1 | Conflict of Laws
1 petitioners' motion for reconsideration, [17] prompting
KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., Petitioners, - versus - MINORU
KITAMURA, Respondent.
DECISION
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.[7] Respondent 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]
Threatened with impending unemployment, respondent,
through his lawyer, requested a negotiation conference
and demanded that he be assigned to the BBRI
project. Nipponinsisted that respondents 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
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 groundsfor 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 Certiorari under 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]
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
SOLUTIONISIN 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.
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 certificationas they, in fact didand 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 secondcertiorari 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, the certiorari petition filed
with the CA and not the instant petition. True, the
Authorization[35] dated September 4, 2000, which is
attached to the second certiorari petition and which is
also attached to the instant petition for review, is limited
in scopeits 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;
2 | Conflict of Laws
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]
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 or mandamus. 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 Dismiss[48] 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.[50] On 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]
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 the lex 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 issuejurisdiction.
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 theres 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.
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
contractusmeans 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
3 | Conflict of Laws
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 courts 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]
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.
2
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner, vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION

Before this Court is a petition for review on
certiorari under Rule 45 of the 1997 Rules of Civil
Procedure which seeks the reversal of the Decision 1 and
Resolution2 of the Court of Appeals in CA-G.R. SP No.
67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the
following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc.
(BMSI), a corporation duly organized and existing under
the laws of the State of Connecticut, United States of
America, and respondent Stockton W. Rouzie, Jr., an
American citizen, entered into a contract whereby BMSI
hired respondent as its representative to negotiate the
sale of services in several government projects in the
Philippines for an agreed remuneration of 10% of the
gross receipts. On 11 March 1992, respondent secured a
service contract with the Republic of the Philippines on
behalf of BMSI for the dredging of rivers affected by the
Mt. Pinatubo eruption and mudflows.3
On 16 July 1994, respondent filed before the
Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust
International, Inc. (RUST), Rodney C. Gilbert and Walter
G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment
contract.4 On 28 September 1995, Labor Arbiter Pablo C.
Espiritu, Jr. rendered judgment ordering BMSI and RUST
to pay respondents money claims. 5 Upon appeal by
BMSI, the NLRC reversed the decision of the Labor Arbiter
and dismissed respondents 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
respondents 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. 10Petitioner 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 dated 13 September 2000, the RTC
14
denied petitioners omnibus motion. The trial court held
that the factual allegations in the complaint, assuming
4 | Conflict of Laws
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 petitioners motion. Thus, it filed a Rule 65
Petition19 with the Court of Appeals praying for the
issuance of a writ of certiorari and a writ of injunction
to set aside the twin orders of the trial court dated 13
September 2000 and 31 July 2001 and to enjoin the
trial court from conducting further proceedings.20
On 28 August 2003, the Court of Appeals
rendered the assailed Decision21 denying the petition
for certiorari for lack of merit. It also denied petitioners
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 petitioners omnibus
motion, it found the evidence presented by petitioner,
that is, the deposition of Walter Browning, insufficient
for purposes of determining whether the complaint
failed to state a cause of action. The appellate court
also stated that it could not rule one way or the other
on the issue of whether the corporations, including
petitioner, named as defendants in the case had
indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue
should be threshed out during trial. 23 Moreover, the
appellate court deferred to the discretion of the trial
court when the latter decided not to desist from
assuming jurisdiction on the ground of the
inapplicability of the principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO DISMISS THE
COMPLAINT FOR FAILURE TO STATE A CAUSE
OF ACTION AGAINST RAYTHEON
INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN REFUSING TO DISMISS THE
COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment
despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested
that the lawyer handling the case, Atty. Rogelio
Karagdag, had severed relations with the law firm even
before the filing of the instant petition and that it could
no longer find the whereabouts of Atty. Karagdag or of
respondent despite diligent efforts. In a
Resolution25 dated 20 November 2006, the Court
resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract
between respondent and BMSI included a valid choice
of law clause, that is, that the contract shall be
governed by the laws of the State of Connecticut. It
also mentions the presence of foreign elements in the
dispute namely, the parties and witnesses involved
are American corporations and citizens and the
evidence to be presented is located outside the
Philippines that renders our local courts inconvenient
forums. Petitioner theorizes that the foreign elements
of the dispute necessitate the immediate application of
the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court
outlined three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely:
jurisdiction, choice of law, and recognition and

enforcement of judgments. Thus, in the
instances27 where the Court held that the local judicial
machinery was adequate to resolve controversies with a
foreign element, the following requisites had to be
proved: (1) that the Philippine Court is one to which the
parties may conveniently resort; (2) that the Philippine
Court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine Court
has or is likely to have the power to enforce its decision. 28
On the matter of jurisdiction over a conflicts-of-laws
problem where the case is filed in a Philippine court and
where the court has jurisdiction over the subject matter,
the parties 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.33The 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 Petitioners 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 courts 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
5 | Conflict of Laws
The complaint alleged that petitioner had
combined with BMSI and RUST to function as one
company. Petitioner contends that the deposition of
Walter Browning rebutted this allegation. On this score,
the resolution of the Court of Appeals is instructive,
thus:
x x x Our examination of the deposition of Mr.
Walter Browning as well as other documents
produced in the hearing shows that these
evidence aliunde are not quite sufficient for us to
mete a ruling that the complaint fails to state a
cause of action.
Annexes "A" to "E" by themselves are not
substantial, convincing and conclusive proofs that
Raytheon Engineers and Constructors, Inc. (REC)
assumed the warranty obligations of defendant Rust
International in the Makar Port Project in General
Santos City, after Rust International ceased to exist
after being absorbed by REC. Other documents already
submitted in evidence are likewise meager to
preponderantly conclude that Raytheon International,
Inc., Rust International[,] Inc. and Brand Marine
Service, Inc. have combined into one company, so
much so that Raytheon International, Inc., the surviving
company (if at all) may be held liable for the obligation
of BMSI to respondent Rouzie for unpaid commissions.
Neither these documents clearly speak otherwise.38
As correctly pointed out by the Court of Appeals,
the question of whether petitioner, BMSI and RUST
merged together requires the presentation of further
evidence, which only a full-blown trial on the merits
can afford.
WHEREFORE, the instant petition for review on
certiorari is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs against petitioner
3
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE COURT OF
APPEALS, HON. ARSENIO M. GONONG, and CESAR S.
URBINO, SR., respondents.
DECISION
Before us is a petition for review on certiorari of
the Decision[1] and the Resolution[2] of the Court of
Appeals[3] dated July 19, 1993 and August 15, 1995,
respectively, which reinstated the entire
Decision[4] dated February 18, 1991 of the Regional
Trial Court of Manila, Branch 8, holding, among others,
petitioner Banco do Brasil liable to private respondent
Cesar Urbino, Sr. for damages amounting to
$300,000.00.[5]
At the outset, let us state that this case should
have been consolidated with the recently decided case
of Vlason Enterprises Corporation v. Court of Appeals
and Duraproof Services, represented by its General
Manager, Cesar Urbino Sr. [6], for these two (2) cases
involved the same material antecedents, though the
main issue proffered in the present petition vary with
the Vlason case.
The material antecedents, as quoted from
the Vlason[7] case, are:
Poro Point Shipping Services, then acting as the
local agent of Omega Sea Transport Company of
Honduras & Panama, a Panamanian Company
(hereafter referred to as Omega), requested permission
for its vessel M/V Star Ace, which had engine trouble,
to unload its cargo and to store it at the Philippine Ports
Authority (PPA) compound in San Fernando, La Union
while awaiting transhipment to Hongkong. The request
was approved by the Bureau of Customs.[8] Despite the
approval, the customs personnel boarded the vessel
when it docked on January 7, 1989, on suspicion that it
was the hijacked M/V Silver Med owned by Med Line

Philippines Co., and that its cargo would be smuggled
into the country.[9] The district customs collector seized
said vessel and its cargo pursuant to Section 2301, Tariff
and Customs Code. A notice of hearing of SFLU Seizure
Identification No. 3-89 was served on its consignee,
Singkong Trading Co. of Hongkong, and its shipper, Dusit
International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La
Union was hit by three typhoons, and the vessel ran
aground and was abandoned. On June 8, 1989, its
authorized representative, Frank Cadacio, entered into
salvage agreement with private respondent to secure
and repair the vessel at the agreed consideration of $1
million and "fifty percent (50%) [of] the cargo after all
expenses, cost and taxes."[10]
Finding that no fraud was committed, the District
Collector of Customs, Aurelio M. Quiray, lifted the warrant
of seizure on July 1989.[11] However, in a Second
Indorsement dated November 11, 1989, then Customs
Commissioner Salvador M. Mison declined to issue a
clearance for Quirays Decision; instead, he forfeited the
vessel and its cargo in accordance with Section 2530 of
the Tariff and Customs Code.[12] Accordingly, acting
District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor
of the government.[13]
To enforce its preferred salvors lien, herein
Private Respondent Duraproof Services filed with the
Regional Trial Court of Manila a Petition for Certiorari,
Prohibition andMandamus[14] assailing the actions of
Commissioner Mison and District Collector Sy. Also
impleaded as respondents were PPA Representative
Silverio Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent
amended its Petition[15] to include former District
Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; x
Vlason Enterprises as represented by its president,
Vicente Angliongto; Singkong Trading Company as
represented by Atty. Eddie Tamondong; Banco Du Brasil;
Dusit International Co.; Thai-Nan Enterprises Ltd., and
Thai-United Trading Co., Ltd.[16] x x x
Summonses for the amended Petition were
served on Atty. Joseph Capuyan for Med Line Philippines:
Anglionto (through his secretary, Betty Bebero), Atty.
Tamondong and Commissioner Mison.[17] Upon motion of
the private respondent, the trial court allowed summons
by publication to be served upon defendants who were
not residents and had no direct representative in the
country.[18]
On January 29, 1990, private respondent moved
to declare respondents in default, but the trial court
denied the motion in its February 23, 1990 Order [19],
because Mangaoang and Amor had jointly filed a Motion
to Dismiss, while Mison and Med Line had moved
separately for an extension to file a similar motion.
[20]
Later it rendered an Order dated July 2, 1990, giving
due course to the motions to dismiss filed by Mangaoang
and Amor on the ground of litis pendentia, and by the
commissioner and district collector of customs on the
ground of lack of jurisdiction.[21] In another Order, the trial
court dismissed the action against Med Line Philippines
on the ground of litis pendentia.[22]
On two other occasions, private respondent
again moved to declare the following in default: [Vlason],
Quiray, Sy and Mison on March 26, 1990; [23] and Banco
[do] Bra[s]il, Dusit International Co., Inc., Thai-Nan
Enterprises Ltd. and Thai-United Trading Co., Ltd. on
August 24, 1990.[24] There is no record, however, that the
trial court acted upon the motions. On September 18,
1990, [private respondent] filed another Motion for leave
to amend the petition,[25] alleging that its counsel failed
to include "necessary and/or indispensable parties":
Omega represented by Cadacio; and M/V Star Ace
represented by Capt. Nahon Rada, relief captain. Aside
from impleading these additional respondents, private
respondent also alleged in the Second (actually, third)
Amended Petition[26] that the owners of the vessel
intended to transfer and alienate their rights and interest
6 | Conflict of Laws
over the vessel and its cargo, to the detriment of the
private respondent.
The trial court granted leave to private
respondent to amend its Petition, but only to exclude
the customs commissioner and the district collector.
[27]
Instead, private respondent filed the "Second
Amended Petition with Supplemental Petition" against
Singkong Trading Company; and Omega and M/V Star
Ace,[28] to which Cadacio and Rada filed a Joint Answer.
[29]
Declared in default in an Order issued by the
trial court on January 23, 1991, were the following:
Singkong Trading Co., Commissioner Mison, M/V Star
Ace and Omega.[30]Private respondent filed, and the
trial court granted, an ex parte Motion to present
evidence against the defaulting respondents. [31] Only
private respondent, Atty. Tamondong, Commissioner
Mison, Omega and M/V Star Ace appeared in the next
pretrial hearing; thus, the trial court declared the other
respondents in default and allowed private respondent
to present evidence against them.[32] Cesar Urbino,
general manager of private respondent, testified and
adduced evidence against the other respondents, x x x.
[33]
On December 29, 1990, private respondent
and Rada, representing Omega, entered into a
Memorandum of Agreement stipulating that Rada
would write and notify Omega regarding the demand
for salvage fees of private respondent; and that if Rada
did not receive any instruction from his principal, he
would assign the vessel in favor of the salvor. [34]
On February 18, 1991, the trial court disposed as
follows:
"WHEREFORE, IN VIEW OF THE FOREGOING, based
on the allegations, prayer and evidence adduced,
both testimonial and documentary, the Court is
convinced, that, indeed, defendants/respondents
are liable to [private respondent] in the amount as
prayed for in the petition for which it renders
judgment as follows:
1. Respondent M/V Star Ace, represented by Capt.
Nahum Rada, [r]elief [c]aptain of the vessel and
Omega Sea Transport Company, Inc., represented by
Frank Cadacio[,] is ordered to refrain from alienating or
[transferring] the vessel M/V Star Ace to any third
parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of
$1,000,000.00 based on xxx Lloyds Standard Form of
Salvage Agreement;
c. Preservation, securing and guarding fees on the
vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to
December 1989 in the amount of $43,000.00 and
unpaid salaries from January 1990 up to the present;
f. Attorneys fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in
the amount of P3,000,000.00 for damages;
4. Banco [Du] Brasil to pay [private respondent] in the
amount of $300,000.00 in damages;[35] and finally,
5. Costs of [s]uit."
Subsequently, upon the motion of Omega,
Singkong Trading Co., and private respondent, the trial
court approved a Compromise Agreement[36] among the
movants, reducing by 20 percent the amounts
adjudged. For their part, respondents-movants agreed
not to appeal the Decision.[37] On March 8, 1991,

private respondent moved for the execution of judgment,
claiming that the trial court Decision had already become
final and executory. The Motion was granted and a Writ of
Execution was issued. To satisfy the Decision, Sheriffs
Jorge Victorino, Amado Sevilla and Dionisio Camagon
were deputized on March 13, 1991 to levy and to sell on
execution the defendants vessel and personal property.
xxx
On March 18, 1991, the Bureau of Customs also
filed an ex parte Motion to recall the execution, and to
quash the notice of levy and the sale on execution.
Despite this Motion, the auction sale was conducted on
March 21, 1991 by Sheriff Camagon, with private
respondent submitting the winning bid. The trial court
ordered the deputy sheriffs to cease and desist from
implementing the Writ of Execution and from levying on
the personal property of the defendants. Nevertheless,
Sheriff Camagon issued the corresponding Certificate of
Sale on March 27, 1991.
On April 10, 1991, petitioner Banco do Brasil
filed, by special appearance, an Urgent Motion to Vacate
Judgement and to Dismiss Case[38] on the ground that the
February 18, 1991 Decision of the trial court is void with
respect to it for having been rendered without validly
acquiring jurisdiction over the person of Banco do Brasil.
Petitioner subsequently amended its petition [39] to
specifically aver that its special appearance is solely for
the purpose of questioning the Courts exercise of
personal jurisdiction.
On May 20, 1991, the trial court issued an
Order[40] acting favorably on petitioners motion and set
aside as against petitioner the decision dated February
18, 1991 for having been rendered without jurisdiction
over Banco do Brasils person. Private respondent sought
reconsideration[41] of the Order dated May 20, 1991.
However, the trial court in an Order[42] dated June 21,
1991 denied said motion.
Meanwhile, a certiorari petition[43] was filed by
private respondent before public respondent Court of
Appeals seeking to nullify the cease and desist Order
dated April 5, 1991 issued by Judge Arsenio M. Gonong.
Two (2) more separate petitions for certiorari were
subsequently filed by private respondent. The second
petition[44] sought to nullify the Order[45] dated June 26,
1992 setting aside the Deputy Sheriffs return dated April
1, 1991 as well as the certificate of sale issued by Deputy
Sheriff Camagon. The third petition [46] sought to nullify
the Order dated October 5, 1992 of the Court of Tax
Appeals directing the Commissioner of Customs to place
Bureau of Customs and PNP officers and guards to secure
the M/V Star Ace and its cargoes, make inventory of the
goods stored in the premises as indicated to belong to
the private respondent. Likewise challenged was the
Order dated August 17, 1992 authorizing the sale of M/V
Star Ace and its cargoes.
These three (3) petitions were consolidated and
on July 19, 1993, the appellate court rendered its
Decision[47] granting private respondents petitions,
thereby nullifying and setting aside the disputed orders
and effectively "giving way to the entire [decision dated
February 18, 1991 of the x x x Regional Trial Court of
Manila, Branch 8, in Civil Case No. 89-51451
which remainsvalid, final and executory, if not yet wholly
executed."[48]
Private respondent Urbino, Vlason Enterprises
and petitioner Banco do Brasil filed separate motions for
reconsideration. For its part, petitioner Banco do Brasil
sought reconsideration, insofar as its liability for
damages, on the ground that there was no valid service
of summons as service was on the wrong party the
ambassador of Brazil. Hence, it argued, the trial court did
not acquire jurisdiction over petitioner Banco do Brasil.
[49]
Nonetheless, the appellate court denied the motions
for reconsideration in its Resolution [50] dated August 15,
1995.
Hence, the instant petition.
7 | Conflict of Laws
Petitioner Banco do Brasil takes exception to
the appellate courts declaration that the suit below
is in rem, not in personam,[51] thus, service of summons
by publication was sufficient for the court to acquire
jurisdiction over the person of petitioner Banco do
Brasil, and thereby liable to private respondent Cesar
Urbino for damages claimed, amounting to
$300,000.00. Petitioner further challenges the finding
that the February 18, 1991 decision of the trial court
was already final and thus, cannot be modified or
assailed.[52]
Petitioner avers that the action filed against it
is an action for damages, as such it is an action in
personam which requires personal service of summons
be made upon it for the court to acquire jurisdiction
over it. However, inasmuch as petitioner Banco do
Brasil is a non-resident foreign corporation, not
engaged in business in the Philippines, unless it has
property located in the Philippines which may be
attached to convert the action into an action in rem,
the court cannot acquire jurisdiction over it in respect
of an action in personam.
The petition bears merit, thus the same should
be as it is hereby granted.
First. When the defendant is a nonresident and
he is not found in the country, summons may be
served extraterritorially in accordance with Rule 14,
Section 17[53] of the Rules of Court.Under this provision,
there are only four (4) instances when extraterritorial
service of summons is proper, namely: "(1) when the
action affects the personal status of the plaintiffs; (2)
when the action relates to, or the subject of which is
property, within the Philippines, in which the defendant
claims a lien or interest, actual or contingent; (3) when
the relief demanded in such action consists, wholly or
in part, in excluding the defendant from any interest in
property located in the Philippines; and (4) when the
defendant non-residents property has been attached
within the Philippines."[54] In these instances, 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.[55]
Clear from the foregoing, extrajudicial service
of summons apply only where the action is in rem, an
action against the thing itself instead of against the
person, or in an action quasi in rem, where an
individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the
obligation or loan burdening the property. This is so
inasmuch as, in in rem and quasi in rem actions,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided
that the court acquires jurisdiction over the res.[56]
However, where the action is in personam, one
brought against a person on the basis of his personal
liability, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the
case. When the defendant is a non-resident, personal
service of summons within the state is essential to the
acquisition of jurisdiction over the person. [57] This
cannot be done, however, if the defendant is not
physically present in the country, and thus, the court
cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case
against him.[58]
In the instant case, private respondents suit
against petitioner is premised on petitioners being one
of the claimants of the subject vessel M/V Star Ace.
[59]
Thus, it can be said that private respondent initially
sought only to exclude petitioner from claiming interest
over the subject vessel M/V Star Ace. However, private
respondent testified during the presentation of
evidence that, for being a nuisance defendant,
petitioner caused irreparable damage to private
respondent in the amount of $300,000.00.[60] Therefore,
while the action is in rem, by claiming damages, the
relief demanded went beyond the res and sought a
relief totally alien to the action.

