RTC as one filed under Rule 108 of the Rules of
Court.
We hasten to point out, however, that this ruling should not be construed as
requiring two separate proceedings for the registration of a foreign divorce decree in
the civil registry one for recognition of the foreign decree and another specifically
for cancellation of the entry under Rule 108 of the Rules of Court. The recognition of
the foreign divorce decree may be made in a Rule 108 proceeding itself, as the object
of special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to
establish the status or right of a party or a particular fact. Moreover, Rule 108 of the
Rules of Court can serve as the appropriate adversarial proceeding 41 by which the
applicability of the foreign judgment can be measured and tested in terms of
jurisdictional infirmities, want of notice to the party, collusion, fraud, or clear mistake
of law or fact.
WHEREFORE, we GRANT the petition for review
on certiorari, andREVERSE the October 30, 2008 decision of the Regional Trial
Court of Laoag City, Branch 11, as well as its February 17, 2009 order. We order
the REMANDof the case to the trial court for further proceedings in accordance with
our ruling above. Let a copy of this Decision be furnished the Civil
RegistrarGeneral. No costs.
SO ORDERED.
Carpio Morales, Bersamin, Abad * and Villarama Jr., JJ., concur.
||| (Corpuz v. Sto. Tomas, G.R. No. 186571, [August 11, 2010], 642 PHIL 420-438)