It must be stressed that any relief granted in
rem or quasi in rem actions must be confined to the res,
and the court cannot lawfully render a personal judgment
against the defendant.[61]Clearly, the publication of
summons effected by private respondent is invalid and
ineffective for the trial court to acquire jurisdiction over
the person of petitioner, since by seeking to recover
damages from petitioner for the alleged commission of
an injury to his person or property [62] caused by
petitioners being a nuisance defendant, private
respondents action became in personam. Bearing in
mind the in personam nature of the action, personal or, if
not possible, substituted service of summons on
petitioner, and not extraterritorial service, is necessary to
confer jurisdiction over the person of petitioner and
validly hold it liable to private respondent for damages.
Thus, the trial court had no jurisdiction to award
damages amounting to $300,000.00 in favor of private
respondent and as against herein petitioner.
Second. We settled the issue of finality of the trial courts
decision dated February 18, 1991 in the Vlason case,
wherein we stated that, considering the admiralty case
involved multiple defendants, "each defendant had a
different period within which to appeal, depending on the
date of receipt of decision." [63] Only upon the lapse of the
reglementary period to appeal, with no appeal perfected
within such period, does the decision become final and
executory.[64]
In the case of petitioner, its Motion to Vacate
Judgment and to Dismiss Case was filed on April 10,
1991, only six (6) days after it learned of the existence of
the case upon being informed by the Embassy of the
Federative Republic of Brazil in the Philippines, on April 4,
1991, of the February 18, 1991 decision. [65] Thus, in the
absence of any evidence on the date of receipt of
decision, other than the alleged April 4, 1991 date when
petitioner learned of the decision, the February 18, 1991
decision of the trial court cannot be said to have attained
finality as regards the petitioner.
WHEREFORE, the subject petition is hereby
GRANTED. The Decision and the Resolution of the Court
of Appeals dated July 19, 1993 and August 15, 1995,
respectively, in CA-G.R. SP Nos. 24669, 28387 and 29317
are hereby REVERSED and SET ASIDE insofar as they
affect petitioner Banco do Brasil. The Order dated May
20, 1991 of the Regional Trial Court of Manila, Branch 8 in
Civil Case No. 89-51451 is REINSTATED
4 G.R. NO. 154830 June 8, 2007
PIONEER CONCRETE PHILIPPINES, INC., PIONEER
PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG,
Petitioners, - versus -
ANTONIO D. TODARO, Respondent.
DECISION
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
8 | Conflict of Laws
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]
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
Order[8] dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition
for Certiorari with the CA.[9] On October 31, 2000, the
CA rendered its presently assailed Decision denying
herein petitioners' Petition for Certiorari. Petitioners
filed a Motion for Reconsideration but the CA denied it
in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based
on the following assignment of errors:
A. THE COURT OF APPEALS' CONCLUSION THAT
THE COMPLAINT STATES A CAUSE OF ACTION AGAINST
PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE
ANNEXES TO THE COMPLAINT CLEARLY BELIE THE
ALLEGATION OF EXISTENCE OF AN EMPLOYMENT
CONTRACT BETWEEN PRIVATE RESPONDENT AND
PETITIONERS.
B. THE COURT OF APPEALS DECIDED A QUESTION
OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW
AND WITH APPLICABLE DECISIONS OF THE SUPREME
COURT WHEN IT UPHELD THE JURISDICTION OF THE
TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT
INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN
ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND
HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION
OF THE NATIONAL LABOR RELATIONS COMMISSION.
C THE COURT OF APPEALS DISREGARDED AND
FAILED TO CONSIDER THE PRINCIPLE OF FORUM NON
CONVENIENS AS A VALID GROUND FOR DISMISSING A
COMPLAINT.[10]

In their first assigned error, petitioners contend that
there was no perfected employment contract between
PIL and herein respondent. Petitioners assert that the
annexes to respondent's complaint show that PIL's offer
was for respondent to be employed as the manager only
of its pre-mixed concrete operations and not as the
company's managing director or CEO. Petitioners argue
that when respondent reiterated his
intention to become the manager of PIL's overall
business venture in the Philippines, he, in effect did not
accept PIL's offer of employment and instead made a
counter-offer, which, however, was not accepted by PIL.
Petitioners also contend that under Article 1318 of the
Civil Code, one of the requisites for a contract to be
perfected is the consent of the contracting parties; that
under Article 1319 of the same Code, consent is
manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract; that the offer must be certain
and the acceptance absolute; that a qualified acceptance
constitutes a counter-offer. Petitioners assert that since
PIL did not accept respondent's counter-offer, there
never was any employment contract that was perfected
between them.
Petitioners further argue that respondent's claim
for damages based on the provisions of Articles 19 and
21 of the Civil Code is baseless because it was shown
that there was no perfected employment contract.
Assuming, for the sake of argument, that PIL may
be held liable for breach of employment contract,
petitioners contend that PCPI and PPHI, may not also be
held liable because they are juridical entities with
personalities which are separate and distinct from PIL,
even if they are subsidiary corporations of the latter.
Petitioners also aver that the annexes to respondent's
complaint show that the negotiations on the alleged
employment contract took place between respondent
and PIL through its office in Hongkong. In other words,
PCPI and PPHI were not privy to the negotiations between
PIL and respondent for the possible employment of the
latter; and under Article 1311 of the Civil Code, a
contract is not binding upon and cannot be enforced
against one who was not a party to it even if he be aware
of such contract and has acted with knowledge thereof.
Petitioners further assert that
petitioner Klepzig may not be held liable because he is
simply acting in his capacity as president of PCPI and
PPHI and settled is the rule that an officer of a
corporation is not personally liable for acts done in the
performance of his duties and within the bounds of the
authority conferred on him. Furthermore, petitioners
argue that even if PCPI and PPHI are held liable,
respondent still has no cause of action
against Klepzig because PCPI and PPHI have personalities
which are separate and distinct from those acting in their
behalf, such as Klepzig.
As to their second assigned error, petitioners
contend that since herein respondent's claims for actual,
moral and exemplary damages are solely premised on
the alleged breach of employment contract, the present
case should be considered as falling within the exclusive
jurisdiction of the NLRC.
With respect to the third assigned error,
petitioners assert that the principle of forum
non conveniens dictates that even where exercise
of jurisidiction is authorized by law, courts may refuse to
entertain a case involving a foreign element where the
matter can be better tried and decided elsewhere, either
because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their
9 | Conflict of Laws
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 thePhilippines. Moreover,
the events which led to the present controversy
occurred outside the Philippines. Petitioners conclude
that based on the foregoing factual circumstances, the
case should be dismissed under the principle of forum
non conveniens.
In his Comment, respondent extensively
quoted the assailed CA Decision maintaining that the
factual allegations in the complaint determine whether
or not the complaint states a cause of action.
As to the question of jurisdiction, respondent
contends that the complaint he filed was not based on
a contract of employment. Rather, it was based on
petitioners' unwarranted breach of their contractual
obligation to employ respondent. This breach,
respondent argues, gave rise to an action for damages
which is cognizable by the regular courts.
Even assuming that there was an employment
contract, respondent asserts that for the NLRC to
acquire jurisdiction, the claim for damages must have a
reasonable causal connection with the employer-
employee relationship of petitioners and respondent.
Respondent further argues that there is a
perfected contract between him and petitioners as
they both agreed that the latter shall employ him to
manage and operate their ready-mix concrete
operations in the Philippines. Even assuming that there
was no perfected contract, respondent contends that
his complaint alleges an alternative cause of action
which is based on the provisions of Articles 19 and 21
of the Civil Code.
As to the applicability of the doctrine of forum
non conveniens, respondent avers that the question of
whether a suit should be entertained or dismissed on
the basis of the principle of forum
non conveniens depends largely upon the facts of the
particular case and is addressed to the sound
discretion of the trial judge, who is in the best position
to determine whether special circumstances require
that the court desist from assuming jurisdiction over
the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as
amended, defines a cause of action as the act or
omission by which a party violates a right of another. A
cause of action exists if the following elements are
present: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created;
(2) an obligation on the part of the named defendant to
respect or not to violate such right; and, (3) an act or
omission on the part of such defendant violative of the
right of the plaintiff or constituting a breach of the

obligation of the defendant to the plaintiff for which the
latter may maintain an action for recovery of damages.[11]
In Hongkong and Shanghai Banking Corporation
Limited v. Catalan,[12] this Court held:
The elementary test for failure to state a cause of action
is whether the complaint alleges facts which if true would
justify the relief demanded. Stated otherwise, may the
court render a valid judgment upon the facts alleged
therein? The inquiry is into the sufficiency, not the
veracity of the material allegations. If the allegations in
the complaint furnish sufficient basis on which it can be
maintained, it should not be dismissed regardless of the
defense that may be presented by the defendants.[13]
Moreover, the complaint does not have to establish or
allege facts proving the existence of a cause of action at
the outset; this will have to be done at the trial on the
merits of the case.[14] To sustain a motion to dismiss for
lack of cause of action, the complaint must show that the
claim for relief does not exist, rather than that a claim
has been defectively stated, or is ambiguous, indefinite
or uncertain.[15]
Hence, in resolving whether or not the Complaint
in the present case states a cause of action, the trial
court correctly limited itself to examining the sufficiency
of the allegations in the Complaint as well as the annexes
thereto. It is proscribed from inquiring into the truth of
the allegations in the Complaint or the authenticity of
any of the documents referred or attached to the
Complaint, since these are deemed hypothetically
admitted by the respondent.
This Court has reviewed respondents 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
10 | Conflict of Laws
employ him. It is settled that an action for breach of
contractualobligation 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 xxx [a] Philippine Court
may assume jurisdiction over the case if it chooses to
do so; provided, that the following requisites are met:
(1) that the Philippine Court is one to which the parties
may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as
to the law and the facts; and, (3) that the Philippine
Court has or is likely to have power to enforce its
decision.
Moreover, this Court enunciated in Philsec. Investment
Corporation vs. Court of Appeals, that the doctrine
of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16
of the Rules of Court does not include said doctrine as
a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so
only after vital facts are established, to determine
whether special circumstances require the courts
desistance; and that the propriety of dismissing a case
based on this principle of forum
non conveniens requires a factual determination,
hence it is more properly considered a matter of
defense.[22](emphasis supplied)
In the present case, the factual circumstances cited by
petitioners which would allegedly justify the application
of the doctrine of forum non conveniens are matters of
defense, the merits of which should properly be
threshed out during trial.
WHEREFORE, the instant petition is DENIED and the
assailed Decision and Resolution of the Court of
Appeals are AFFIRMED.
Costs against petitioners
5 [G.R. No. 120135. March 31, 2003]
BANK OF AMERICA NT&SA, BANK OF AMERICA
INTERNATIONAL, LTD., petitioners, vs. COURT OF
APPEALS, HON. MANUEL PADOLINA, EDUARDO

LITONJUA, SR., and AURELIO K. LITONJUA,
JR., respondents.
DECISION
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; [3] thereafter, 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 petitioners;[8]and the possession the vessels was
also placed by defendant banks in the hands of persons
selected and designated by them (defendant banks).[9]
The Litonjuas claimed that defendant banks as trustees
did not fully render an account of all the income derived
from the operation of the vessels as well as of the
proceeds of the subsequent foreclosure sale; [10] because
of the breach of their fiduciary duties and/or negligence
of the petitioners and/or the persons designated by them
in the operation of private respondents six vessels, the
revenues derived from the operation of all the vessels
declined drastically; the loans acquired for the purchase
of the four additional vessels then matured and remained
unpaid, prompting defendant banks to have all the six
vessels, including the two vessels originally owned by the
private respondents, foreclosed and sold at public
auction to answer for the obligations incurred for and in
behalf of the operation of the vessels; they (Litonjuas)
lost sizeable amounts of their own personal funds
equivalent to ten percent (10%) of the acquisition cost of
the four vessels and were left with the unpaid balance of
their loans with defendant banks. [11] The Litonjuas prayed
for the accounting of the revenues derived in the
operation of the six vessels and of the proceeds of the
sale thereof at the foreclosure proceedings instituted by
petitioners; damages for breach of trust; exemplary
damages and attorneys 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]
11 | Conflict of Laws
Instead of filing an answer the defendant banks went
to the Court of Appeals on a Petition for Review on
Certiorari[15] which was aptly treated by the appellate
court as a petition for certiorari. They assailed the
above-quoted order as well as the subsequent denial of
their Motion for Reconsideration. [16] The appellate court
dismissed the petition and denied petitioners Motion
for Reconsideration.[17]
Hence, herein petition anchored on the following
grounds:
1. RESPONDENT COURT OF APPEALS FAILED TO
CONSIDER THE FACT THAT THE SEPARATE
PERSONALITIES OF THE PRIVATE RESPONDENTS (MERE
STOCKHOLDERS) AND THE FOREIGN CORPORATIONS
(THE REAL BORROWERS) CLEARLY SUPPORT, BEYOND
ANY DOUBT, THE PROPOSITION THAT THE PRIVATE
RESPONDENTS HAVE NO PERSONALITIES TO SUE.
2. THE RESPONDENT COURT OF APPEALS FAILED TO
REALIZE THAT WHILE THE PRINCIPLE OF FORUM NON
CONVENIENS IS NOT MANDATORY, THERE ARE,
HOWEVER, SOME GUIDELINES TO FOLLOW IN
DETERMINING WHETHER THE CHOICE OF FORUM
SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES
SURROUNDING THE INSTANT CASE, DISMISSAL OF THE
COMPLAINT ON THE GROUND OF FORUM NON-
CONVENIENS IS MORE APPROPRIATE AND PROPER.
3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO
FINAL JUDGMENT IN THE PHILIPPINES. IN FACT, THE
PENDENCY OF FOREIGN ACTION MAY BE THE LEGAL
BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED
BY THE PRIVATE RESPONDENT. COROLLARY TO THIS,
THE RESPONDENT COURT OF APPEALS FAILED TO
CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE
GUILTY OF FORUM SHOPPING. [18]
As to the first assigned error: Petitioners argue that the
borrowers and the registered owners of the vessels are
the foreign corporations and not private respondents
Litonjuas who are mere stockholders; and that the
revenues derived from the operations of all the vessels
are deposited in the accounts of the
corporations. Hence, petitioners maintain that these
foreign corporations are the legal entities that have the
personalities to sue and not herein private
respondents; that private respondents, being mere
shareholders, have no claim on the vessels as owners
since they merely have an inchoate right to whatever
may remain upon the dissolution of the said foreign
corporations and after all creditors have been fully paid
and satisfied;[19]and that while private respondents may
have allegedly spent amounts equal to 10% of the
acquisition costs of the vessels in question, their 10%
however represents their investments as stockholders
in the foreign corporations.[20]
Anent the second assigned error, petitioners posit that
while the application of the principle of forum non
conveniens is discretionary on the part of the Court,
said discretion is limited by the guidelines pertaining to
the private as well as public interest factors in
determining whether plaintiffs choice of forum should
be disturbed, as elucidated in Gulf Oil Corp. vs.
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, petitioners allege the following:
i) The Bank of America Branches involved, as clearly
mentioned in the Complaint, are based in Hongkong and
England. As such, the evidence and the witnesses are not
readily available in the Philippines;
ii) The loan transactions were obtained, perfected,
performed, consummated and partially paid outside the
Philippines;
iii) The monies were advanced outside the
Philippines. Furthermore, the mortgaged vessels were
part of an offshore fleet, not based in the Philippines;
iv) All the loans involved were granted to the Private
Respondents foreign CORPORATIONS;
v) The Restructuring Agreements were ALL governed by
the laws of England;
vi) The subsequent sales of the mortgaged vessels and
the application of the sales proceeds occurred and
transpired outside the Philippines, and the deliveries of
the sold mortgaged vessels were likewise made outside
the Philippines;
vii) The revenues of the vessels and the proceeds of the
sales of these vessels were ALL deposited to the
Accounts of the foreign CORPORATIONS abroad; and
viii) Bank of America International Ltd. is not licensed nor
engaged in trade or business in the Philippines. [24]
Petitioners argue further that the loan agreements,
security documentation and all subsequent restructuring
agreements uniformly, unconditionally and expressly
provided that they will be governed by the laws of
England;[25] that Philippine Courts would then have to
apply English law in resolving whatever issues may be
presented to it in the event it recognizes and accepts
herein case; that it would then be imposing a significant
and unnecessary expense and burden not only upon the
parties to the transaction but also to the local
court. Petitioners insist that the inconvenience and
difficulty of applying English law with respect to a wholly
foreign transaction in a case pending in the Philippines
may be avoided by its dismissal on the ground of forum
non conveniens. [26]
Finally, petitioners claim that private respondents
have already waived their alleged causes of action in the
case at bar for their refusal to contest the foreign civil
cases earlier filed by the petitioners against them in
Hongkong and England, to wit:
1.) Civil action in England in its High Court of Justice,
Queens Bench Division Commercial Court (1992-Folio No.
2098) against (a) LIBERIAN TRANSPORT NAVIGATION. SA.;
(b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER
SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA;
(g) EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.
2.) Civil action in England in its High Court of Justice,
Queens Bench Division, Commercial Court (1992-Folio
No. 2245) against (a) EL CHALLENGER S.A., (b) ESPRIONA
12 | Conflict of Laws
SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN
LITONJUA and (d) AURELIO KATIPUNAN LITONJUA.
3.) Civil action in the Supreme Court of Hongkong High
Court (Action No. 4039 of 1992), against (a) ESHLEY
COMPANIA NAVIERA S.A., (b) EL CHALLENGER S.A., (c)
ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA,
JR., and (h) EDUARDO KATIPUNAN LITONJUA.
4.) A civil action in the Supreme Court of Hong Kong
High Court (Action No. 4040 of 1992), against (a)
ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER
S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA,
RJ., and (h) EDUARDO KATIPUNAN LITONJUA.
and that private respondents alleged cause of action is
already barred by the pendency of another action or
by litis pendentia as shown above.[27]
On the other hand, private respondents contend
that certain material facts and pleadings are omitted
and/or misrepresented in the present petition for
certiorari; that the prefatory statement failed to state
that part of the security of the foreign loans were
mortgages on a 39-hectare piece of real estate located
in the Philippines;[28] that while the complaint was filed
only by the stockholders of the corporate borrowers,
the latter are wholly-owned by the private respondents
who are Filipinos and therefore under Philippine laws,
aside from the said corporate borrowers being but their
alter-egos, they have interests of their own in the
vessels.[29] Private respondents also argue that the
dismissal by the Court of Appeals of the petition for
certiorari was justified because there was neither
allegation nor any showing whatsoever by the
petitioners that they had no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of
law from the Order of the trial judge denying their
Motion to Dismiss; that the remedy available to the
petitioners after their Motion to Dismiss was denied
was to file an Answer to the complaint; [30] that as
upheld by the Court of Appeals, the decision of the trial
court in not applying the principle of forum non
conveniens is in the lawful exercise of its discretion.
[31]
Finally, private respondents aver that the statement
of petitioners that the doctrine of res judicata also
applies to foreign judgment is merely an opinion
advanced by them and not based on a categorical
ruling of this Court;[32] and that herein private
respondents did not actually participate in the
proceedings in the foreign courts.[33]
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the
motion to dismiss cannot be the subject of petition for
certiorari. Petitioners should have filed an answer to
the complaint, proceed to trial and await judgment
before making an appeal. As repeatedly held by this
Court:
An order denying a motion to dismiss is interlocutory
and cannot be the subject of the extraordinary petition
for certiorari or mandamus. The remedy of the
aggrieved party is to file an answer and to interpose as
defenses the objections raised in his motion to dismiss,
proceed to trial, and in case of an adverse decision, to

elevate the entire case by appeal in due course. xxx
Under certain situations, recourse to certiorari or
mandamus is considered appropriate, i.e., (a) when the
trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of
discretion by the trial court; or (c) appeal would not
prove to be a speedy and adequate remedy as when an
appeal would not promptly relieve a defendant from the
injurious effects of the patently mistaken order
maintaining the plaintiffs baseless action and compelling
the defendant needlessly to go through a protracted trial
and clogging the court dockets by another futile case. [34]
Records show that the trial court acted within its
jurisdiction when it issued the assailed Order denying
petitioners motion to dismiss. Does the denial of the
motion to dismiss constitute a patent grave abuse of
discretion? Would appeal, under the circumstances, not
prove to be a speedy and adequate remedy? We will
resolve said questions in conjunction with the issues
raised by the parties.
First issue. Did the trial court commit grave abuse of
discretion in refusing to dismiss the complaint on the
ground that plaintiffs have no cause of action against
defendants since plaintiffs are merely stockholders of the
corporations which are the registered owners of the
vessels and the borrowers of petitioners?
No. Petitioners argument that private respondents,
being mere stockholders of the foreign corporations,
have no personalities to sue, and therefore, the
complaint should be dismissed, is untenable. A case is
dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-in-interest. Lack of
personality to sue can be used as a ground for a Motion
to Dismiss based on the fact that the complaint, on the
face thereof, evidently states no cause of action.
[35]
In San Lorenzo Village Association, Inc. vs. Court of
Appeals,[36] this Court clarified that a complaint states a
cause of action where it contains three essential
elements of a cause of action, namely: (1) the legal right
of the plaintiff, (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant
in violation of said legal right. If these elements are
absent, the complaint becomes vulnerable to a motion to
dismiss on the ground of failure to state a cause of
action.[37] To emphasize, it is not the lack or absence of
cause of action that is a ground for dismissal of the
complaint but rather the fact that the complaint states
no cause of action.[38] Failure to state a cause of
action refers to the insufficiency of allegation in the
pleading, unlike lack of cause of action which refers to
the insufficiency of factual basis for the action. Failure to
state a cause of action may be raised at the earliest
stages of an action through a motion to dismiss the
complaint, while lack of cause of action may be raised
any time after the questions of fact have been resolved
on the basis of stipulations, admissions or evidence
presented.[39]
In the case at bar, the complaint contains the three
elements of a cause of action. It alleges that: (1)
plaintiffs, herein private respondents, have the right to
demand for an accounting from defendants (herein
petitioners), as trustees by reason of the fiduciary
relationship that was created between the parties
involving the vessels in question; (2) petitioners have the
obligation, as trustees, to render such an accounting;
and (3) petitioners failed to do the same.
Petitioners insist that they do not have any
obligation to the private respondents as they are mere
13 | Conflict of Laws
stockholders of the corporation; that the corporate
entities have juridical personalities separate and
distinct from those of the private respondents. Private
respondents maintain that the corporations are wholly
owned by them and prior to the incorporation of such
entities, they were clients of petitioners which induced
them to acquire loans from said petitioners to invest on
the additional ships.
We agree with private respondents. As held in the
San Lorenzo case,[40]
xxx assuming that the allegation of facts constituting
plaintiffs cause of action is not as clear and categorical
as would otherwise be desired, any uncertainty thereby
arising should be so resolved as to enable a full inquiry
into the merits of the action.
As this Court has explained in the San Lorenzo case,
such a course, would preclude multiplicity of suits
which the law abhors, and conduce to the definitive
determination and termination of the dispute. To do
otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be
indecisive and would not end the controversy, since
the institution of another action upon a revised
complaint would not be foreclosed.[41]
Second Issue. Should the complaint be dismissed
on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally
meaning the forum is inconvenient, emerged in private
international law to deter the practice of global forum
shopping,[42] that is to prevent non-resident litigants
from choosing the forum or place wherein to bring their
suit for malicious reasons, such as to secure
procedural advantages,
to annoy and harass thedefendant, to avoid
overcrowded dockets, or to select a more friendly
venue. Under this doctrine, a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where
it is not the most convenient or available forum and
the parties are not precluded from seeking remedies
elsewhere.[43]
Whether a suit should be entertained or dismissed
on the basis of said doctrine depends largely upon the
facts of the particular case and is addressed to the
sound discretion of the trial court. [44] In the case
of Communication Materials and Design, Inc. vs. Court
of Appeals,[45] this Court held that xxx [a] Philippine
Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following
requisites are met: (1) that the Philippine Court is one
to which the parties may conveniently resort to; (2)
that the 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
courts 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
petitioner. It merely mentioned that civil cases were filed
in Hongkong and England without however showing the
identity of rights asserted and the reliefs sought for as
well as the presence of the elements of res
judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
xxx [T]he petitioners, by simply enumerating the civil
actions instituted abroad involving the parties herein xxx,
failed to provide this Court with relevant and clear
specifications that would show the presence of the
above-quoted elements or requisites for res
judicata. While it is true that the petitioners in their
motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad,
did aver that Copies of the foreign judgments are hereto
attached and made integral parts hereof as Annexes B,
C, D and E, they failed, wittingly or inadvertently, to
include a single foreign judgment in their pleadings
submitted to this Court as annexes to their petition. How
then could We have been expected to rule on this issue
even if We were to hold that foreign judgments could be
the basis for the application of the aforementioned
principle of res judicata?[53]
Consequently, both courts correctly denied the
dismissal of herein subject complaint.
WHEREFORE, the petition is DENIED for lack of
merit.
Costs against petitioners
6 recommended by one Nestor Buenio, a friend of his.
G.R. No. 120077 October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL.
LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER
CEFERINA J. DIOSANA AND MARCELO G.
SANTOS, respondents.
14 | Conflict of Laws
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.
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),
MHICL10 trained the personnel and staff of the Palace
Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press
in the Sultanate of Oman, respondent Santos received
a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt,
General Manager, Palace Hotel, Beijing, China. Mr.
Schmidt informed respondent Santos that he was
Mr. Shmidt offered respondent Santos the same
position as printer, but with a higher monthly salary
and increased benefits. The position was slated to open
on October 1, 1988.11
On May 8, 1988, respondent Santos wrote to Mr.
Shmidt and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J.
Henk mailed a ready to sign employment contract to
respondent Santos. Mr. Henk advised respondent

Santos that if the contract was acceptable, to return the
same to Mr. Henk in Manila, together with his passport
and two additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the
Mazoon Printing Press, effective June 30, 1988, under the
pretext that he was needed at home to help with the
family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace
Hotel and acknowledged Mr. Henk's letter. Respondent
Santos enclosed four (4) signed copies of the
employment contract (dated June 4, 1988) and notified
them that he was going to arrive in Manila during the
first week of July 1988.
The employment contract of June 4, 1988 stated that his
employment would commence September 1, 1988 for a
period of two years.12 It provided for a monthly salary of
nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed
resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing,
China. He started to work at the Palace Hotel.14
Subsequently, respondent Santos signed an amended
"employment agreement" with the Palace Hotel, effective
November 5, 1988. In the contract, Mr. Shmidt
represented the Palace Hotel. The Vice President
(Operations and Development) of petitioner MHICL
Miguel D. Cergueda signed the employment agreement
under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the
Philippines on vacation leave. He returned to China and
reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a
certain Joanna suggested in a handwritten note that
respondent Santos be given one (1) month notice of his
release from employment.
On August 10, 1989, the Palace Hotel informed
respondent Santos by letter signed by Mr. Shmidt that his
employment at the Palace Hotel print shop would be
terminated due to business reverses brought about by
the political upheaval in China.15 We quote the letter:16
"After the unfortunate happenings in China and
especially Beijing (referring to Tiannamen Square
incidents), our business has been severely affected. To
reduce expenses, we will not open/operate printshop for
the time being.
"We sincerely regret that a decision like this has to be
made, but rest assured this does in no way reflect your
past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will
contact you directly and give you priority on future
assignment."
On September 5, 1989, the Palace Hotel terminated the
employment of respondent Santos and paid all benefits
due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated
to the Philippines.
15 | Conflict of Laws
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.
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 NLRC33
On April 30,1996, private respondent Santos filed his
comment.34
16 | Conflict of Laws
On June 26, 1996, the Court granted the manifestation
of the Solicitor General and required the NLRC to file its
own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in
two foreign jurisdictions and the case involves purely
foreign elements. The only link that the Philippines has
with the case is that respondent Santos is a Filipino
citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be
tried here.
The employment contract. Respondent Santos was
hired directly by the Palace Hotel, a foreign employer,
through correspondence sent to the Sultanate of
Oman, where respondent Santos was then employed.
He was hired without the intervention of the POEA or
any authorized recruitment agency of the
government.36
Under the rule of forum non conveniens, a Philippine
court or agency may assume jurisdiction over the case
if it chooses to do so provided: (1) that the Philippine
court is one to which the parties may conveniently
resort to; (2) that the Philippine court is in a position to
make an intelligent decision as to the law and the
facts; and (3) that the Philippine court has or is likely to
have power to enforce its decision.37 The conditions are
unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a
convenient forum given that all the incidents of the
case from the time of recruitment, to employment to
dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the
proper defendants, the Palace Hotel and MHICL are not
nationals of the Philippines. Neither .are they "doing
business in the Philippines." Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents
of the Philippines.
No power to determine applicable law. Neither can
an intelligent decision be made as to the law governing
the employment contract as such was perfected in
foreign soil. This calls to fore the application of the
principle of lex loci contractus (the law of the place
where the contract was made).38
The employment contract was not perfected in the
Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the
Republic of Oman. This letter was sent to the Palace
Hotel in the People's Republic of China.
No power to determine the facts. Neither can the
NLRC determine the facts surrounding the alleged
illegal dismissal as all acts complained of took place in
Beijing, People's Republic of China. The NLRC was not
in a position to determine whether the Tiannamen
Square incident truly adversely affected operations of
the Palace Hotel as to justify respondent Santos'
retrenchment.
Principle of effectiveness, no power to execute
decision. Even assuming that a proper decision
could be reached by the NLRC, such would not have
any binding effect against the employer, the Palace
Hotel. The Palace Hotel is a corporation incorporated

under the laws of China and was not even served with
summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies
have no power to solve controversies involving foreign
employers. Neither are we saying that we do not have
power over an employment contract executed in a
foreign country. If Santos were an "overseas contract
worker", a Philippine forum, specifically the POEA, not
the NLRC, would protect him.39 He is not an "overseas
contract worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum,
even on the merits, the NLRC's decision cannot be
sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had
jurisdiction over the case, and (2) that MHICL was liable
for Santos' retrenchment, still MHC, as a separate and
distinct juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty
percent (50%) of its capital stock. However, this is not
enough to pierce the veil of corporate fiction between
MHICL and MHC.
Piercing the veil of corporate entity is an equitable
remedy. It is resorted to when the corporate fiction is
used to defeat public convenience, justify wrong, protect
fraud or defend a crime. 41 It is done only when a
corporation is a mere alter ego or business conduit of a
person or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that
"the mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock
of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate
personalities."
The tests in determining whether the corporate veil may
be pierced are: First, the defendant must have control or
complete domination of the other corporation's finances,
policy and business practices with regard to the
transaction attacked. There must be proof that the other
corporation had no separate mind, will or existence with
respect the act complained of. Second, control must be
used by the defendant to commit fraud or wrong. Third,
the aforesaid control or breach of duty must be the
proximate cause of the injury or loss complained of. The
absence of any of the elements prevents the piercing of
the corporate veil.43
It is basic that a corporation has a personality separate
and distinct from those composing it as well as from that
of any other legal entity to which it may be
related.44 Clear and convincing evidence is needed to
pierce the veil of corporate fiction. 45 In this case, we find
no evidence to show that MHICL and MHC are one and
the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the
fact that MHICL "signed" his employment contract with
the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and
Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely
signed under the word "noted".
When one "notes" a contract, one is not expressing his
agreement or approval, as a party would. 46 In Sichangco
17 | Conflict of Laws
v. Board of Commissioners of Immigration,47 the Court
recognized that the term "noted" means that the
person so noting has merely taken cognizance of the
existence of an act or declaration, without exercising a
judicious deliberation or rendering a decision on the
matter.
Mr. Cergueda merely signed the "witnessing part" of
the document. The "witnessing part" of the document
is that which, "in a deed or other formal instrument is
that part which comes after the recitals, or where there
are no recitals, after the parties (emphasis ours)."48 As
opposed to a party to a contract, a witness is simply
one who, "being present, personally sees or perceives
a thing; a beholder, a spectator, or eyewitness." 49 One
who "notes" something just makes a "brief written
statement"50 a memorandum or observation.
Second, and more importantly, there was no existing
employer-employee relationship between Santos and
MHICL. In determining the existence of an employer-
employee relationship, the following elements are
considered:51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the
aforementioned powers. It did not select respondent
Santos as an employee for the Palace Hotel. He was
referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did not engage respondent Santos to
work. The terms of employment were negotiated and
finalized through correspondence between respondent
Santos, Mr. Schmidt and Mr. Henk, who were officers
and representatives of the Palace Hotel and not MHICL.
Neither did respondent Santos adduce any proof that
MHICL had the power to control his conduct. Finally, it
was the Palace Hotel, through Mr. Schmidt
and not MHICL that terminated respondent Santos'
services.
Neither is there evidence to suggest that MHICL was a
"labor-only contractor."52 There is no proof that MHICL
"supplied" respondent Santos or even referred him for
employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace
Hotel and MHICL are one and the same entity. The fact
that the Palace Hotel is a member of the "Manila Hotel
Group" is not enough to pierce the corporate veil
between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-
conveniens and considering further that no employer-
employee relationship existed between MHICL, MHC
and respondent Santos, Labor Arbiter Ceferina J.
Diosana clearly had no jurisdiction over respondent's
claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction
only over the following:53
"1. Unfair labor practice cases;
"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
7 do so did the police return her passport and
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF
APPEALS, MILAGROS P. MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding Judge of Branch 89,
Regional Trial Court of Quezon City, respondents.
This petition for certiorari pursuant to Rule 45 of the
Rules of Court seeks to annul and set aside the
Resolution 1dated September 27, 1995 and the
Decision 2 dated April 10, 1996 of the Court of
Appeals 3 in CA-G.R. SP No. 36533, 4and the
Orders dated August 29, 1994 and February
5 6
2,
1995 7 that were issued by the trial court in Civil Case No.
Q-93-18394. 8
The pertinent antecedent facts which gave rise to the
instant petition, as stated in the questioned Decision 9,
are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff
as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia. . . .
18 | Conflict of Laws
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.
When plaintiff returned to Jeddah a few days later,
several SAUDIA officials interrogated her about the
Jakarta incident. They then requested her to go
back to Jakarta to help arrange the release of
Thamer and Allah. In Jakarta, SAUDIA Legal Officer
Sirah Akkad and base manager Baharini negotiated
with the police for the immediate release of the
detained crew members but did not succeed
because plaintiff refused to cooperate. She was
afraid that she might be tricked into something she
did not want because of her inability to understand
the local dialect. She also declined to sign a blank
paper and a document written in the local dialect.
Eventually, SAUDIA allowed plaintiff to return to
Jeddah but barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of
the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were
again put in service by defendant SAUDI (sic). In
September 1990, defendant SAUDIA transferred
plaintiff to Manila.
On January 14, 1992, just when plaintiff thought
that the Jakarta incident was already behind her,
her superiors requested her to see Mr. Ali Meniewy,
Chief Legal Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her to the
police station where the police took her passport
and questioned her about the Jakarta incident.
Miniewy simply stood by as the police put pressure
on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to
allowed her to catch the afternoon flight out of
Jeddah.
One year and a half later or on lune 16, 1993, in
Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Miniewy, the
Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a
Saudi court where she was asked to sign a
document written in Arabic. They told her that this
was necessary to close the case against Thamer
and Allah. As it turned out, plaintiff signed a notice
to her to appear before the court on June 27, 1993.
Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned
plaintiff to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation.
Plaintiff did so after receiving assurance from
SAUDIA's Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no
danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to
the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they
let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that
the airline had forbidden her to take flight. At the
Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her
passport and told her to remain in Jeddah, at the
crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted
plaintiff to the same court where the judge, to her
astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then
did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened
in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing and listening
to the music in violation of Islamic laws; and (3)
socializing with the male crew, in contravention of
Islamic tradition. 10
Facing conviction, private respondent sought the help of
her employer, petitioner SAUDIA. Unfortunately, she was
denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on
appeal. Meanwhile, to pay for her upkeep, she worked on
the domestic flight of SAUDIA, while Thamer and Allah
continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of
Makkah dismissed the case against her and allowed her
to leave Saudi Arabia. Shortly before her return to
Manila, 12 she was terminated from the service by
SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint for 13
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
19 | Conflict of Laws
jurisdiction to hear and try the case on the basis of
Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia.
On October 14, 1994, Morada filed her Opposition 22 (To
Defendant's Motion for Reconsideration).
In the Reply 23 filed with the trial court on October 24,
1994, SAUDIA alleged that since its Motion for
Reconsideration raised lack of jurisdiction as its cause
of action, the Omnibus Motion Rule does not apply,
even if that ground is raised for the first time on
appeal. Additionally, SAUDIA alleged that the
Philippines does not have any substantial interest in
the prosecution of the instant case, and hence, without
jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another
Order 24 dated February 2, 1995, denying SAUDIA's
Motion for Reconsideration. The pertinent portion of the
assailed Order reads as follows:
Acting on the Motion for Reconsideration of
defendant Saudi Arabian Airlines filed, thru
counsel, on September 20, 1994, and the
Opposition thereto of the plaintiff filed, thru
counsel, on October 14, 1994, as well as the Reply
therewith of defendant Saudi Arabian Airlines filed,
thru counsel, on October 24, 1994, considering that
a perusal of the plaintiffs Amended Complaint,
which is one for the recovery of actual, moral and
exemplary damages plus attorney's fees, upon the
basis of the applicable Philippine law, Article 21 of
the New Civil Code of the Philippines, is, clearly,
within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of
substance which might cause the reversal or
modification of the order sought to be
reconsidered, the motion for reconsideration of the
defendant, is DENIED.
SO ORDERED. 25
Consequently, on February 20, 1995, SAUDIA filed its
Petition for Certiorari and Prohibition with Prayer for
Issuance of Writ of Preliminary Injunction and/or
Temporary Restraining Order 26 with the Court of
Appeals.
Respondent Court of Appeals promulgated a Resolution
with Temporary Restraining Order 27 dated February 23,
1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed,
in the interim.
In another Resolution 28 promulgated on September 27,
1995, now assailed, the appellate court denied
SAUDIA's Petition for the Issuance of a Writ of
Preliminary Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of
Preliminary Injunction is hereby DENIED, after
considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and
Rejoinder, it appearing that herein petitioner is not
clearly entitled thereto (Unciano Paramedical
College, et. Al., v. Court of Appeals, et. Al., 100335,
April 7, 1993, Second Division).
SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable
Court the instant Petition 29 for Review with Prayer for
Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition,
respondent Court of Appeals rendered the
Decision 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
Order31 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.
Petitioner SAUDIA raised the following issues:
I The trial court has no jurisdiction to hear and try
Civil Case No. Q-93-18394 based on Article 21 of the
New Civil Code since the proper law applicable is the
law of the Kingdom of Saudi Arabia inasmuch as this
case involves what is known in private international
law as a "conflicts problem". Otherwise, the Republic
of the Philippines will sit in judgment of the acts done
by another sovereign state which is abhorred.
II Leave of court before filing a supplemental
pleading is not a jurisdictional requirement. Besides,
the matter as to absence of leave of court is now
moot and academic when this Honorable Court
required the respondents to comment on petitioner's
April 30, 1996 Supplemental Petition For Review With
Prayer For A Temporary Restraining Order Within Ten
(10) Days From Notice Thereof. Further, the Revised
Rules of Court should be construed with liberality
pursuant to Section 2, Rule 1 thereof.
III Petitioner received on April 22, 1996 the April 10,
1996 decision in CA-G.R. SP NO. 36533 entitled
"Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al."
and filed its April 30, 1996 Supplemental Petition For
Review With Prayer For A Temporary Restraining
Order on May 7, 1996 at 10:29 a.m. or within the 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".
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
20 | Conflict of Laws
private respondent's claim for alleged abuse of rights
occurred in the Kingdom of Saudi Arabia. It alleges that
the existence of a foreign element qualifies the instant
case for the application of the law of the Kingdom of
Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34
On the other hand, private respondent contends that
since her Amended Complaint is based on Articles
19 35 and 21 36 of the Civil Code, then the instant case
is properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case,
there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi
Arabia.
As stated by private respondent in her Amended
Complaint 38 dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA
is a foreign airlines corporation doing business in
the Philippines. It may be served with summons
and other court processes at Travel Wide
Associated Sales (Phils.). Inc., 3rd Floor, Cougar
Building, 114 Valero St., Salcedo Village, Makati,
Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of
the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were
again put in service by defendant SAUDIA. In
September 1990, defendant SAUDIA transferred
plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought
that the Jakarta incident was already behind her,
her superiors reauested her to see MR. Ali
Meniewy, Chief Legal Officer of SAUDIA in Jeddah,
Saudi Arabia. When she saw him, he brought her to
the police station where the police took her
passport and questioned her about the Jakarta
incident. Miniewy simply stood by as the police put
pressure on her to make a statement dropping the
case against Thamer and Allah. Not until she
agreed to do so did the police return her passport
and allowed her to catch the afternoon flight out of
Jeddah.
8. One year and a half later or on June 16, 1993, in
Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Meniewy, the
Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a
Saudi court where she was asked to sigh a
document written in Arabic. They told her that this
was necessary to close the case against Thamer
and Allah. As it turned out, plaintiff signed a notice
to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA
summoned plaintiff to report to Jeddah once again
and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving
assurance from SAUDIA's Manila manger, Aslam

Saleemi, that the investigation was routinary and
that it posed no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff
to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the
Jakarta incident. After one hour of interrogation, they
let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that
the airline had forbidden her to take that flight. At
the Inflight Service Office where she was told to go,
the secretary of Mr. Yahya Saddick took away her
passport and told her to remain in Jeddah, at the
crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again
escorted plaintiff to the same court where the judge,
to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then
did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened
in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing, and listening
to the music in violation of Islamic laws; (3)
socializing with the male crew, in contravention of
Islamic tradition.
12. Because SAUDIA refused to lend her a hand in
the case, plaintiff sought the help of the Philippines
Embassy in Jeddah. The latter helped her pursue an
appeal from the decision of the court. To pay for her
upkeep, she worked on the domestic flights of
defendant SAUDIA while, ironically, Thamer and Allah
freely served the international flights. 39
Where the factual antecedents satisfactorily establish the
existence of a foreign element, we agree with petitioner
that the problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is
affected by the diverse laws of two or more states is said
to contain a "foreign element". The presence of a foreign
element is inevitable since social and economic affairs of
individuals and associations are rarely confined to the
geographic limits of their birth or conception. 40
The forms in which this foreign element may appear are
many. 41 The foreign element may simply consist in the
fact that one of the parties to a contract is an alien or
has a foreign domicile, or that a contract between
nationals of one State involves properties situated in
another State. In other cases, the foreign element may
assume a complex form. 42
In the instant case, the foreign element consisted in the
fact that private respondent Morada is a resident
Philippine national, and that petitioner SAUDIA is a
resident foreign corporation. Also, by virtue of the
employment of Morada with the petitioner Saudia as a
flight stewardess, events did transpire during her many
occasions of travel across national borders, particularly
from Manila, Philippines to Jeddah, Saudi Arabia, and vice
versa, that caused a "conflicts" situation to arise.
We thus find private respondent's assertion that the case
is purely domestic, imprecise. A conflicts problem
presents itself here, and the question of
jurisdiction 43 confronts the court a quo.
21 | Conflict of Laws
After a careful study of the private respondent's
Amended Complaint, 44 and the Comment thereon, we
note that she aptly predicated her cause of action on
Articles 19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his
rights and in the performance of his duties, act
with justice give everyone his due and observe
honesty and good faith.
On the other hand, Article 21 of the New Civil Code
provides:
Art. 21. Any person who willfully causes loss or
injury to another in a manner that is contrary to
morals, good customs or public policy shall
compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of
Appeals, 45 this Court held that:
The aforecited provisions on human relations were
intended to expand the concept of torts in this
jurisdiction by granting adequate legal remedy for
the untold number of moral wrongs which is
impossible for human foresight to specifically
provide in the statutes.
Although Article 19 merely declares a principle of law,
Article 21 gives flesh to its provisions. Thus, we agree
with private respondent's assertion that violations of
Articles 19 and 21 are actionable, with judicially
enforceable remedies in the municipal forum.
Based on the allegations 46 in the Amended Complaint,
read in the light of the Rules of Court on
jurisdiction 47 we find that the Regional Trial Court (RTC)
of Quezon City possesses jurisdiction over the subject
matter of the suit. 48 Its authority to try and hear the
case is provided for under Section 1 of Republic Act No.
7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129,
otherwise known as the "Judiciary Reorganization
Act of 1980", is hereby amended to read as follows:
Sec. 19. Jurisdiction in Civil Cases. Regional Trial
Courts shall exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of
interest, damages of whatever kind, attorney's
fees, litigation expenses, and cots or the value of
the property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds
Two hundred Thousand pesos (P200,000.00).
(Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules
of Court the venue, Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now
Regional Trial Court]

(a) xxx xxx xxx
(b) Personal actions. All other actions may be
commenced and tried where the defendant or any of
the defendants resides or may be found, or where
the plaintiff or any of the plaintiff resides, at the
election of the plaintiff.
Pragmatic considerations, including the convenience of
the parties, also weigh heavily in favor of the RTC Quezon
City assuming jurisdiction. Paramount is the private
interest of the litigant. Enforceability of a judgment if one
is obtained is quite obvious. Relative advantages and
obstacles to a fair trial are equally important. Plaintiff
may not, by choice of an inconvenient forum, "vex",
"harass", or "oppress" the defendant, e.g. by inflicting
upon him needless expense or disturbance. But unless
the balance is strongly in favor of the defendant, the
plaintiffs choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a
quo found it best to hear the case in the Philippines. Had
it refused to take cognizance of the case, it would be
forcing plaintiff (private respondent now) to seek
remedial action elsewhere, i.e. in the Kingdom of Saudi
Arabia where she no longer maintains substantial
connections. That would have caused a fundamental
unfairness to her.
Moreover, by hearing the case in the Philippines no
unnecessary difficulties and inconvenience have been
shown by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over
the persons of the parties herein. By filing her Complaint
and Amended Complaint with the trial court, private
respondent has voluntary submitted herself to the
jurisdiction of the court.
The records show that petitioner SAUDIA has filed several
motions 50 praying for the dismissal of Morada's
Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is
very patent and explicit from the motions filed, is that
SAUDIA prayed for other reliefs under the premises.
Undeniably, petitioner SAUDIA has effectively submitted
to the trial court's jurisdiction by praying for the
dismissal of the Amended Complaint on grounds other
than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company,
Ltd.: 51
We observe that the motion to dismiss filed on April
14, 1962, aside from disputing the lower court's
jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that
plaintiff's cause of action has prescribed. By
interposing such second ground in its motion to
dismiss, Ker and Co., Ltd. availed of an affirmative
defense on the basis of which it prayed the court to
resolve controversy in its favor. For the court to
validly decide the said plea of defendant Ker & Co.,
Ltd., it necessarily had to acquire jurisdiction upon
the latter's person, who, being the proponent of the
affirmative defense, should be deemed to have
abandoned its special appearance and voluntarily
submitted itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
22 | Conflict of Laws
When the appearance is by motion for the purpose
of objecting to the jurisdiction of the court over the
person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court.
If his motion is for any other purpose than to object
to the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the
court. A special appearance by motion made for
the purpose of objecting to the jurisdiction of the
court over the person will be held to be a general
appearance, if the party in said motion should, for
example, ask for a dismissal of the action upon the
further ground that the court had no jurisdiction
over the subject matter. 52
Clearly, petitioner had submitted to the jurisdiction of
the Regional Trial Court of Quezon City. Thus, we find
that the trial court has jurisdiction over the case and
that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-
of-law problems seek to answer two important
questions: (1) What legal system should control a given
situation where some of the significant facts occurred
in two or more states; and (2) to what extent should
the chosen legal system regulate the situation. 53
Several theories have been propounded in order to
identify the legal system that should ultimately control.
Although ideally, all choice-of-law theories should
intrinsically advance both notions of justice and
predictability, they do not always do so. The forum is
then faced with the problem of deciding which of these
two important values should be stressed. 54
Before a choice can be made, it is necessary for us to
determine under what category a certain set of facts or
rules fall. This process is known as "characterization",
or the "doctrine of qualification". It is the "process of
deciding whether or not the facts relate to the kind of
question specified in a conflicts rule." 55 The purpose of
"characterization" is to enable the forum to select the
proper law. 56
Our starting point of analysis here is not a legal
relation, but a factual situation, event, or operative
fact. 57 An essential element of conflict rules is the
indication of a "test" or "connecting factor" or "point of
contact". Choice-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;

(4) the place where an act has been done, the locus
actus, such as the place where a contract has been
made, a marriage celebrated, a will signed or a tort
committed. The lex loci actus is particularly
important in contracts and torts;
(5) the place where an act is intended to come into
effect, e.g., the place of performance of contractual
duties, or the place where a power of attorney is to
be exercised;
(6) the intention of the contracting parties as to the
law that should govern their agreement, the lex loci
intentionis;
(7) the place where judicial or administrative
proceedings are instituted or done. The lex fori the
law of the forum is particularly important because,
as we have seen earlier, matters of "procedure" not
going to the substance of the claim involved are
governed by it; and because the lex fori applies
whenever the content of the otherwise applicable
foreign law is excluded from application in a given
case for the reason that it falls under one of the
exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive
of practically all legal relationships of the ship and of
its master or owner as such. It also covers
contractual relationships particularly contracts of
affreightment. 60 (Emphasis ours.)
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed admitted
for purposes of the motion to dismiss, we are convinced
that there is reasonable basis for private respondent's
assertion that although she was already working in
Manila, petitioner brought her to Jeddah on the pretense
that she would merely testify in an investigation of the
charges she made against the two SAUDIA crew
members for the attack on her person while they were in
Jakarta. As it turned out, she was the one made to face
trial for very serious charges, including adultery and
violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that
the "handing over" or "turning over" of the person of
private respondent to Jeddah officials, petitioner may
have acted beyond its duties as employer. Petitioner's
purported act contributed to and amplified or even
proximately caused additional humiliation, misery and
suffering of private respondent. Petitioner thereby
allegedly facilitated the arrest, detention and prosecution
of private respondent under the guise of petitioner's
authority as employer, taking advantage of the trust,
confidence and faith she reposed upon it. As purportedly
found by the Prince of Makkah, the alleged conviction
and imprisonment of private respondent was wrongful.
But these capped the injury or harm allegedly inflicted
upon her person and reputation, for which petitioner
could be liable as claimed, to provide compensation or
redress for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one
involving torts, the "connecting factor" or "point of
contact" could be the place or places where the tortious
conduct or lex loci actus occurred. And applying the torts
principle in a conflicts case, we find that the Philippines
could be said as a situs of the tort (the place where the
alleged tortious conduct took place). This is because it is
in the Philippines where petitioner allegedly deceived
private respondent, a Filipina residing and working here.
According to her, she had honestly believed that
23 | Conflict of Laws
petitioner would, in the exercise of its rights and in the
performance of its duties, "act with justice, give her
due and observe honesty and good faith." Instead,
petitioner failed to protect her, she claimed. That
certain acts or parts of the injury allegedly occurred in
another country is of no moment. For in our view what
is important here is the place where the over-all harm
or the totality of the alleged injury to the person,
reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff
below (herein private respondent). All told, it is not
without basis to identify the Philippines as the situs of
the alleged tort.
Moreover, with the widespread criticism of the
traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability 61 have been
advanced to offer fresh judicial approaches to arrive at
just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to
apply the "State of the most significant relationship"
rule, which in our view should be appropriate to apply
now, given the factual context of this case.
In applying said principle to determine the State which
has the most significant relationship, the following
contacts are to be taken into account and evaluated
according to their relative importance with respect to
the particular issue: (a) the place where the injury
occurred; (b) the place where the conduct causing the
injury occurred; (c) the domicile, residence, nationality,
place of incorporation and place of business of the
parties, and (d) the place where the relationship, if any,
between the parties is centered. 62
As already discussed, there is basis for the claim that
over-all injury occurred and lodged in the Philippines.
There is likewise no question that private respondent is
a resident Filipina national, working with petitioner, a
resident foreign corporation engaged here in the
business of international air carriage. Thus, the
"relationship" between the parties was centered here,
although it should be stressed that this suit is not
based on mere labor law violations. From the record,
the claim that the Philippines has the most significant
contact with the matter in this dispute, 63 raised by
private respondent as plaintiff below against defendant
(herein petitioner), in our view, has been properly
established.
Prescinding from this premise that the Philippines is the
situs of the tort complained of and the place "having
the most interest in the problem", we find, by way of
recapitulation, that the Philippine law on tort liability
should have paramount application to and control in
the resolution of the legal issues arising out of this
case. Further, we hold that the respondent Regional
Trial Court has jurisdiction over the parties and the
subject matter of the complaint; the appropriate venue
is in Quezon City, which could properly apply Philippine
law. Moreover, we find untenable petitioner's insistence
that "[s]ince private respondent instituted this suit, she
has the burden of pleading and proving the applicable
Saudi law on the matter." 64 As aptly said by private
respondent, she has "no obligation to plead and prove
the law of the Kingdom of Saudi Arabia since her cause
of action is based on Articles 19 and 21" of the Civil
Code of the Philippines. In her Amended Complaint and
subsequent pleadings, she never alleged that Saudi
law should govern this case. 65 And as correctly held by
the respondent appellate court, "considering that it
was the petitioner who was invoking the applicability of
the law of Saudi Arabia, then the burden was on it

[petitioner] to plead and to establish what the law of
Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent
appellate court in upholding the trial court's denial of
defendant's (herein petitioner's) motion to dismiss the
case. Not only was jurisdiction in order and venue
properly laid, but appeal after trial was obviously
available, and expeditious trial itself indicated by the
nature of the case at hand. Indubitably, the Philippines is
the state intimately concerned with the ultimate
outcome of the case below, not just for the benefit of all
the litigants, but also for the vindication of the country's
system of law and justice in a transnational setting. With
these guidelines in mind, the trial court must proceed to
try and adjudge the case in the light of relevant
Philippine law, with due consideration of the foreign
element or elements involved. Nothing said herein, of
course, should be construed as prejudging the results of
the case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Civil Case No. Q-93-18394 entitled "Milagros
P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED
to Regional Trial Court of Quezon City, Branch 89 for
further proceedings.
8
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner, vs. RAMON GARCIA, as
head of the Asset Privatization Trust, RAUL MANGLAPUS,
as Secretary of Foreign Affairs, and CATALINO MACARAIG,
as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner, vs. EXECUTIVE SECRETARY
MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN
RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO,
et al., as members of the PRINCIPAL AND BIDDING
COMMITTEES ON THE UTILIZATION/DISPOSITION
PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN
JAPAN,respondents.
These are two petitions for prohibition seeking to enjoin
respondents, their representatives and agents from
proceeding with the bidding for the sale of the 3,179
square meters of land at 306 Roppongi, 5-Chome Minato-
ku Tokyo, Japan scheduled on February 21, 1990. We
granted the prayer for a temporary restraining order
effective February 20, 1990. One of the petitioners (in
G.R. No. 92047) likewise prayes for a writ of mandamus
to compel the respondents to fully disclose to the public
the basis of their decision to push through with the sale
of the Roppongi property inspire of strong public
opposition and to explain the proceedings which
effectively prevent the participation of Filipino citizens
and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia,
et al. were heard by the Court on March 13, 1990. After
G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was
filed, the respondents were required to file a comment by
the Court's resolution dated February 22, 1990. The two
petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were
deliberated upon.
The Court could not act on these cases immediately
because the respondents filed a motion for an extension
24 | Conflict of Laws
of thirty (30) days to file comment in G.R. No. 92047,
followed by a second motion for an extension of
another thirty (30) days which we granted on May 8,
1990, a third motion for extension of time granted on
May 24, 1990 and a fourth motion for extension of time
which we granted on June 5, 1990 but calling the
attention of the respondents to the length of time the
petitions have been pending. After the comment was
filed, the petitioner in G.R. No. 92047 asked for thirty
(30) days to file a reply. We noted his motion and
resolved to decide the two (2) cases.
I The subject property in this case is one of the
four (4) properties in Japan acquired by the Philippine
government under the Reparations Agreement entered
into with Japan on May 9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi,
Shibuya-ku, Tokyo which has an area of approximately
2,489.96 square meters, and is at present the site of
the Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho,
Kobe, with an area of around 764.72 square meters
and categorized as a commercial lot now being used as
a warehouse and parking lot for the consulate staff;
and
(3) The Kobe Residential Property at 1-980-2
Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services
procured from the Japanese government for national
development projects are part of the indemnification to
the Filipino people for their losses in life and property
and their suffering during World War II.
The Reparations Agreement provides that reparations
valued at $550 million would be payable in twenty (20)
years in accordance with annual schedules of
procurements to be fixed by the Philippine and
Japanese governments (Article 2, Reparations
Agreement). Rep. Act No. 1789, the Reparations Law,
prescribes the national policy on procurement and
utilization of reparations and development loans. The
procurements are divided into those for use by
the government sector and those for private parties in
projects as the then National Economic Council shall
determine. Those intended for the private sector shall
be made available by sale to Filipino citizens or to one
hundred (100%) percent Filipino-owned entities in
national development projects.
The Roppongi property was acquired from the Japanese
government under the Second Year Schedule and listed
under the heading "Government Sector", through
Reparations Contract No. 300 dated June 27, 1958. The
Roppongi property consists of the land and building
"for the Chancery of the Philippine Embassy" (Annex M-
D to Memorandum for Petitioner, p. 503). As intended,
it became the site of the Philippine Embassy until the
latter was transferred to Nampeidai on July 22, 1976
when the Roppongi building needed major repairs. Due
to the failure of our government to provide necessary
funds, the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President Corazon C.
Aquino by former Philippine Ambassador to Japan,
Carlos J. Valdez, to make the property the subject of a
lease agreement with a Japanese firm - Kajima
Corporation which shall construct two (2) buildings

in Roppongi and one (1) building in Nampeidai and
renovate the present Philippine Chancery in Nampeidai.
The consideration of the construction would be the lease
to the foreign corporation of one (1) of the buildings to
be constructed in Roppongi and the two (2) buildings in
Nampeidai. The other building in Roppongi shall then be
used as the Philippine Embassy Chancery. At the end of
the lease period, all the three leased buildings shall be
occupied and used by the Philippine government. No
change of ownership or title shall occur. (See Annex "B"
to Reply to Comment) The Philippine government retains
the title all throughout the lease period and thereafter.
However, the government has not acted favorably on this
proposal which is pending approval and ratification
between the parties. Instead, on August 11, 1986,
President Aquino created a committee to study the
disposition/utilization of Philippine government properties
in Tokyo and Kobe, Japan through Administrative Order
No. 3, followed by Administrative Orders Numbered 3-A,
B, C and D.
On July 25, 1987, the President issued Executive Order
No. 296 entitling non-Filipino citizens or entities to avail
of separations' capital goods and services in the event of
sale, lease or disposition. The four properties in Japan
including the Roppongi were specifically mentioned in
the first "Whereas" clause.
Amidst opposition by various sectors, the Executive
branch of the government has been pushing, with great
vigor, its decision to sell the reparations properties
starting with the Roppongi lot. The property has twice
been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one
bidder qualified. The second one, after postponements,
has not yet materialized. The last scheduled bidding on
February 21, 1990 was restrained by his Court. Later, the
rules on bidding were changed such that the $225 million
floor price became merely a suggested floor price.
The Court finds that each of the herein petitions raises
distinct issues. The petitioner in G.R. No. 92013 objects
to the alienation of the Roppongi property to anyone
while the petitioner in G.R. No. 92047 adds as a principal
objection the alleged unjustified bias of the Philippine
government in favor of selling the property to non-Filipino
citizens and entities. These petitions have been
consolidated and are resolved at the same time for the
objective is the same - to stop the sale of the Roppongi
property.
The petitioner in G.R. No. 92013 raises the following
issues:
(1) Can the Roppongi property and others of its kind be
alienated by the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents,
have the authority and jurisdiction, to sell the Roppongi
property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from
questioning the authority of the government to alienate
the Roppongi property assails the constitutionality of
Executive Order No. 296 in making the property available
for sale to non-Filipino citizens and entities. He also
questions the bidding procedures of the Committee on
the Utilization or Disposition of Philippine Government
Properties in Japan for being discriminatory against
Filipino citizens and Filipino-owned entities by denying
them the right to be informed about the bidding
requirements.
25 | Conflict of Laws
II In G.R. No. 92013, petitioner Laurel asserts
that the Roppongi property and the related lots were
acquired as part of the reparations from the Japanese
government for diplomatic and consular use by the
Philippine government. Vice-President Laurel states
that the Roppongi property is classified as one of public
dominion, and not of private ownership under Article
420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property
comes under "property intended for public service" in
paragraph 2 of the above provision. He states that
being one of public dominion, no ownership by any one
can attach to it, not even by the State. The Roppongi
and related properties were acquired for "sites for
chancery, diplomatic, and consular quarters, buildings
and other improvements" (Second Year Reparations
Schedule). The petitioner states that they continue to
be intended for a necessary service. They are held by
the State in anticipation of an opportune use. (Citing 3
Manresa 65-66). Hence, it cannot be appropriated, is
outside the commerce of man, or to put it in more
simple terms, it cannot be alienated nor be the subject
matter of contracts (Citing Municipality of Cavite v.
Rojas, 30 Phil. 20 [1915]). Noting the non-use of the
Roppongi property at the moment, the petitioner avers
that the same remains property of public dominion so
long as the government has not used it for other
purposes nor adopted any measure constituting a
removal of its original purpose or use.
The respondents, for their part, refute the petitioner's
contention by saying that the subject property is not
governed by our Civil Code but by the laws of Japan
where the property is located. They rely upon the rule
of lex situs which is used in determining the applicable
law regarding the acquisition, transfer and devolution
of the title to a property. They also invoke Opinion No.
21, Series of 1988, dated January 27, 1988 of the
Secretary of Justice which used the lex situs in
explaining the inapplicability of Philippine law
regarding a property situated in Japan.
The respondents add that even assuming for the sake
of argument that the Civil Code is applicable, the
Roppongi property has ceased to become property of
public dominion. It has become patrimonial property
because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now
(Citing Article 422, Civil Code) and because
the intention by the Executive Department and the
Congress to convert it to private use has been
manifested by overt acts, such as, among others: (1)
the transfer of the Philippine Embassy to Nampeidai (2)
the issuance of administrative orders for the possibility
of alienating the four government properties in Japan;
(3) the issuance of Executive Order No. 296; (4) the
enactment by the Congress of Rep. Act No. 6657 [the
Comprehensive Agrarian Reform Law] on June 10, 1988
which contains a provision stating that funds may be
taken from the sale of Philippine properties in foreign
countries; (5) the holding of the public bidding of the
Roppongi property but which failed; (6) the deferment
by the Senate in Resolution No. 55 of the bidding to a
future date; thus an acknowledgment by the Senate of
the government's intention to remove the Roppongi
property from the public service purpose; and (7) the
resolution of this Court dismissing the petition in Ojeda
v. Bidding Committee, et al., G.R. No. 87478 which
sought to enjoin the second bidding of the Roppongi
property scheduled on March 30, 1989.

III In G.R. No. 94047, petitioner Ojeda once more
asks this Court to rule on the constitutionality of
Executive Order No. 296. He had earlier filed a petition in
G.R. No. 87478 which the Court dismissed on August 1,
1989. He now avers that the executive order contravenes
the constitutional mandate to conserve and develop the
national patrimony stated in the Preamble of the 1987
Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of
alienable lands of the public domain to Filipino citizens.
(Sections 2 and 3, Article XII, Constitution; Sections 22
and 23 of Commonwealth Act 141).itc-asl
(2) The preference for Filipino citizens in the grant of
rights, privileges and concessions covering the national
economy and patrimony (Section 10, Article VI,
Constitution);
(3) The protection given to Filipino enterprises against
unfair competition and trade practices;
(4) The guarantee of the right of the people to
information on all matters of public concern (Section 7,
Article III, Constitution);
(5) The prohibition against the sale to non-Filipino
citizens or entities not wholly owned by Filipino citizens
of capital goods received by the Philippines under the
Reparations Act (Sections 2 and 12 of Rep. Act No. 1789);
and
(6) The declaration of the state policy of full public
disclosure of all transactions involving public interest
(Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the
execution of an unconstitutional executive order is a
misapplication of public funds He states that since the
details of the bidding for the Roppongi property
were never publicly disclosed until February 15, 1990 (or
a few days before the scheduled bidding), the bidding
guidelines are available only in Tokyo, and the
accomplishment of requirements and the selection of
qualified bidders should be done in Tokyo, interested
Filipino citizens or entities owned by them did not have
the chance to comply with Purchase Offer Requirements
on the Roppongi. Worse, the Roppongi shall be sold for a
minimum price of $225 million from which price capital
gains tax under Japanese law of about 50 to 70% of the
floor price would still be deducted.
IV The petitioners and respondents in both cases do
not dispute the fact that the Roppongi site and the three
related properties were through reparations agreements,
that these were assigned to the government sector and
that the Roppongi property itself was specifically
designated under the Reparations Agreement to house
the Philippine Embassy.
The nature of the Roppongi lot as property for public
service is expressly spelled out. It is dictated by the
terms of the Reparations Agreement and the
corresponding contract of procurement which bind both
the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless
it is convincingly shown that the property has become
patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is
outside the commerce of man. It cannot be alienated. Its
26 | Conflict of Laws
ownership is a special collective ownership for general
use and enjoyment, an application to the satisfaction of
collective needs, and resides in the social group. The
purpose is not to serve the State as a juridical person,
but the citizens; it is intended for the common and
public welfare and cannot be the object of
appropration. (Taken from 3 Manresa, 66-69; cited in
Tolentino, Commentaries on the Civil Code of the
Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of
private ownership.
ART. 420. The following things are property of
public dominion
(1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges
constructed by the State, banks shores roadsteads,
and others of similar character;
(2) Those which belong to the State, without being
for public use, and are intended for some public
service or for the development of the national
wealth.
ART. 421. All other property of the State, which is
not of the character stated in the preceding article,
is patrimonial property.
The Roppongi property is correctly classified under
paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public
service.
Has the intention of the government regarding the use
of the property been changed because the lot has been
Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not
automatically convert it to patrimonial property. Any
such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A
property continues to be part of the public domain, not
available for private appropriation or ownership until
there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v.
Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements
by concerned public officials insinuating a change of
intention. We emphasize, however, that an
abandonment of the intention to use the Roppongi
property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be
definite Abandonment cannot be inferred from the non-
use alone specially if the non-use was attributable not
to the government's own deliberate and indubitable
will but to a lack of financial support to repair and
improve the property (See Heirs of Felino Santiago v.
Lazaro, 166 SCRA 368 [1988]). Abandonment must be
a certain and positive act based on correct legal
premises.
A mere transfer of the Philippine Embassy to
Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure
by the government to repair the building in Roppongi is

not abandonment since as earlier stated, there simply
was a shortage of government funds. The recent
Administrative Orders authorizing a study of the status
and conditions of government properties in Japan were
merely directives for investigation but did not in any way
signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an
"authority to sell", does not have a provision in its text
expressly authorizing the sale of the four properties
procured from Japan for the government sector. The
executive order does not declare that the properties lost
their public character. It merely intends to make the
properties available to foreigners and not to Filipinos
alone in case of a sale, lease or other disposition. It
merely eliminates the restriction under Rep. Act No. 1789
that reparations goods may be sold only to Filipino
citizens and one hundred (100%) percent Filipino-owned
entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as
amended, and of other laws to the contrary
notwithstanding, the above-mentioned properties
can be made available for sale, lease or any other
manner of disposition to non-Filipino citizens or to
entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise
or assumption that the Roppongi and the three other
properties were earlier converted into alienable real
properties. As earlier stated, Rep. Act No. 1789
differentiates the procurements for the government
sector and the private sector (Sections 2 and 12, Rep. Act
No. 1789). Only the private sector properties can be sold
to end-users who must be Filipinos or entities owned by
Filipinos. It is this nationality provision which was
amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which
provides as one of the sources of funds for its
implementation, the proceeds of the disposition of the
properties of the Government in foreign countries, did
not withdraw the Roppongi property from being classified
as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties
which are alienable and not to those reserved for public
use or service. Rep Act No. 6657, therefore, does not
authorize the Executive Department to sell the Roppongi
property. It merely enumerates possible sources of future
funding to augment (as and when needed) the Agrarian
Reform Fund created under Executive Order No. 299.
Obviously any property outside of the commerce of man
cannot be tapped as a source of funds.
The respondents try to get around the public dominion
character of the Roppongi property by insisting that
Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government
officials, of all people, should be the ones to insist that in
the sale of extremely valuable government property,
Japanese law and not Philippine law should prevail. The
Japanese law - its coverage and effects, when enacted,
and exceptions to its provision is not presented to the
Court It is simply asserted that the lex loci rei sitae or
Japanese law should apply without stating what that law
provides. It is a ed on faith that Japanese law would allow
the sale.
We see no reason why a conflict of law rule should apply
when no conflict of law situation exists. A conflict of law
situation arises only when: (1) There is a dispute over
the title or ownership of an immovable, such that the
27 | Conflict of Laws
capacity to take and transfer immovables, the
formalities of conveyance, the essential validity and
effect of the transfer, or the interpretation and effect of
a conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp. 377-
383); and (2) A foreign law on land ownership and its
conveyance is asserted to conflict with a domestic law
on the same matters. Hence, the need to determine
which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership
or title. There is no question that the property belongs
to the Philippines. The issue is the authority of the
respondent officials to validly dispose of property
belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed
by Philippine Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of
Justice sheds light on the relevance of the lex situsrule
is misplaced. The opinion does not tackle
the alienability of the real properties procured through
reparations nor the existence in what body of the
authority to sell them. In discussing who are capableof
acquiring the lots, the Secretary merely explains that it
is the foreign law which should determine who can
acquire the properties so that the constitutional
limitation on acquisition of lands of the public domain
to Filipino citizens and entities wholly owned by
Filipinos is inapplicable. We see no point in belaboring
whether or not this opinion is correct. Why should we
discuss who can acquire the Roppongi lot when there is
no showing that it can be sold?
The subsequent approval on October 4, 1988 by
President Aquino of the recommendation by the
investigating committee to sell the Roppongi property
was premature or, at the very least, conditioned on a
valid change in the public character of the Roppongi
property. Moreover, the approval does not have the
force and effect of law since the President already lost
her legislative powers. The Congress had already
convened for more than a year.
Assuming for the sake of argument, however, that the
Roppongi property is no longer of public dominion,
there is another obstacle to its sale by the
respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of
1917 provides
Section 79 (f ) Conveyances and contracts to which
the Government is a party. In cases in which the
Government of the Republic of the Philippines is a
party to any deed or other instrument conveying
the title to real estate or to any other property the
value of which is in excess of one hundred
thousand pesos, the respective Department
Secretary shall prepare the necessary papers
which, together with the proper
recommendations, shall be submitted to the
Congress of the Philippines for approval by the
same. Such deed, instrument, or contract shall be
executed and signed by the President of the
Philippines on behalf of the Government of the
Philippines unless the Government of the
Philippines unless the authority therefor be

expressly vested by law in another officer. (Emphasis
supplied)
The requirement has been retained in Section 48, Book I
of the Administrative Code of 1987 (Executive Order No.
292).
SEC. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government
is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled in the name
of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the
Philippines but titled in the name of any political
subdivision or of any corporate agency or
instrumentality, by the executive head of the agency
or instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real
property of the government on his or her own sole will.
Any such conveyance must be authorized and approved
by a law enacted by the Congress. It requires executive
and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989,
asking for the deferment of the sale of the Roppongi
property does not withdraw the property from public
domain much less authorize its sale. It is a mere
resolution; it is not a formal declaration abandoning the
public character of the Roppongi property. In fact, the
Senate Committee on Foreign Relations is conducting
hearings on Senate Resolution No. 734 which raises
serious policy considerations and calls for a fact-finding
investigation of the circumstances behind the decision to
sell the Philippine government properties in Japan.
The resolution of this Court in Ojeda v. Bidding
Committee, et al., supra, did not pass upon the
constitutionality of Executive Order No. 296. Contrary to
respondents' assertion, we did not uphold the authority
of the President to sell the Roppongi property. The Court
stated that the constitutionality of the executive order
was not the real issue and that resolving the
constitutional question was "neither necessary nor finally
determinative of the case." The Court noted that "[W]hat
petitioner ultimately questions is the use of the proceeds
of the disposition of the Roppongi property." In
emphasizing that "the decision of the Executive to
dispose of the Roppongi property to finance the CARP ...
cannot be questioned" in view of Section 63 (c) of Rep.
Act No. 6657, the Court did not acknowledge the fact
that the property became alienable nor did it indicate
that the President was authorized to dispose of the
Roppongi property. The resolution should be read to
mean that in case the Roppongi property is re-classified
to be patrimonial and alienable by authority of law, the
proceeds of a sale may be used for national economic
development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The
petitions before us question the proposed 1990 sale of
the Roppongi property. We are resolving the issues raised
in these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to
withdraw the Roppongi property from public domain to
28 | Conflict of Laws
make it alienable and a need for legislative authority to
allow the sale of the property, we see no compelling
reason to tackle the constitutional issues raised by
petitioner Ojeda.
The Court does not ordinarily pass upon constitutional
questions unless these questions are properly raised in
appropriate cases and their resolution is necessary for
the determination of the case (People v. Vera, 65 Phil.
56 [1937]). The Court will not pass upon a
constitutional question although properly presented by
the record if the case can be disposed of on some other
ground such as the application of a statute or general
law (Siler v. Louisville and Nashville R. Co., 213 U.S.
175, [1909], Railroad Commission v. Pullman Co., 312
U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the
Roppongi property should not be sold:
The Roppongi property is not just like any piece of
property. It was given to the Filipino people in
reparation for the lives and blood of Filipinos who
died and suffered during the Japanese military
occupation, for the suffering of widows and
orphans who lost their loved ones and kindred, for
the homes and other properties lost by countless
Filipinos during the war. The Tokyo properties are a
monument to the bravery and sacrifice of the
Filipino people in the face of an invader; like the
monuments of Rizal, Quezon, and other Filipino
heroes, we do not expect economic or financial
benefits from them. But who would think of selling
these monuments? Filipino honor and national
dignity dictate that we keep our properties in Japan
as memorials to the countless Filipinos who died
and suffered. Even if we should become paupers
we should not think of selling them. For it would be
as if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by
the Japanese government in atonement for its past
belligerence for the valiant sacrifice of life and limb
and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in
World War II.
It is for what it stands for, and for what it could
never bring back to life, that its significance today
remains undimmed, inspire of the lapse of 45 years
since the war ended, inspire of the passage of 32
years since the property passed on to the
Philippine government.
Roppongi is a reminder that cannot should not
be dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable
not so much because of the inflated prices fetched by
real property in Tokyo but more so because of its
symbolic value to all Filipinos veterans and civilians
alike. Whether or not the Roppongi and related
properties will eventually be sold is a policy
determination where both the President and Congress
must concur. Considering the properties' importance
and value, the laws on conversion and disposition of
property of public dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions
are GRANTED. A writ of prohibition is issued enjoining the
respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20,
1990 Temporary Restraining Order is made PERMANENT
9 San Diego. Paula was represented by counsel, John
[G.R. No. 124371. November 23, 2000]
PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS
and ALICIA F. LLORENTE, respondents.
DECISION
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 City [2] declaring
respondent Alicia F. Llorente (herinafter 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 fathers 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 Lorenzos
salary and all other obligations for Paulas 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 Paulas
29 | Conflict of Laws
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
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.
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 Llorentes 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 Lorenzos
estate in her favor. Paula contended (1) that she was
Lorenzos surviving spouse, (2) that the various property
were acquired during their marriage, (3) that Lorenzos
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 Paulas
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:
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
30 | Conflict of Laws
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 Alicias
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:
Art. 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.
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 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. (emphasis 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 decedents 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 Lorenzos 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 courts opinion was a mere paramour. 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
31 | Conflict of Laws
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:
Art. 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. (underscoring 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.
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. Llorentes 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
10
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E.
CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN,
Heir of the deceased, Executor and Heir-appellees, vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
This is an appeal from a decision of the Court of First
Instance of Davao, Hon. Vicente N. Cusi, Jr., presiding, in
Special Proceeding No. 622 of said court, dated
September 14, 1949, approving among things the final
accounts of the executor, directing the executor to
reimburse Maria Lucy Christensen the amount of P3,600
paid by her to Helen Christensen Garcia as her legacy,
and declaring Maria Lucy Christensen entitled to the
residue of the property to be enjoyed during her lifetime,
and in case of death without issue, one-half of said
residue to be payable to Mrs. Carrie Louise C. Borton,
etc., in accordance with the provisions of the will of the
testator Edward E. Christensen. The will was executed in
Manila on March 5, 1951 and contains the following
provisions:
3. I declare ... that I have but ONE (1) child, named
MARIA LUCY CHRISTENSEN (now Mrs. Bernard Daney),
who was born in the Philippines about twenty-eight years
ago, and who is now residing at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants,
and no descendants except my above named daughter,
MARIA LUCY CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN
CHRISTENSEN, now married to Eduardo Garcia, about
eighteen years of age and who, notwithstanding the fact
that she was baptized Christensen, is not in any way
related to me, nor has she been at any time adopted by
me, and who, from all information I have now resides in
Egpit, Digos, Davao, Philippines, the sum of THREE
THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine
Currency the same to be deposited in trust for the said
Maria Helen Christensen with the Davao Branch of the
Philippine National Bank, and paid to her at the rate of
One Hundred Pesos (P100.00), Philippine Currency per
month until the principal thereof as well as any interest
which may have accrued thereon, is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-
beloved daughter, the said MARIA LUCY CHRISTENSEN
DANEY (Mrs. Bernard Daney), now residing as aforesaid
at No. 665 Rodger Young Village, Los Angeles, California,
U.S.A., all the income from the rest, remainder, and
residue of my property and estate, real, personal and/or
mixed, of whatsoever kind or character, and wheresoever
32 | Conflict of Laws
situated, of which I may be possessed at my death and
which may have come to me from any source
whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions
that the executor in his final account and project of
partition ratified the payment of only P3,600 to Helen
Christensen Garcia and proposed that the residue of
the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition
was filed by Helen Christensen Garcia, insofar as it
deprives her (Helen) of her legitime as an
acknowledged natural child, she having been declared
by Us in G.R. Nos. L-11483-84 an acknowledged natural
child of the deceased Edward E. Christensen. The legal
grounds of opposition are (a) that the distribution
should be governed by the laws of the Philippines, and
(b) that said order of distribution is contrary thereto
insofar as it denies to Helen Christensen, one of two
acknowledged natural children, one-half of the estate
in full ownership. In amplification of the above grounds
it was alleged that the law that should govern the
estate of the deceased Christensen should not be the
internal law of California alone, but the entire law
thereof because several foreign elements are involved,
that the forum is the Philippines and even if the case
were decided in California, Section 946 of the California
Civil Code, which requires that the domicile of the
decedent should apply, should be applicable. It was
also alleged that Maria Helen Christensen having been
declared an acknowledged natural child of the
decedent, she is deemed for all purposes legitimate
from the time of her birth.
The court below ruled that as Edward E. Christensen
was a citizen of the United States and of the State of
California at the time of his death, the successional
rights and intrinsic validity of the provisions in his will
are to be governed by the law of California, in
accordance with which a testator has the right to
dispose of his property in the way he desires, because
the right of absolute dominion over his property is
sacred and inviolable (In re McDaniel's Estate, 77 Cal.
Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117
Cal. 286, 49 Pac. 192, cited in page 179, Record on
Appeal). Oppositor Maria Helen Christensen, through
counsel, filed various motions for reconsideration, but
these were denied. Hence, this appeal.
The most important assignments of error are as
follows:
I THE LOWER COURT ERRED IN IGNORING THE
DECISION OF THE HONORABLE SUPREME COURT THAT
HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF
EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN
DEPRIVING HER OF HER JUST SHARE IN THE
INHERITANCE.
II THE LOWER COURT ERRED IN ENTIRELY
IGNORING AND/OR FAILING TO RECOGNIZE THE
EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF
INTERNAL LAW.
III THE LOWER COURT ERRED IN FAILING TO
RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE
INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF
THE DECEASED EDWARD E. CHRISTENSEN SHOULD BE
GOVERNED BY THE LAWS OF THE PHILIPPINES.

IV THE LOWER COURT ERRED IN NOT DECLARING
THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED BY
THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.
V THE LOWER COURT ERRED IN NOT DECLARING
THAT UNDER THE PHILIPPINE LAWS HELEN CHRISTENSEN
GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE
IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a
citizen of the United States and of the State of California
at the time of his death. But there is also no question
that at the time of his death he was domiciled in the
Philippines, as witness the following facts admitted by
the executor himself in appellee's brief:
In the proceedings for admission of the will to probate,
the facts of record show that the deceased Edward E.
Christensen was born on November 29, 1875 in New York
City, N.Y., U.S.A.; his first arrival in the Philippines, as an
appointed school teacher, was on July 1, 1901, on board
the U.S. Army Transport "Sheridan" with Port of
Embarkation as the City of San Francisco, in the State of
California, U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the
United States and stayed there for the following nine
years until 1913, during which time he resided in, and
was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in
July of the year 1913. However, in 1928, he again
departed the Philippines for the United States and came
back here the following year, 1929. Some nine years
later, in 1938, he again returned to his own country, and
came back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the
foregoing stipulation of facts be admitted and approved
by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered
by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned
by the Japanese Military Forces in the Philippines during
World War II. Upon liberation, in April 1945, he left for the
United States but returned to the Philippines in
December, 1945. Appellees Collective Exhibits "6", CFI
Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-
Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473,
t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more
to California shortly after the making of his last will and
testament (now in question herein) which he executed at
his lawyers' offices in Manila on March 5, 1951. He died
at the St. Luke's Hospital in the City of Manila on April 30,
1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the
deceased is the Philippines, we are persuaded by the fact
that he was born in New York, migrated to California and
resided there for nine years, and since he came to the
Philippines in 1913 he returned to California very rarely
and only for short visits (perhaps to relatives), and
considering that he appears never to have owned or
acquired a home or properties in that state, which would
indicate that he would ultimately abandon the Philippines
and make home in the State of California.
Sec. 16. Residence is a term used with many shades of
meaning from mere temporary presence to the most
permanent abode. Generally, however, it is used to
denote something more than mere physical presence.
(Goodrich on Conflict of Laws, p. 29)
33 | Conflict of Laws
As to his citizenship, however, We find that the
citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913,
was never lost by his stay in the Philippines, for the
latter was a territory of the United States (not a state)
until 1946 and the deceased appears to have
considered himself as a citizen of California by the fact
that when he executed his will in 1951 he declared that
he was a citizen of that State; so that he appears never
to have intended to abandon his California citizenship
by acquiring another. This conclusion is in accordance
with the following principle expounded by Goodrich in
his Conflict of Laws.
The terms "'residence" and "domicile" might well be
taken to mean the same thing, a place of permanent
abode. But domicile, as has been shown, has acquired
a technical meaning. Thus one may be domiciled in a
place where he has never been. And he may reside in a
place where he has no domicile. The man with two
homes, between which he divides his time, certainly
resides in each one, while living in it. But if he went on
business which would require his presence for several
weeks or months, he might properly be said to have
sufficient connection with the place to be called a
resident. It is clear, however, that, if he treated his
settlement as continuing only for the particular
business in hand, not giving up his former "home," he
could not be a domiciled New Yorker. Acquisition of a
domicile of choice requires the exercise of intention as
well as physical presence. "Residence simply requires
bodily presence of an inhabitant in a given place, while
domicile requires bodily presence in that place and also
an intention to make it one's domicile." Residence,
however, is a term used with many shades of meaning,
from the merest temporary presence to the most
permanent abode, and it is not safe to insist that any
one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary
dispositions is defined in Article 16 of the Civil Code of
the Philippines, which is as follows:
ART. 16. Real property as well as personal property is
subject to the law of the country where it is situated.
However, intestate and testamentary successions, both
with respect to the order of succession and to the
amount of successional rights and to the intrinsic
validity of testamentary provisions, shall be regulated
by the national law of the person whose succession is
under consideration, whatever may be the nature of
the property and regardless of the country where said
property may be found.
The application of this article in the case at bar
requires the determination of the meaning of the
term "national law" is used therein.
There is no single American law governing the validity
of testamentary provisions in the United States, each
state of the Union having its own private law applicable
to its citizens only and in force only within the state.
The "national law" indicated in Article 16 of the Civil
Code above quoted can not, therefore, possibly mean
or apply to any general American law. So it can refer to
no other than the private law of the State of California.
The next question is: What is the law in California
governing the disposition of personal property? The
decision of the court below, sustains the contention of
the executor-appellee that under the California Probate
Code, a testator may dispose of his property by will in
the form and manner he desires, citing the case of
Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952.

But appellant invokes the provisions of Article 946 of the
Civil Code of California, which is as follows:
If there is no law to the contrary, in the place where
personal property is situated, it is deemed to follow the
person of its owner, and is governed by the law of his
domicile.
The existence of this provision is alleged in appellant's
opposition and is not denied. We have checked it in the
California Civil Code and it is there. Appellee, on the
other hand, relies on the case cited in the decision and
testified to by a witness. (Only the case of Kaufman is
correctly cited.) It is argued on executor's behalf that as
the deceased Christensen was a citizen of the State of
California, the internal law thereof, which is that given in
the abovecited case, should govern the determination of
the validity of the testamentary provisions of
Christensen's will, such law being in force in the State of
California of which Christensen was a citizen. Appellant,
on the other hand, insists that Article 946 should be
applicable, and in accordance therewith and following
the doctrine of therenvoi, the question of the validity of
the testamentary provision in question should be referred
back to the law of the decedent's domicile, which is the
Philippines.
The theory of doctrine of renvoi has been defined by
various authors, thus:
The problem has been stated in this way: "When the
Conflict of Laws rule of the forum refers a jural matter to
a foreign law for decision, is the reference to the purely
internal rules of law of the foreign system; i.e., to the
totality of the foreign law minus its Conflict of Laws
rules?"
On logic, the solution is not an easy one. The Michigan
court chose to accept the renvoi, that is, applied the
Conflict of Laws rule of Illinois which referred the matter
back to Michigan law. But once having determined the
the Conflict of Laws principle is the rule looked to, it is
difficult to see why the reference back should not have
been to Michigan Conflict of Laws. This would have
resulted in the "endless chain of references" which has
so often been criticized be legal writers. The opponents
of the renvoi would have looked merely to the internal
law of Illinois, thus rejecting the renvoi or the reference
back. Yet there seems no compelling logical reason why
the original reference should be the internal law rather
than to the Conflict of Laws rule. It is true that such a
solution avoids going on a merry-go-round, but those
who have accepted the renvoitheory 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.
34 | Conflict of Laws
The Restatement accepts the renvoi theory in two
instances: where the title to land is in question, and
where the validity of a decree of divorce is challenged.
In these cases the Conflict of Laws rule of the situs of
the land, or the domicile of the parties in the divorce
case, is applied by the forum, but any further reference
goes only to the internal law. Thus, a person's title to
land, recognized by the situs, will be recognized by
every court; and every divorce, valid by the domicile of
the parties, will be valid everywhere. (Goodrich,
Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled
in France, leaving movable property in Massachusetts,
England, and France. The question arises as to how this
property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts
court. There the rule of the conflict of laws as to
intestate succession to movables calls for an
application of the law of the deceased's last domicile.
Since by hypothesis X's last domicile was France, the
natural thing for the Massachusetts court to do would
be to turn to French statute of distributions, or
whatever corresponds thereto in French law, and
decree a distribution accordingly. An examination of
French law, however, would show that if a French court
were called upon to determine how this property
should be distributed, it would refer the distribution to
the national law of the deceased, thus applying the
Massachusetts statute of distributions. So on the
surface of things the Massachusetts court has open to
it alternative course of action: (a) either to apply the
French law is to intestate succession, or (b) to resolve
itself into a French court and apply the Massachusetts
statute of distributions, on the assumption that this is
what a French court would do. If it accepts the so-
called renvoidoctrine, 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. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has
been advanced. The theory of the doctrine of renvoiis
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. 529-531. The pertinent parts of the
article are quoted herein below:
The recognition of the renvoi theory implies that the
rules of the conflict of laws are to be understood as
incorporating not only the ordinary or internal law of the
foreign state or country, but its rules of the conflict of
laws as well. According to this theory 'the law of a
country' means the whole of its law.
xxx xxx xxx
Von Bar presented his views at the meeting of the
Institute of International Law, at Neuchatel, in 1900, in
the form of the following theses:
(1) Every court shall observe the law of its country as
regards the application of foreign laws.
(2) Provided that no express provision to the contrary
exists, the court shall respect:
(a) The provisions of a foreign law which disclaims the
right to bind its nationals abroad as regards their
personal statute, and desires that said personal statute
shall be determined by the law of the domicile, or even
by the law of the place where the act in question
occurred.
(b) The decision of two or more foreign systems of law,
provided it be certain that one of them is necessarily
competent, which agree in attributing the determination
of a question to the same system of law.
xxx xxx xxx
If, for example, the English law directs its judge to
distribute the personal estate of an Englishman who has
died domiciled in Belgium in accordance with the law of
his domicile, he must first inquire whether the law of
Belgium would distribute personal property upon death
in accordance with the law of domicile, and if he finds
that the Belgian law would make the distribution in
accordance with the law of nationality that is the
English law he must accept this reference back to his
own law.
We note that Article 946 of the California Civil Code is its
conflict of laws rule, while the rule applied in In re
Kaufman, Supra, its internal law. If the law on succession
and the conflict of laws rules of California are to be
enforced jointly, each in its own intended and
appropriate sphere, the principle cited In re Kaufman
should apply to citizens living in the State, but Article
946 should apply to such of its citizens as are not
domiciled in California but in other jurisdictions. The rule
laid down of resorting to the law of the domicile in the
determination of matters with foreign element involved is
in accord with the general principle of American law that
the domiciliary law should govern in most matters or
rights which follow the person of the owner.
When a man dies leaving personal property in one or
more states, and leaves a will directing the manner of
distribution of the property, the law of the state where he
was domiciled at the time of his death will be looked to in
deciding legal questions about the will, almost as
completely as the law of situs is consulted in questions
about the devise of land. It is logical that, since the
domiciliary rules control devolution of the personal estate
in case of intestate succession, the same rules should
determine the validity of an attempted testamentary
dispostion of the property. Here, also, it is not that the
35 | Conflict of Laws
domiciliary has effect beyond the borders of the
domiciliary state. The rules of the domicile are
recognized as controlling by the Conflict of Laws rules
at the situs property, and the reason for the recognition
as in the case of intestate succession, is the general
convenience of the doctrine. The New York court has
said on the point: 'The general principle that a
dispostiton of a personal property, valid at the domicile
of the owner, is valid anywhere, is one of the universal
application. It had its origin in that international comity
which was one of the first fruits of civilization, and it
this age, when business intercourse and the process of
accumulating property take but little notice of
boundary lines, the practical wisdom and justice of the
rule is more apparent than ever. (Goodrich, Conflict of
Laws, Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code
of the Philippines pointed out as the national law is the
internal law of California. But as above explained the
laws of California have prescribed two sets of laws for
its citizens, one for residents therein and another for
those domiciled in other jurisdictions. Reason demands
that We should enforce the California internal law
prescribed for its citizens residing therein, and enforce
the conflict of laws rules for the citizens domiciled
abroad. If we must enforce the law of California as in
comity we are bound to go, as so declared in Article 16
of our Civil Code, then we must enforce the law of
California in accordance with the express mandate
thereof and as above explained, i.e., apply the internal
law for residents therein, and its conflict-of-laws rule
for those domiciled abroad.
It is argued on appellees' behalf that the clause "if
there is no law to the contrary in the place where the
property is situated" in Sec. 946 of the California Civil
Code refers to Article 16 of the Civil Code of the
Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 that
the national law of the deceased should govern. This
contention can not be sustained. As explained in the
various authorities cited above the national law
mentioned in Article 16 of our Civil Code is the law on
conflict of laws in the California Civil Code, i.e., Article
946, which authorizes the reference or return of the
question to the law of the testator's domicile. The
conflict of laws rule in California, Article 946, Civil
Code, precisely refers back the case, when a decedent
is not domiciled in California, to the law of his domicile,
the Philippines in the case at bar. The court of the
domicile can not and should not refer the case back to
California; such action would leave the issue incapable
of determination because the case will then be like a
football, tossed back and forth between the two states,
between the country of which the decedent was a
citizen and the country of his domicile. The Philippine
court must apply its own law as directed in the conflict
of laws rule of the state of the decedent, if the question
has to be decided, especially as the application of the
internal law of California provides no legitime for
children while the Philippine law, Arts. 887(4) and 894,
Civil Code of the Philippines, makes natural children
legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil.
156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs.
Brimo, 50 Phil. 867; Babcock Templeton vs. Rider
Babcock, 52 Phil. 130; and Gibbs vs. Government, 59
Phil. 293.) cited by appellees to support the decision
can not possibly apply in the case at bar, for two
important reasons, i.e., the subject in each case does
not appear to be a citizen of a state in the United

States but with domicile in the Philippines, and it does
not appear in each case that there exists in the state of
which the subject is a citizen, a law similar to or identical
with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased
Christensen, a citizen of California, is the Philippines, the
validity of the provisions of his will depriving his
acknowledged natural child, the appellant, should be
governed by the Philippine Law, the domicile, pursuant to
Art. 946 of the Civil Code of California, not by the internal
law of California..
WHEREFORE, the decision appealed from is hereby
reversed and the case returned to the lower court with
instructions that the partition be made as the Philippine
law on succession provides. Judgment reversed, with
costs against appellees
11
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor. MARIA
CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-
appellants, vs. EDWARD A. BELLIS, ET AL., heirs-
appellees.
This is a direct appeal to Us, upon a question purely of
law, from an order of the Court of First Instance of Manila
dated April 30, 1964, approving the project of partition
filed by the executor in Civil Case No. 37089
therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State
of Texas and of the United States." By his first wife, Mary
E. Mallen, whom he divorced, he had five legitimate
children: Edward A. Bellis, George Bellis (who pre-
deceased him in infancy), Henry A. Bellis, Alexander
Bellis and Anna Bellis Allsman; by his second wife, Violet
Kennedy, who survived him, he had three legitimate
children: Edwin G. Bellis, Walter S. Bellis and Dorothy
Bellis; and finally, he had three illegitimate children:
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma
Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the
Philippines, in which he directed that after all taxes,
obligations, and expenses of administration are paid for,
his distributable estate should be divided, in trust, in the
following order and manner: (a) $240,000.00 to his first
wife, Mary E. Mallen; (b) P120,000.00 to his three
illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis,
Miriam Palma Bellis, or P40,000.00 each and (c) after the
foregoing two items have been satisfied, the remainder
shall go to his seven surviving children by his first and
second wives, namely: Edward A. Bellis, Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis,
Walter S. Bellis, and Dorothy E. Bellis, in equal
shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a
resident of San Antonio, Texas, U.S.A. His will was
admitted to probate in the Court of First Instance of
Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the
will, paid all the bequests therein including the amount of
$240,000.00 in the form of shares of stock to Mary E.
Mallen and to the three (3) illegitimate children, Amos
36 | Conflict of Laws
Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis,
various amounts totalling P40,000.00 each in
satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time
according as the lower court approved and allowed the
various motions or petitions filed by the latter three
requesting partial advances on account of their
respective legacies.
On January 8, 1964, preparatory to closing its
administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and
Project of Partition" wherein it reported, inter alia, the
satisfaction of the legacy of Mary E. Mallen by the
delivery to her of shares of stock amounting to
$240,000.00, and the legacies of Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis in the amount of
P40,000.00 each or a total of P120,000.00. In the
project of partition, the executor pursuant to the
"Twelfth" clause of the testator's Last Will and
Testament divided the residuary estate into seven
equal portions for the benefit of the testator's seven
legitimate children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam
Palma Bellis filed their respective oppositions to the
project of partition on the ground that they were
deprived of their legitimes as illegitimate children and,
therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice
to him, proof of service of which is evidenced by the
registry receipt submitted on April 27, 1964 by the
executor.1
After the parties filed their respective memoranda and
other pertinent pleadings, the lower court, on April 30,
1964, issued an order overruling the oppositions and
approving the executor's final account, report and
administration and project of partition. Relying upon
Art. 16 of the Civil Code, it applied the national law of
the decedent, which in this case is Texas law, which did
not provide for legitimes.
Their respective motions for reconsideration having
been denied by the lower court on June 11, 1964,
oppositors-appellants appealed to this Court to raise
the issue of which law must apply Texas law or
Philippine law.
In this regard, the parties do not submit the case on,
nor even discuss, the doctrine of renvoi, applied by this
Court in Aznar v. Christensen Garcia, L-16749, January
31, 1963. Said doctrine is usually pertinent where the
decedent is a national of one country, and a domicile of
another. In the present case, it is not disputed that the
decedent was both a national of Texas and a domicile
thereof at the time of his death.2 So that even
assuming Texas has a conflict of law rule providing that
the domiciliary system (law of the domicile) should
govern, the same would not result in a reference back
(renvoi) to Philippine law, but would still refer to Texas
law. Nonetheless, if Texas has a conflicts rule adopting
the situs theory (lex rei sitae) calling for the application
of the law of the place where the properties are
situated, renvoi would arise, since the properties here
involved are found in the Philippines. In the absence,
however, of proof as to the conflict of law rule of Texas,
it should not be presumed different from
ours.3 Appellants' position is therefore not rested on
the doctrine of renvoi. As stated, they never invoked
nor even mentioned it in their arguments. Rather, they
argue that their case falls under the circumstances

mentioned in the third paragraph of Article 17 in relation
to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render
applicable the national law of the decedent, in intestate
or testamentary successions, with regard to four items:
(a) the order of succession; (b) the amount of
successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed.
They provide that
ART. 16. Real property as well as personal property is
subject to the law of the country where it is situated.
However, intestate and testamentary successions,
both with respect to the order of succession and to
the amount of successional rights and to the intrinsic
validity of testamentary provisions, shall be
regulated by the national law of the person whose
succession is under consideration, whatever may he
the nature of the property and regardless of the
country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the
law of the nation of the decedent.
Appellants would however counter that Art. 17,
paragraph three, of the Civil Code, stating that
Prohibitive laws concerning persons, their acts or
property, and those which have for their object public
order, public policy and good customs shall not be
rendered ineffective by laws or judgments
promulgated, or by determinations or conventions
agreed upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil
Code afore-quoted. This is not correct. Precisely,
Congressdeleted the phrase, "notwithstanding the
provisions of this and the next preceding article" when
they incorporated Art. 11 of the old Civil Code as Art. 17
of the new Civil Code, while reproducing without
substantial change the second paragraph of Art. 10 of
the old Civil Code as Art. 16 in the new. It must have
been their purpose to make the second paragraph of Art.
16 a specific provision in itself which must be applied in
testate and intestate succession. As further indication of
this legislative intent, Congress added a new provision,
under Art. 1039, which decrees that capacity to succeed
is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good
customs may be involved in our System of legitimes,
Congress has not intended to extend the same to the
succession of foreign nationals. For it has specifically
chosen to leave, inter alia, the amount of successional
rights, to the decedent's national law. Specific provisions
must prevail over general ones.
Appellants would also point out that the decedent
executed two wills one to govern his Texas estate and
the other his Philippine estate arguing from this that
he intended Philippine law to govern his Philippine
estate. Assuming that such was the decedent's intention
in executing a separate Philippine will, it would not alter
the law, for as this Court ruled in Miciano v. Brimo, 50
Phil. 867, 870, a provision in a foreigner's will to the
effect that his properties shall be distributed in
accordance with Philippine law and not with his national
law, is illegal and void, for his national law cannot be
ignored in regard to those matters that Article 10 now
37 | Conflict of Laws
Article 16 of the Civil Code states said national law
should govern.
The parties admit that the decedent, Amos G. Bellis,
was a citizen of the State of Texas, U.S.A., and that
under the laws of Texas, there are no forced heirs or
legitimes. Accordingly, since the intrinsic validity of the
provision of the will and the amount of successional
rights are to be determined under Texas law, the
Philippine law on legitimes cannot be applied to the
testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby
affirmed in toto, with costs against appellants. So
ordered
12
G.R. No. 138322 October 2, 2001
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-
RECIO, petitioner, vs. REDERICK A. RECIO, respondents.
A divorce obtained abroad by an alien may be
recognized in our jurisdiction, provided such decree is
valid according to the national law of the foreigner.
However, the divorce decree and the governing
personal law of the alien spouse who obtained the
divorce must be proven. Our courts do not take judicial
notice of foreign laws and judgment; hence, like any
other facts, both the divorce decree and the national
law of the alien must be alleged and proven according
to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the
Rules of Court, seeking to nullify the January 7, 1999
Decision1 and the March 24, 1999 Order2 of the
Regional Trial Court of Cabanatuan City, Branch 28, in
Civil Case No. 3026-AF. The assailed Decision disposed
as follows:
"WHEREFORE, this Court declares the marriage
between Grace J. Garcia and Rederick A. Recio
solemnized on January 12, 1994 at Cabanatuan
City as dissolved and both parties can now remarry
under existing and applicable laws to any and/or
both parties."3
The assailed Order denied reconsideration of the
above-quoted Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha
Samson, an Australian citizen, in Malabon, Rizal, on
March 1, 1987.4 They lived together as husband and
wife in Australia. On May 18, 1989, 5 a decree of
divorce, purportedly dissolving the marriage, was
issued by an Australian family court.
On June 26, 1992, respondent became an Australian
citizen, as shown by a "Certificate of Australian
Citizenship" issued by the Australian
government.6 Petitioner a Filipina and respondent
were married on January 12, 1994 in Our Lady of
Perpetual Help Church in Cabanatuan City. 7 In
their application for a marriage license, respondent
was declared as "single" and "Filipino."8

Starting October 22, 1995, petitioner and respondent
lived separately without prior judicial dissolution of their
marriage. While the two were still in Australia, their
conjugal assets were divided on May 16, 1996, in
accordance with their Statutory Declarations secured in
Australia.9
On March 3, 1998, petitioner filed a Complaint for
Declaration of Nullity of Marriage 10 in the court a quo, on
the ground of bigamy respondent allegedly had a prior
subsisting marriage at the time he married her on
January 12, 1994. She claimed that she learned of
respondent's marriage to Editha Samson only in
November, 1997.
In his Answer, respondent averred that, as far back as
1993, he had revealed to petitioner his prior
marriage andits subsequent dissolution.11 He contended
that his first marriage to an Australian citizen had been
validly dissolved by a divorce decree obtained in
Australian in 1989;12 thus, he was legally capacitated to
marry petitioner in 1994.1wphi1.nt
On July 7, 1998 or about five years after the couple's
wedding and while the suit for the declaration of nullity
was pending respondent was able to secure a divorce
decree from a family court in Sydney, Australia because
the "marriage ha[d] irretrievably broken down."13
Respondent prayed in his Answer that the Complained be
dismissed on the ground that it stated no cause of
action.14 The Office of the Solicitor General agreed with
respondent.15 The court marked and admitted the
documentary evidence of both parties. 16 After they
submitted their respective memoranda, the case was
submitted for resolution.17
Thereafter, the trial court rendered the assailed Decision
and Order.
Ruling of the Trial Court
The trial court declared the marriage dissolved on the
ground that the divorce issued in Australia was valid and
recognized in the Philippines. It deemed the marriage
ended, but not on the basis of any defect in an essential
element of the marriage; that is, respondent's alleged
lack of legal capacity to remarry. Rather, it based its
Decision on the divorce decree obtained by respondent.
The Australian divorce had ended the marriage; thus,
there was no more martial union to nullify or annual.
Hence, this Petition.18
Issues
Petitioner submits the following issues for our
consideration:
"I The trial court gravely erred in finding that the
divorce decree obtained in Australia by the
respondent ipso facto terminated his first marriage to
Editha Samson thereby capacitating him to contract
a second marriage with the petitioner.
"2 The failure of the respondent, who is now a
naturalized Australian, to present a certificate of
legal capacity to marry constitutes absence of a
substantial requisite voiding the petitioner' marriage
to the respondent.
38 | Conflict of Laws
"3 The trial court seriously erred in the application
of Art. 26 of the Family Code in this case.
"4 The trial court patently and grievously erred in
disregarding Arts. 11, 13, 21, 35, 40, 52 and 53 of
the Family Code as the applicable provisions in this
case.
"5 The trial court gravely erred in pronouncing
that the divorce gravely erred in pronouncing that
the divorce decree obtained by the respondent in
Australia ipso facto capacitated the parties to
remarry, without first securing a recognition of the
judgment granting the divorce decree before our
courts."19
The Petition raises five issues, but for purposes of this
Decision, we shall concentrate on two pivotal ones: (1)
whether the divorce between respondent and Editha
Samson was proven, and (2) whether respondent was
proven to be legally capacitated to marry petitioner.
Because of our ruling on these two, there is no more
necessity to take up the rest.
The Court's Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha
Samson
Petitioner assails the trial court's recognition of the
divorce between respondent and Editha Samson.
Citing Adong v. Cheong Seng Gee,20 petitioner argues
that the divorce decree, like any other foreign
judgment, may be given recognition in this jurisdiction
only upon proof of the existence of (1) the foreign law
allowing absolute divorce and (2) the alleged divorce
decree itself. She adds that respondent miserably
failed to establish these elements.
Petitioner adds that, based on the first paragraph of
Article 26 of the Family Code, marriages solemnized
abroad are governed by the law of the place where
they were celebrated (the lex loci celebrationist). In
effect, the Code requires the presentation of the
foreign law to show the conformity of the marriage in
question to the legal requirements of the place where
the marriage was performed.
At the outset, we lay the following basic legal principles
as the take-off points for our discussion. Philippine law
does not provide for absolute divorce; hence, our
courts cannot grant it.21 A marriage between two
Filipinos cannot be dissolved even by a divorce
obtained abroad, because of Articles 15 22 and 1723 of
the Civil Code.24 In mixed marriages involving a Filipino
and a foreigner, Article 2625 of the Family Code allows
the former to contract a subsequent marriage in case
the divorce is "validly obtained abroad by the alien
spouse capacitating him or her to remarry." 26 A divorce
obtained abroad by a couple, who are both aliens, may
be recognized in the Philippines, provided it is
consistent with their respective national laws.27
A comparison between marriage and divorce, as far as
pleading and proof are concerned, can be made. Van
Dorn v. Romillo Jr. decrees that "aliens may obtain
divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their

national law."28 Therefore, before a foreign divorce decree
can be recognized by our courts, the party pleading it
must prove the divorce as a fact and demonstrate its
conformity to the foreign law allowing it. 29 Presentation
solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be
admitted in evidence, it must first comply with the
registration requirements under Articles 11, 13 and 52 of
the Family Code. These articles read as follows:
"ART. 11. Where a marriage license is required, each
of the contracting parties shall file separately a
sworn application for such license with the proper
local civil registrar which shall specify the following:
xxx xxx xxx
"(5) If previously married, how, when and where the
previous marriage was dissolved or annulled;
xxx xxx xxx
"ART. 13. In case either of the contracting parties has
been previously married, the applicant shall be
required to furnish, instead of the birth of baptismal
certificate required in the last preceding article, the
death certificate of the deceased spouse or the
judicial decree of annulment or declaration of nullity
of his or her previous marriage. x x x.
"ART. 52. The judgment of annulment or of absolute
nullity of the marriage, the partition and distribution
of the properties of the spouses, and the delivery of
the children's presumptive legitimes shall be
recorded in the appropriate civil registry and
registries of property; otherwise, the same shall not
affect their persons."
Respondent, on the other hand, argues that the
Australian divorce decree is a public document a
written official act of an Australian family court.
Therefore, it requires no further proof of its authenticity
and due execution.
Respondent is getting ahead of himself. Before a foreign
judgment is given presumptive evidentiary value, the
document must first be presented and admitted in
evidence.30 A divorce obtained abroad is proven by the
divorce decree itself. Indeed the best evidence of a
judgment is the judgment itself.31 The decree purports to
be a written act or record of an act of an officially body or
tribunal of a foreign country.32
Under Sections 24 and 25 of Rule 132, on the other hand,
a writing or document may be proven as a public or
official record of a foreign country by either (1) an official
publication or (2) a copy thereof attested33 by the officer
having legal custody of the document. If the record is not
kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his
office.34
The divorce decree between respondent and Editha
Samson appears to be an authentic one issued by an
Australian family court.35 However, appearance is not
39 | Conflict of Laws
sufficient; compliance with the aforemetioned rules on
evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce
decree of May 18, 1989 was submitted in evidence,
counsel for petitioner objected, not to its admissibility,
but only to the fact that it had not been registered in
the Local Civil Registry of Cabanatuan City. 36 The trial
court ruled that it was admissible, subject to
petitioner's qualification.37Hence, it was admitted in
evidence and accorded weight by the judge. Indeed,
petitioner's failure to object properly rendered the
divorce decree admissible as a written act of the Family
Court of Sydney, Australia.38
Compliance with the quoted articles (11, 13 and 52) of
the Family Code is not necessary; respondent was no
longer bound by Philippine personal laws after he
acquired Australian citizenship in 1992. 39 Naturalization
is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a
citizen.40 Naturalized citizens, freed from the protective
cloak of their former states, don the attires of their
adoptive countries. By becoming an Australian,
respondent severed his allegiance to the Philippines
and the vinculum juris that had tied him to Philippine
personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove
Australian divorce law falls upon petitioner, because
she is the party challenging the validity of a foreign
judgment. He contends that petitioner was satisfied
with the original of the divorce decree and was
cognizant of the marital laws of Australia, because she
had lived and worked in that country for quite a long
time. Besides, the Australian divorce law is allegedly
known by Philippine courts: thus, judges may take
judicial notice of foreign laws in the exercise of sound
discretion.
We are not persuaded. The burden of proof lies with
"the party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an
action."41 In civil cases, plaintiffs have the burden of
proving the material allegations of the complaint when
those are denied by the answer; and defendants have
the burden of proving the material allegations in their
answer when they introduce new matters. 42 Since the
divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law
validating it falls squarely upon him.
It is well-settled in our jurisdiction that our courts
cannot take judicial notice of foreign laws. 43 Like any
other facts, they must be alleged and proved.
Australian marital laws are not among those matters
that judges are supposed to know by reason of their
judicial function.44 The power of judicial notice must be
exercised with caution, and every reasonable doubt
upon the subject should be resolved in the negative.
Second Issue:
Respondent's Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient
proof of the divorce, respondent was legally
incapacitated to marry her in 1994.

Hence, she concludes that their marriage was void ab
initio.
Respondent replies that the Australian divorce decree,
which was validly admitted in evidence, adequately
established his legal capacity to marry under Australian
law.
Respondent's contention is untenable. In its strict legal
sense, divorce means the legal dissolution of a lawful
union for a cause arising after marriage. But divorces are
of different types. The two basic ones are (1) absolute
divorce or a vinculo matrimonii and (2) limited divorce
or a mensa et thoro. The first kind terminates the
marriage, while the second suspends it and leaves the
bond in full force.45 There is no showing in the case at bar
which type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory
decree a conditional or provisional judgment of divorce.
It is in effect the same as a separation from bed and
board, although an absolute divorce may follow after the
lapse of the prescribed period during which no
reconciliation is effected.46
Even after the divorce becomes absolute, the court may
under some foreign statutes and practices, still restrict
remarriage. Under some other jurisdictions, remarriage
may be limited by statute; thus, the guilty party in a
divorce which was granted on the ground of adultery
may be prohibited from remarrying again. The court may
allow a remarriage only after proof of good behavior.47
On its face, the herein Australian divorce decree contains
a restriction that reads:
"1. A party to a marriage who marries again before
this decree becomes absolute (unless the other party
has died) commits the offence of bigamy."48
This quotation bolsters our contention that the divorce
obtained by respondent may have been restricted. It did
not absolutely establish his legal capacity to remarry
according to his national law. Hence, we find no basis for
the ruling of the trial court, which erroneously assumed
that the Australian divorce ipso facto restored
respondent's capacity to remarry despite the paucity of
evidence on this matter.
We also reject the claim of respondent that the divorce
decree raises a disputable presumption or presumptive
evidence as to his civil status based on Section 48, Rule
3949 of the Rules of Court, for the simple reason that no
proof has been presented on the legal effects of the
divorce decree obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity
required by Article 21 of the Family Code was not
submitted together with the application for a marriage
license. According to her, its absence is proof that
respondent did not have legal capacity to remarry.
We clarify. To repeat, the legal capacity to contract
marriage is determined by the national law of the party
concerned. The certificate mentioned in Article 21 of the
Family Code would have been sufficient to establish the
legal capacity of respondent, had he duly presented it in
court. A duly authenticated and admitted certificate is
prima facie evidence of legal capacity to marry on the
part of the alien applicant for a marriage license.50
40 | Conflict of Laws
As it is, however, there is absolutely no evidence that
proves respondent's legal capacity to marry petitioner.
A review of the records before this Court shows that
only the following exhibits were presented before the
lower court: (1) for petitioner: (a) Exhibit "A"
Complaint;51 (b) Exhibit "B" Certificate of Marriage
Between Rederick A. Recto (Filipino-Australian) and
Grace J. Garcia (Filipino) on January 12, 1994 in
Cabanatuan City, Nueva Ecija;52(c) Exhibit "C"
Certificate of Marriage Between Rederick A. Recio
(Filipino) and Editha D. Samson (Australian) on March
1, 1987 in Malabon, Metro Manila; 53 (d) Exhibit "D"
Office of the City Registrar of Cabanatuan City
Certification that no information of annulment between
Rederick A. Recto and Editha D. Samson was in its
records;54 and (e) Exhibit "E" Certificate of Australian
Citizenship of Rederick A. Recto; 55 (2) for respondent:
(Exhibit "1" Amended Answer;56 (b) Exhibit "S"
Family Law Act 1975 Decree Nisi of Dissolution of
Marriage in the Family Court of Australia; 57 (c) Exhibit
"3" Certificate of Australian Citizenship of Rederick A.
Recto;58 (d) Exhibit "4" Decree Nisi of Dissolution of
Marriage in the Family Court of Australia
Certificate;59 and Exhibit "5" Statutory Declaration of
the Legal Separation Between Rederick A. Recto and
Grace J. Garcia Recio since October 22, 1995.60
Based on the above records, we cannot conclude that
respondent, who was then a naturalized Australian
citizen, was legally capacitated to marry petitioner on
January 12, 1994. We agree with petitioner's
contention that the court a quo erred in finding that the
divorce decree ipso facto clothed respondent with the
legal capacity to remarry without requiring him to
adduce sufficient evidence to show the Australian
personal law governing his status; or at the very least,
to prove his legal capacity to contract the second
marriage.
Neither can we grant petitioner's prayer to declare her
marriage to respondent null and void on the ground of
bigamy. After all, it may turn out that under Australian
law, he was really capacitated to marry petitioner as a
direct result of the divorce decree. Hence, we believe
that the most judicious course is to remand this case to
the trial court to receive evidence, if any, which show
petitioner's legal capacity to marry petitioner. Failing in
that, then the court a quo may declare a nullity of the
parties' marriage on the ground of bigamy, there being
already in evidence two existing marriage certificates,
which were both obtained in the Philippines, one in
Malabon, Metro Manila dated March 1, 1987 and the
other, in Cabanatuan City dated January 12, 1994.
WHEREFORE, in the interest of orderly procedure and
substantial justice, we REMAND the case to the court a
quo for the purpose of receiving evidence which
conclusively show respondent's legal capacity to marry
petitioner; and failing in that, of declaring the parties'
marriage void on the ground of bigamy, as above
discussed. No costs
13
[G.R. No. 74495. July 11, 1996]
DUMEZ COMPANY and TRANS-ORIENT ENGINEERS,
INC., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and VERONICO EBILANE,respondents.
DECISION

Before us is a petition for certiorari assailing the
Decision[1] of the National Labor Relations Commission
(hereafter, NLRC)[2] in an illegal dismissal case[3] involving
an overseas contract worker who contracted a
debilitating illness while rendering services under a
subsisting job contract in Riyadh, Saudi Arabia. The
assailed Decision affirmed the award [4] by the Workers'
Assistance and Adjudication Office of the Philippine
Overseas Employment Administration (hereafter POEA) in
favor of private respondent in the amount of U.S.
$1,110.00 or its peso equivalent as and for his medical
compensation benefits.
The facts of the case are not in dispute:
On May 21, 1982, petitioner Dumez Company, a
French company, through petitioner Trans-Orient
Engineers, Inc., a corporation organized and existing
under the laws of the Philippines, engaged the services
of private respondent Veronico Ebilane as carpenter for
one of its projects in the Middle East, with Riyadh, Saudi
Arabia, as his place of actual employment. The parties
executed and signed a one-year overseas employment
agreement embodying the terms and conditions of
private respondent's employment.
Private respondent commenced performance of said
contract on July 3, 1982. On August 31, 1982, while at
the job site, private respondent was suddenly seized by
abdominal pain and rushed to the Riyadh Central
Hospital were appendectomy was performed on
him. During his confinement, he developed right-sided
weakness and numbness and difficulty of speaking which
was found to have been caused by Atrial Fibrillation and
CVA embolism.
In a letter dated September 22, 1982, petitioners
formally terminated private respondent's employment
effective September 29, 1982, up to which time
petitioners paid private respondent his salaries under his
employment contract. Thereafter, on October 13, 1982,
private respondent was repatriated to Manila.
On November 23, 1982, private respondent filed a
complaint for illegal dismissal against petitioners. Such
complaint was filed with the Workers' Assistance and
Adjudication Office of the POEA.
Private respondent asseverates that he bad been
terminated pursuant to the provision of Section 1 (d) of
the employment agreement which refers to termination
of an employee who is unqualified. He maintains that
such ground for termination did not exist in his case and,
thus, his dismissal was without cause.[5]
On January 24, 1984, the POEA Administrator
rendered the assailed Decision ordering petitioners to
pay private respondent medical compensation benefits in
the amount of U.S.$1,110.00 or its peso
equivalent. Notwithstanding an explicit finding made in
the assailed Decision that "there can be no dispute that
complainant could be terminated for medical reasons,"
still petitioners were found to have failed to perform its
obligation to give private respondent his "daily allowance
for each day of work disability, including holidays." [6]
Believing that the POEA Administrator erred in
finding them liable for private respondent's medical
compensation benefits, petitioners appealed to the
NLRC. In a Resolution[7]promulgated on March 25, 1986,
the NLRC affirmed in toto the assailed Decision and
dismissed the appeal for lack of merit.
41 | Conflict of Laws
Petitioners thus came to this Court on a petition
for certiorari[8] seeking the voiding of the Resolution of
the NLRC. In the meantime, petitioners prayed that a
temporary restraining order be issued to enjoin the
POEA from enforcing the assailed Resolution.
As prayed for, we issued a temporary restraining
order enjoining the POEA and the NLRC from enforcing
the assailed Resolution.[9]
On November 17, 1986, the Solicitor General filed
a Comment "as his own, considering that he is unable
to agree with the position adopted by public
respondent National Labor Relations
Commission."[10] The Solicitor General does not dispute
private complainant's entitlement, under Saudi Arabia
law, to medical benefits corresponding to the period of
his physical incapacity. It is his position, however, that
while payment of said medical benefits is explicitly
mandated by the Social Insurance Law of Saudi Arabia,
x x x the same law x x x is equally explicit that the
liability decreed therein devolves at the General
Organization's expense, and not on the employer of
the private respondent.[11]
Significantly, neither the private nor the public
respondent has filed any pleading to refute the
aforementioned postulate of the Solicitor General.
Understandably, the sole error attributed to the
NLRC and the POEA is that there is no legal basis to
require petitioners to pay private respondent medical
compensation benefits equal to 75% of his salaries for
four (4) months.
Petitioners are correct.
The POEA Administrator, in finding petitioners
liable to private respondent for medical benefits
accruing to the latter under the Social Insurance Law of
Saudi Arabia, took judicial notice of the said law. To this
extent, the POEA Administrator's actuations are legally
defensible. We have earlier ruled in Norse Management
Co. (PTE) vs. National Seamen Board[12] that evidence is
usually a matter of procedure of which a mere quasi-
judicial body is not strict about. Although in a long line
of cases, we have ruled that a foreign law, being a
matter of evidence must be alleged and proved, in
order to be recognized and applied in a particular
controversy involving conflicts of laws, jurisprudence
on this matter was not meant to apply to cases before
administrative or quasi-judicial bodies in the light of
the well-settled rule that administrative and quasi-
judicial bodies are not bound strictly by technical rules.
[13]
Nonetheless, only to this extent were the acts of the
POEA Administrator amply supported by the law. Her
actual application thereof, however, is starkly
erroneous.
Section 6(a) of the Overseas Employment
Agreement entered into and signed by the private
parties herein, provides that "Workmen's
Compensation insurance benefits will be provided
within the limits of the compensation law of the host
country."[14] That compensation for disability was to be
provided in accordance with the law of the host
country, Saudi Arabia, is a necessary consequence of
the compulsory coverage under the General
Organization for Social Insurance Law of Saudi Arabia
(hereafter, GOSI Law of Saudi Arabia), upon all workers,
regardless of nationality, sex or age, who render their

services within the territory of Saudi Arabia by virtue of a
labor contract.
Article 49 of the GOSI Law of Saudi Arabia provides
that the General Organization shall pay to the
beneficiaries the insurance compensation, the employer
being under no obligation to pay any allowance to the
insured or to his heirs unless the injury has been
intentionally caused by the employer or the injury has
occurred by reason of the latter's gross error or failure to
abide by the GOSI Law or the rules relating to
occupational health and safety.[15]
Under the GOSI Law of Saudi Arabia as pleaded by
petitioners clearly the obligation to pay medical benefits
as compensation for work-related injury or illness,
devolves upon the General Organization and not upon
petitioners. Furthermore, after taking judicial notice of
the GOSI Law of Saudi Arabia, the POEA Administrator
considered the said law as one of a similar nature as that
of our own compensation laws. Thus, in awarding the
medical benefits to private respondent, she rationalized
the same by quoting Article 166 of the Labor Code of the
Philippines which provides that "the State shall promote
and develop a tax-exempt employees' compensation
program whereby employees x x x in the event of work-
connected disability or death, may promptly secure
adequate income benefit and medical or related
benefits." Indeed, we may postulate further that the
policies underlying our compensation laws and the GOSI
Law of Saudi Arabia being similar, the nature thereof
could not be so dissimilar. Suffice it to say that our own
compensation program imposes on the employer nothing
more than the obligation to remit monthly premiums to
the State Insurance Fund and it is the latter, not the
employer, on which is laid the burden of compensating
the employee for any disability; in fact, once the
employer pays his share to the fund, all obligation on his
part to his employees is ended.[16] No showing at all has
there been that petitioners had failed to comply with its
obligations as employer under the GOSI Law of Saudi
Arabia.
WHEREFORE, the petition for certiorari is
GRANTED. The decisions of the POEA Administrator and
of the NLRC are hereby ANNULLED and SET ASIDE. No
pronouncement as to costs
14
G.R. No. 155014 November 11, 2005
CRESCENT PETROLEUM, LTD., Petitioner, - versus - M/V
LOK MAHESHWARI, THE SHIPPING CORPORATION OF
INDIA, and PORTSERV LIMITED and/or TRANSMAR
SHIPPING, INC., Respondents.
DECISION
This petition for review on certiorari under Rule 45 seeks
the (a) reversal of the November 28, 2001 Decision of
the Court of Appeals in CA-G.R. No. CV-54920, [1] which
dismissed for want of jurisdiction the instant case, and
the September 3, 2002 Resolution of the same appellate
court,[2] which denied petitioners motion for
reconsideration, and (b) reinstatement of the July 25,
1996 Decision[3] of the Regional Trial Court (RTC) in Civil
Case No. CEB-18679, which held that respondents were
solidarily liable to pay petitioner the sum prayed for in
the complaint.
The facts are as follows: Respondent M/V Lok Maheshwari
(Vessel) is an oceangoing vessel of Indian registry that is
owned by respondent Shipping Corporation of India (SCI),
a corporation organized and existing under the laws of
42 | Conflict of Laws
India and principally owned by the Government of
India. It was time-chartered by respondent SCI to Halla
Merchant Marine Co. Ltd. (Halla), a South Korean
company. Halla, in turn, sub-chartered the Vessel
through a time charter to Transmar Shipping, Inc.
(Transmar). Transmar further sub-chartered the Vessel
to Portserv Limited (Portserv). Both Transmar and
Portserv are corporations organized and existing under
the laws of Canada.
On or about November 1, 1995, Portserv requested
petitioner Crescent Petroleum, Ltd. (Crescent), a
corporation organized and existing under the laws of
Canada that is engaged in the business of selling
petroleum and oil products for the use and operation of
oceangoing vessels, to deliver marine fuel oils (bunker
fuels) to the Vessel. Petitioner Crescent granted and
confirmed the request through an advice via facsimile
dated November 2, 1995. As security for the payment
of the bunker fuels and related services, petitioner
Crescent received two (2) checks in the amounts of
US$100,000.00 and US$200,000.00. Thus, petitioner
Crescent contracted with its supplier, Marine Petrobulk
Limited (Marine Petrobulk), another Canadian
corporation, for the physical delivery of the bunker
fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk
delivered the bunker fuels amounting to US$103,544
inclusive of barging and demurrage charges to the
Vessel at the port of Pioneer Grain, Vancouver, Canada.
The Chief Engineer Officer of the Vessel duly
acknowledged and received the delivery
receipt. Marine Petrobulk issued an invoice to petitioner
Crescent for the US$101,400.00 worth of the bunker
fuels. Petitioner Crescent issued a check for the same
amount in favor of Marine Petrobulk, which check was
duly encashed.
Having paid Marine Petrobulk, petitioner Crescent
issued a revised invoice dated November 21, 1995 to
Portserv Limited, and/or the Master, and/or Owners,
and/or Operators, and/or Charterers of M/V Lok
Maheshwari in the amount of US$103,544.00 with
instruction to remit the amount on or before December
1, 1995. The period lapsed and several demands were
made but no payment was received. Also, the checks
issued to petitioner Crescent as security for the
payment of the bunker fuels were dishonored for
insufficiency of funds. As a consequence, petitioner
Crescent incurred additional expenses of US$8,572.61
for interest, tracking fees, and legal fees.
On May 2, 1996, while the Vessel was docked at
the port of Cebu City, petitioner Crescent instituted
before the RTC of Cebu City an action for a sum of
money with prayer for temporary restraining order and
writ of preliminary attachment against respondents
Vessel and SCI, Portserv and/or Transmar. The case was
raffled to Branch 10 and docketed as Civil Case No.
CEB-18679.
On May 3, 1996, the trial court issued a writ of
attachment against the Vessel with bond
at P2,710,000.00. Petitioner Crescent withdrew its
prayer for a temporary restraining order and posted
the required bond.
On May 18, 1996, summonses were served to
respondents Vessel and SCI, and Portserv and/or
Transmar through the Master of the Vessel. On May 28,
1996, respondents Vessel and SCI, through Pioneer
Insurance and Surety Corporation (Pioneer), filed an
urgent ex-parte motion to approve Pioneers letter of
undertaking, to consider it as counter-bond and to
discharge the attachment. On May 29, 1996, the trial
court granted the motion; thus, the letter of
undertaking was approved as counter-bond to
discharge the attachment.
For failing to file their respective answers and upon
motion of petitioner Crescent, the trial court declared
respondents Vessel and SCI, Portserv and/or Transmar

in default. Petitioner Crescent was allowed to present its
evidence ex-parte.
On July 25, 1996, the trial court rendered its decision in
favor of petitioner Crescent, thus:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of
plaintiff [Crescent] and against the defendants
[Vessel, SCI, Portserv and/or Transmar].
Consequently, the latter are hereby ordered to pay
plaintiff jointly and solidarily, the following:
(a) the sum of US$103,544.00, representing the
outstanding obligation;
(b) interest of US$10,978.50 as of July 3, 1996, plus
additional interest at 18% per annum for the period
thereafter, until the principal account is fully paid;
(c) attorneys fees of P300,000.00; and
(d) P200,000.00 as litigation expenses.
SO ORDERED.
On August 19, 1996, respondents Vessel and SCI
appealed to the Court of Appeals. They attached copies
of the charter parties between respondent SCI and Halla,
between Halla and Transmar, and between Transmar and
Portserv. They pointed out that Portserv was a time
charterer and that there is a clause in the time charters
between respondent SCI and Halla, and between Halla
and Transmar, which states that the Charterers shall
provide and pay for all the fuel except as otherwise
agreed. They submitted a copy of Part II of the Bunker
Fuel Agreement between petitioner Crescent and
Portserv containing a stipulation that New York law
governs the construction, validity and performance of
the contract. They likewise submitted certified copies of
the Commercial Instruments and Maritime Lien Act of
the United States (U.S.), some U.S. cases, and some
Canadian cases to support their defense.
On November 28, 2001, the Court of Appeals issued
its assailed Decision, which reversed that of the trial
court, viz:
WHEREFORE, premises considered, the
Decision dated July 25, 1996, issued by the
Regional Trial Court of Cebu City, Branch 10, is
hereby REVERSED and SET ASIDE, and a new
one is entered DISMISSING the instant case for
want of jurisdiction.
The appellate court denied petitioner Crescents motion
for reconsideration explaining that it dismissed the
instant action primarily on the ground of forum non
conveniensconsidering that the parties are foreign
corporations which are not doing business in the
Philippines.
Hence, this petition submitting the following issues for
resolution, viz:
1. Philippine courts have jurisdiction over
a foreign vessel found inside Philippine waters for
the enforcement of a maritime lien against said
vessel and/or its owners and operators;
2. The principle of forum non
conveniens is inapplicable to the instant case;
3. The trial court acquired jurisdiction over
the subject matter of the instant case, as well as
over the res and over the persons of the parties;
43 | Conflict of Laws
4. The enforcement of a maritime lien on
the subject vessel is expressly granted by law.
The Ship Mortgage Acts as well as the Code of
Commerce provides for relief to petitioner for
its unpaid claim;
5. The arbitration clause in the contract
was not rigid or inflexible but expressly allowed
petitioner to enforce its maritime lien in
Philippine courts provided the vessel was in the
Philippines;
6. The law of the state of New York is
inapplicable to the present controversy as the
same has not been properly pleaded and
proved;
7. Petitioner has legal capacity to sue
before Philippine courts as it is suing upon an
isolated business transaction;
8. Respondents were duly served
summons although service of summons upon
respondents is not a jurisdictional requirement,
the action being a suit quasi in rem;
9. The trial courts decision has factual
and legal bases; and,
10. The respondents should be held jointly
and solidarily liable.
In a nutshell, this case is for the satisfaction of
unpaid supplies furnished by a foreign supplier in a
foreign port to a vessel of foreign registry that is
owned, chartered and sub-chartered by foreign
entities.
Under Batas Pambansa Bilang 129, as amended by
Republic Act No. 7691, RTCs exercise exclusive original
jurisdiction (i)n all actions in admiralty and maritime
where the demand or claim exceeds two hundred
thousand pesos (P200,000) or in Metro Manila, where
such demand or claim exceeds four hundred thousand
pesos (P400,000). Two (2) tests have been used to
determine whether a case involving a contract comes
within the admiralty and maritime jurisdiction of a
court - the locational test and the subject matter test.
The English rule follows the locational test wherein
maritime and admiralty jurisdiction, with a few
exceptions, is exercised only on contracts made upon
the sea and to be executed thereon. This is totally
rejected under the American rule where the criterion in
determining whether a contract is maritime depends
on the nature and subject matter of the contract,
having reference to maritime service and transactions.
[4]
In International Harvester Company of the
Philippines v. Aragon,[5] we adopted the American rule
and held that (w)hether or not a contract is maritime
depends not on the place where the contract is made
and is to be executed, making the locality the test, but
on the subject matter of the contract, making the true
criterion a maritime service or a maritime transaction.
A contract for furnishing supplies like the one
involved in this case is maritime and within the
jurisdiction of admiralty.[6] It may be invoked before our
courts through an action in rem or quasi in rem or an
action in personam. Thus: [7]
xxx
Articles 579 and 584 [of the Code of Commerce]
provide a method of collecting or enforcing not
only the liens created under Section 580 but also
for the collection of any kind of lien whatsoever.
[8]
In the Philippines, we have a complete
legislation, both substantive and adjective, under
which to bring an action in remagainst a vessel
for the purpose of enforcing liens. The
substantive law is found in Article 580 of the
Code of Commerce. The procedural law is to be
found in Article 584 of the same Code. The result
is, therefore, that in the Philippines any vessel

even though it be a foreign vessel found in any
port of this Archipelago may be attached and sold
under the substantive law which defines the right,
and the procedural law contained in the Code of
Commerce by which this right is to be enforced. [9] x
x x. But where neither the law nor the contract
between the parties creates any lien or charge
upon the vessel, the only way in which it can be
seized before judgment is by pursuing the remedy
relating to attachment under Rule 59 [now Rule 57]
of the Rules of Court.[10]
But, is petitioner Crescent entitled to a maritime
lien under our laws? Petitioner Crescent bases its claim of
a maritime lien on Sections 21, 22 and 23 of Presidential
Decree No. 1521 (P.D. No. 1521), also known as the Ship
Mortgage Decree of 1978, viz:
Sec. 21. Maritime Lien for Necessaries; persons
entitled to such lien. - Any person furnishing
repairs, supplies, towage, use of dry dock or
maritime railway, or other necessaries, to any
vessel, whether foreign or domestic, upon the
order of the owner of such vessel, or of a person
authorized by the owner, shall have a maritime lien
on the vessel, which may be enforced by suit in
rem, and it shall be necessary to allege or prove
that credit was given to the vessel.
Sec. 22. Persons Authorized to Procure Repairs,
Supplies and Necessaries. - The following persons
shall be presumed to have authority from the
owner to procure repairs, supplies, towage, use of
dry dock or marine railway, and other necessaries
for the vessel: The managing owner, ships
husband, master or any person to whom the
management of the vessel at the port of supply is
entrusted. No person tortuously or unlawfully in
possession or charge of a vessel shall have
authority to bind the vessel.
Sec. 23. Notice to Person Furnishing Repairs,
Supplies and Necessaries. - The officers and agents
of a vessel specified in Section 22 of this Decree
shall be taken to include such officers and agents
when appointed by a charterer, by an owner pro
hac vice, or by an agreed purchaser in possession
of the vessel; but nothing in this Decree shall be
construed to confer a lien when the furnisher knew,
or by exercise of reasonable diligence could have
ascertained, that because of the terms of a charter
party, agreement for sale of the vessel, or for any
other reason, the person ordering the repairs,
supplies, or other necessaries was without
authority to bind the vessel therefor.
Petitioner Crescent submits that these provisions
apply to both domestic and foreign vessels, as well as
domestic and foreign suppliers of necessaries. It
contends that the use of the term any person in Section
21 implies that the law is not restricted to domestic
suppliers but also includes all persons who supply
provisions and necessaries to a vessel, whether foreign
or domestic. It points out further that the law does not
indicate that the supplies or necessaries must be
furnished in the Philippines in order to give petitioner the
right to seek enforcement of the lien with a Philippine
court.[11]
Respondents Vessel and SCI, on the other hand,
maintain that Section 21 of the P.D. No. 1521 or the Ship
Mortgage Decree of 1978 does not apply to a foreign
supplier like petitioner Crescent as the provision refers
only to a situation where the person furnishing the
supplies is situated inside the territory of the Philippines
and not where the necessaries were furnished in a
foreign jurisdiction like Canada.[12]
We find against petitioner Crescent.
I. P.D. No. 1521 or the Ship Mortgage Decree of
1978 was enacted to accelerate the growth and
development of the shipping industry and to extend the
benefits accorded to overseas shipping under
44 | Conflict of Laws
Presidential Decree No. 214 to domestic shipping. [13] It
is patterned closely from the U.S. Ship Mortgage Act of
1920 and the Liberian Maritime Law relating to
preferred mortgages.[14] Notably, Sections 21, 22 and
23 of P.D. No. 1521 or the Ship Mortgage Decree of
1978 are identical to Subsections P, Q, and R,
respectively, of the U.S. Ship Mortgage Act of 1920,
which is part of the Federal Maritime Lien Act. Hence,
U.S. jurisprudence finds relevance to determining
whether P.D. No. 1521 or the Ship Mortgage Decree of
1978 applies in the present case.
The various tests used in the U.S. to determine
whether a maritime lien exists are the following:
One. In a suit to establish and enforce a maritime
lien for supplies furnished to a vessel in a foreign port,
whether such lien exists, or whether the court has or
will exercise jurisdiction, depends on the law of the
country where the supplies were furnished, which must
be pleaded and proved.[15] This principle was laid down
in the 1888 case ofThe Scotia,[16] reiterated in The
Kaiser Wilhelm II[17] (1916), in The
Woudrichem[18] (1921) and in The City of
Atlanta[19] (1924).
Two. The Lauritzen-Romero-Rhoditis trilogy of
cases, which replaced such single-factor methodologies
as the law of the place of supply. [20]
In Lauritzen v. Larsen,[21] a Danish seaman, while
temporarily in New York, joined the crew of a ship of
Danish flag and registry that is owned by a Danish
citizen. He signed the ships articles providing that the
rights of the crew members would be governed by
Danish law and by the employers contract with the
Danish Seamens Union, of which he was a member.
While in Havana and in the course of his employment,
he was negligently injured. He sued the shipowner in a
federal district court in New York for damages under
the Jones Act. In holding that Danish law and not the
Jones Act was applicable, the Supreme Court adopted
a multiple-contact test to determine, in the absence of
a specific Congressional directive as to the statutes
reach, which jurisdictions law should be applied. The
following factors were considered: (1) place of the
wrongful act; (2) law of the flag; (3) allegiance or
domicile of the injured; (4) allegiance of the defendant
shipowner; (5) place of contract; (6) inaccessibility of
foreign forum; and (7) law of the forum.
Several years after Lauritzen, the U.S. Supreme
Court in the case of Romero v. International Terminal
Operating Co.[22] again considered a foreign seamans
personal injury claim under both the Jones Act and the
general maritime law. The Court held that the factors
first announced in the case of Lauritzen
were applicable not only to personal injury claims
arising under the Jones Act but to all matters arising
under maritime law in general.[23]
Hellenic Lines, Ltd. v. Rhoditis [24] was also a suit
under the Jones Act by a Greek seaman injured aboard
a ship of Greek registry while in American waters. The
ship was operated by a Greek corporation which has its
largest office in New York and another office in New
Orleans and whose stock is more than 95% owned by a
U.S. domiciliary who is also a Greek citizen. The ship
was engaged in regularly scheduled runs between
various ports of the U.S. and the Middle East, Pakistan,
and India, with its entire income coming from either
originating or terminating in the U.S. The contract of
employment provided that Greek law and a Greek
collective bargaining agreement would apply between
the employer and the seaman and that all claims
arising out of the employment contract were to be
adjudicated by a Greek court. The U.S. Supreme Court
observed that of the seven factors listed in the
Lauritzen test, four were in favor of the shipowner and
against jurisdiction. In arriving at the conclusion that
the Jones Act applies, it ruled that the application of
the Lauritzen test is not a mechanical one. It stated
thus: [t]he significance of one or more factors must be
considered in light of the national interest served by

the assertion of Jones Act jurisdiction. (footnote omitted)
Moreover, the list of seven factors in Lauritzen was not
intended to be exhaustive. x x x [T]he shipowners base
of operations is another factor of importance in
determining whether the Jones Act is applicable; and
there well may be others.
The principles enunciated in these maritime tort
cases have been extended to cases involving unpaid
supplies and necessaries such as the
cases of Forsythe International U.K., Ltd. v. M/V Ruth
Venture,[25] and Comoco Marine Services v. M/V El
Centroamericano.[26]
Three. The factors provided in Restatement (Second)
of Conflicts of Law have also been applied, especially in
resolving cases brought under the Federal Maritime Lien
Act. Their application suggests that in the absence of an
effective choice of law by the parties, the forum contacts
to be considered include: (a) the place of contracting; (b)
the place of negotiation of the contract; (c) the place of
performance; (d) the location of the subject matter of the
contract; and (e) the domicile, residence, nationality,
place of incorporation and place of business of the
parties.[27]
In Gulf Trading and Transportation Co. v. The Vessel
Hoegh Shield,[28] an admiralty action in rem was brought
by an American supplier against a vessel of Norwegian
flag owned by a Norwegian Company and chartered by a
London time charterer for unpaid fuel oil and marine
diesel oil delivered while the vessel was in U.S. territory.
The contract was executed in London. It was held that
because the bunker fuel was delivered to a foreign flag
vessel within the jurisdiction of the U.S., and because the
invoice specified payment in the U.S., the admiralty and
maritime law of the U.S. applied. The U.S. Court of
Appeals recognized the modern approach to maritime
conflict of law problems introduced in the Lauritzen case.
However, it observed that Lauritzen involved a torts
claim under the Jones Act while the present claim
involves an alleged maritime lien arising from unpaid
supplies. It made a disclaimer that its conclusion is
limited to the unique circumstances surrounding a
maritime lien as well as the statutory directives found in
the Maritime Lien Statute and that the initial choice of
law determination is significantly affected by the
statutory policies surrounding a maritime lien. It ruled
that the facts in the case call for the application of the
Restatement (Second) of Conflicts of Law. The U.S. Court
gave much significance to the congressional intent in
enacting the Maritime Lien Statute to protect the
interests of American supplier of goods, services or
necessaries by making maritime liens available where
traditional services are routinely rendered. It concluded
that the Maritime Lien Statute represents a relevant
policy of the forum that serves the needs of the
international legal system as well as the basic policies
underlying maritime law. The court also gave equal
importance to the predictability of result and protection
of justified expectations in a particular field of law. In the
maritime realm, it is expected that when necessaries are
furnished to a vessel in an American port by an American
supplier, the American Lien Statute will apply to protect
that supplier regardless of the place where the contract
was formed or the nationality of the vessel.
The same principle was applied in the case
of Swedish Telecom Radio v. M/V Discovery I [29] where the
American court refused to apply the Federal Maritime
Lien Act to create a maritime lien for goods and services
supplied by foreign companies in foreign ports. In this
case, a Swedish company supplied radio equipment in a
Spanish port to refurbish a Panamanian vessel damaged
by fire. Some of the contract negotiations occurred in
Spain and the agreement for supplies between the
parties indicated Swedish companys willingness to
submit to Swedish law. The ship was later sold under a
contract of purchase providing for the application of New
York law and was arrested in the U.S. The U.S. Court of
Appeals also held that while the contacts-based
framework set forth in Lauritzen was useful in the
analysis of all maritime choice of law situations, the
factors were geared towards a seamans injury claim. As
45 | Conflict of Laws
in Gulf Trading, the lien arose by operation of law
because the ships owner was not a party to the
contract under which the goods were supplied. As a
result, the court found it more appropriate to consider
the factors contained in Section 6 of the Restatement
(Second) of Conflicts of Law. The U.S. Court held that
the primary concern of the Federal Maritime Lien Act is
the protection of American suppliers of goods and
services.
The same factors were applied in the case
of Ocean Ship Supply, Ltd. v. M/V Leah.[30]
II. Finding guidance from the foregoing decisions,
the Court cannot sustain petitioner Crescents
insistence on the application of P.D. No. 1521 or the
Ship Mortgage Decree of 1978 and hold that a
maritime lien exists.
First. Out of the seven basic factors listed in the
case of Lauritzen, Philippine law only falls under
one the law of the forum. All other elements are
foreign Canada is the place of the wrongful act, of
the allegiance or domicile of the injured and the
place of contract; India is the law of the flag and
the allegiance of the defendant shipowner.
Balancing these basic interests, it is inconceivable
that the Philippine court has any interest in the
case that outweighs the interests of Canada or
India for that matter.
Second. P.D. No. 1521 or the Ship Mortgage Decree
of 1978 is inapplicable following the factors under
Restatement (Second) of Conflict of Laws. Like the
Federal Maritime Lien Act of the U.S., P.D. No. 1521
or the Ship Mortgage Decree of 1978 was enacted
primarily to protect Filipino suppliers and was not
intended to create a lien from a contract for
supplies between foreign entities delivered in a
foreign port.
Third. Applying P.D. No. 1521 or the Ship Mortgage
Decree of 1978 and rule that a maritime lien exists
would not promote the public policy behind the
enactment of the law to develop the domestic
shipping industry. Opening up our courts to foreign
suppliers by granting them a maritime lien under
our laws even if they are not entitled to a maritime
lien under their laws will encourage forum
shopping.
Finally. The submission of petitioner is not in
keeping with the reasonable expectation of the
parties to the contract. Indeed, when the parties
entered into a contract for supplies in Canada, they
could not have intended the laws of a remote
country like the Philippines to determine the
creation of a lien by the mere accident of the
Vessels being in Philippine territory.
III. But under which law should petitioner Crescent
prove the existence of its maritime lien?
In light of the interests of the various foreign
elements involved, it is clear that Canada has the most
significant interest in this dispute. The injured party is
a Canadian corporation, the sub-charterer which placed
the orders for the supplies is also Canadian, the entity
which physically delivered the bunker fuels is in
Canada, the place of contracting and negotiation is in
Canada, and the supplies were delivered in Canada.
The arbitration clause contained in the Bunker Fuel
Agreement which states that New York law governs the
construction, validity and performance of the contract
is only a factor that may be considered in the choice-
of-law analysis but is not conclusive. As in the cases
of Gulf Trading and Swedish Telecom, the lien that is
the subject matter of this case arose by operation of
law and not by contract because the shipowner was

not a party to the contract under which the goods were
supplied.
It is worthy to note that petitioner Crescent never
alleged and proved Canadian law as basis for the
existence of a maritime lien. To the end, it insisted on its
theory that Philippine law applies. Petitioner contends
that even if foreign law applies, since the same was not
properly pleaded and proved, such foreign law must be
presumed to be the same as Philippine law pursuant to
the doctrine of processual presumption.
Thus, we are left with two choices: (1) dismiss the
case for petitioners failure to establish a cause of
action[31] or (2) presume that Canadian law is the same
as Philippine law. In either case, the case has to be
dismissed.
It is well-settled that a party whose cause of action or
defense depends upon a foreign law has the burden of
proving the foreign law. Such foreign law is treated as a
question of fact to be properly pleaded and proved.
[32]
Petitioner Crescents insistence on enforcing a
maritime lien before our courts depended on the
existence of a maritime lien under the proper law. By
erroneously claiming a maritime lien under Philippine law
instead of proving that a maritime lien exists under
Canadian law, petitioner Crescent failed to establish a
cause of action.[33]
Even if we apply the doctrine of processual
presumption, the result will still be the same. Under P.D.
No. 1521 or the Ship Mortgage Decree of 1978, the
following are the requisites for maritime liens on
necessaries to exist: (1) the necessaries must have been
furnished to and for the benefit of the vessel; (2) the
necessaries must have been necessary for the
continuation of the voyage of the vessel; (3) the credit
must have been extended to the vessel; (4) there must
be necessity for the extension of the credit; and (5) the
necessaries must be ordered by persons authorized to
contract on behalf of the vessel. [34] These do not avail in
the instant case.
First. It was not established that benefit was
extended to the vessel. While this is presumed when
the master of the ship is the one who placed the
order, it is not disputed that in this case it was the
sub-charterer Portserv which placed the orders to
petitioner Crescent.[35] Hence, the presumption does
not arise and it is incumbent upon petitioner
Crescent to prove that benefit was extended to the
vessel. Petitioner did not.
Second. Petitioner Crescent did not show any proof
that the marine products were necessary for the
continuation of the vessel.
Third. It was not established that credit was
extended to the vessel. It is presumed that in the
absence of fraud or collusion, where advances are
made to a captain in a foreign port, upon his
request, to pay for necessary repairs or supplies to
enable his vessel to prosecute her voyage, or to pay
harbor dues, or for pilotage, towage and like services
rendered to the vessel, that they are made upon the
credit of the vessel as well as upon that of her
owners.[36] In this case, it was the sub-charterer
Portserv which requested for the delivery of the
bunker fuels. The issuance of two checks amounting
to US$300,000 in favor of petitioner Crescent prior to
the delivery of the bunkers as security for the
payment of the obligation weakens petitioner
Crescents contention that credit was extended to the
Vessel.
We also note that when copies of the charter parties
were submitted by respondents in the Court of
Appeals, the time charters between respondent SCI
and Halla and between Halla and Transmar were
shown to contain a clause which states that the
Charterers shall provide and pay for all the fuel
except as otherwise agreed. This militates against
petitioner Crescents position that Portserv is
46 | Conflict of Laws
authorized by the shipowner to contract for
supplies upon the credit of the vessel.
Fourth. There was no proof of necessity of credit. A
necessity of credit will be presumed where it
appears that the repairs and supplies were
necessary for the ship and that they were ordered
by the master. This presumption does not arise in
this case since the fuels were not ordered by the
master and there was no proof of necessity for the
supplies.
Finally. The necessaries were not ordered by
persons authorized to contract in behalf of the
vessel as provided under Section 22 of P.D. No.
1521 or the Ship Mortgage Decree of 1978 - the
managing owner, the ships husband, master or
any person with whom the management of the
vessel at the port of supply is entrusted. Clearly,
Portserv, a sub-charterer under a time charter, is
not someone to whom the management of the
vessel has been entrusted. A time charter is a
contract for the use of a vessel for a specified
period of time or for the duration of one or more
specified voyages wherein the owner of the time-
chartered vessel retains possession and control
through the master and crew who remain his
employees.[37] Not enjoying the presumption of
authority, petitioner Crescent should have proved
that Portserv was authorized by the shipowner to
contract for supplies. Petitioner failed.
A discussion on the principle of forum non
conveniens is unnecessary.
IN VIEW WHEREOF, the Decision of the Court of
Appeals in CA-G.R. No. CV 54920, dated November 28,
2001, and its subsequent Resolution of September 3,
2002 are AFFIRMED. The instant petition for review on
certiorari is DENIED for lack of merit. Cost against
petitioner
15
G.R. No. 172342 July 13, 2009
LWV CONSTRUCTION CORPORATION, Petitioner, -versus
MARCELO B. DUPO, Respondent.
DECISION
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] datedApril 12, 2006, denying the motion
for reconsideration. The Court of Appeals had ruled
that under Article 87 of the Saudi Labor and Workmen
Law (Saudi Labor Law), respondent Marcelo Dupo is
entitled to a service award or longevity pay amounting
to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino
workers, hired respondent as Civil Structural
Superintendent to work in Saudi Arabia for its principal,
Mohammad Al-Mojil Group/Establishment
(MMG). On February 26, 1992, respondent signed his
first overseas employment contract, renewable after one
year. It was renewed five times on the following
dates: May 10, 1993, November 16, 1994, January 22,
1996, April 14, 1997, and March 26, 1998. All were
fixed-period contracts for one year. The sixth and last
contract stated that respondents employment starts
upon reporting to work and ends when he leaves the
work site. Respondent left Saudi Arabia on April 30,
1999 and arrived in thePhilippines on May 1, 1999.
On May 28, 1999, respondent informed MMG, through
the petitioner, that he needs to extend his vacation
because his son was hospitalized. He also sought a

promotion with salary adjustment. [3] In reply, MMG
informed respondent that his promotion is subject to
managements review; that his services are still needed;
that he was issued a plane ticket for his return flight
to Saudi Arabia on May 31, 1999; and that his decision
regarding his employment must be made within seven
days, otherwise, MMG will be compelled to cancel [his]
slot.[4]
On July 6, 1999, respondent resigned. In his letter to
MMG, he also stated:
xxxx
I am aware that I still have to do a final settlement with
the company and hope that during my more than seven
(7) [years] services, as the Saudi Law stated, I am
entitled for a long service award.[5] (Emphasis supplied.)
xxxx
According to respondent, when he followed up his claim
for long service award on December 7, 2000, petitioner
informed him that MMG did not respond.[6]
On December 11, 2000, respondent filed a Aggrieved, petitioner brought the case to the Court of
complaint[7] for payment of service award against
petitioner before the National Labor Relations
Commission (NLRC), Regional Arbitration
Branch, Cordillera Administrative Region, Baguio City. In
support of his claim, respondent averred in his position
paper that:
xxxx
Under the Law of Saudi Arabia, an employee who
rendered at least five (5) years in a company within the
jurisdiction of Saudi Arabia, is entitled to the so-
called long service award which is known to others as
longevity pay of at least one half month pay for every
year of service. In excess of five years an employee is
entitled to one month pay for every year of service. In
both cases inclusive of all benefits and allowances.
This benefit was offered to complainant before he went
on vacation, hence, this was engrained in his mind. He
reconstructed the computation of his long service award
or longevity pay and he arrived at the following
computation exactly the same with the amount he was
previously offered [which is US$12,640.33]. [8] (Emphasis
supplied.)
xxxx
Respondent said that he did not grab the offer for he
intended to return after his vacation.
For its part, petitioner offered payment and prescription
as defenses. Petitioner maintained that MMG pays its
workers their Service Award or Severance Pay every
conclusion of their Labor Contracts pursuant to Article 87
of the [Saudi Labor Law]. Under Article 87, payment of
the award is at the end or termination of the Labor
Contract concluded for a specific period. Based on the
payroll,[9] respondent was already paid his service award
or severance pay for his latest (sixth) employment
contract.
Petitioner added that under Article 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. Respondents six
contracts ended when he left Saudi Arabia on the
following dates: April 15, 1993, June 8, 1994, December
18, 1995, March 21, 1997, March 16, 1998 and April 30,
1999. Petitioner concluded that the one-year prescriptive
47 | Conflict of Laws
period had lapsed because respondent filed his
complaint on December 11, 2000or one year and
seven months after his sixth contract ended.[11]
In his June 18, 2001 Decision, [12] the Labor Arbiter
ordered petitioner to pay respondent longevity pay of
US$12,640.33 or P648,562.69 and attorneys fees
of P64,856.27 or a total of P713,418.96.[13]
The Labor Arbiter ruled that respondents seven-year
employment with MMG had sufficiently oriented him on
the benefits given to workers; that petitioner was
unable to convincingly refute respondents claim that
MMG offered him longevity pay before he went on
vacation on May 1, 1999; and that respondents claim
was not barred by prescription since his claim on July 6,
1999, made a month after his cause of action accrued,
interrupted the prescriptive period under the Saudi
Labor Law until his claim was categorically denied.
Petitioner appealed. However, the NLRC dismissed the
appeal and affirmed the Labor Arbiters decision. [14] The
NLRC ruled that respondent is entitled to longevity pay
which is different from severance pay.
Appeals through a petition for certiorari under Rule 65
of the Rules of Court. The Court of Appeals denied the
petition and affirmed the NLRC. The Court of Appeals
ruled that service award is the same as longevity pay,
and that the severance pay received by
respondent cannot be equated with service award. The
dispositive portion of the Court of Appeals decision
reads:
WHEREFORE, finding no grave abuse of discretion
amounting to lack or in (sic) excess of jurisdiction on
the part of public respondent NLRC, the petition is
denied. The NLRC decision dated November 29,
2002 as well as and (sic) its January 31,
2003 Resolution are hereby AFFIRMED in toto.
SO ORDERED.[15]
After its motion for reconsideration was denied,
petitioner filed the instant petition raising the following
issues:
I. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN FINDING NO GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION ON THE PART OF PUBLIC RESPONDENT
NATIONAL LABOR RELATIONS COMMISSION.
II. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN FINDING THAT THE SERVICE AWARD
OF THE RESPONDENT [HAS] NOT PRESCRIBED WHEN
HIS COMPLAINT WAS FILED ON DECEMBER 11, 2000.
III. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN APPLYING IN THE CASE AT BAR
[ARTICLE 1155 OF THE CIVIL CODE].
IV. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN APPLYING ARTICLE NO. 7 OF THE
SAUDI LABOR AND WORKMEN LAW TO SUPPORT ITS
FINDING THAT THE BASIS OF THE SERVICE AWARD IS
LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED
BY AN EMPLOYEE.[16]
Essentially, the issue is whether the Court of Appeals
erred in ruling that respondent is entitled to a service
award or longevity pay of US$12,640.33 under the
provisions of the Saudi Labor Law. Related to this issue
are petitioners defenses of payment and prescription.

Petitioner points out that the Labor Arbiter
awarded longevity pay although the Saudi Labor Law
grants no such benefit, and the NLRC confused longevity
pay and service award. Petitioner maintains that the
benefit granted by Article 87 of the Saudi Labor Law
is service award which was already paid by MMG each
time respondents contract ended.
Petitioner insists that prescription barred respondents
claim for service award as the complaint was filed one
year and seven months after the sixth contract
ended.Petitioner alleges that the Court of Appeals erred
in ruling that respondents July 6, 1999 claim interrupted
the running of the prescriptive period. Such ruling is
contrary to Article 13 of the Saudi Labor Law which
provides that no case or claim relating to any of the
rights provided for under said law shall be heard after the
lapse of 12 months from the date of the termination of
the contract.
Respondent counters that he is entitled to longevity
pay under the provisions of the Saudi Labor Law and
quotes extensively the decision of the Court of
Appeals. He points out that petitioner has not refuted the
Labor Arbiters 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
respondents service award under Article 87 of the Saudi
Labor Law has already been paid. Our computation will
show that the severance pay received by respondent was
his service award.
Article 87 clearly grants a service award. It reads:
Article 87
Where the term of a labor contract concluded for a
specified period comes to an end or where the employer
cancels a contract of unspecified period, the employer
shall pay to the workman an award for the period of his
service to be computed on the basis of half a months pay
for each of the first five years and one months pay for
each of the subsequent years. The last rate of pay shall
be taken as basis for the computation of the award. For
fractions of a year, the workman shall be entitled to an
award which is proportionate to his service period during
that year. Furthermore, the workman shall be entitled to
the service award provided for at the beginning of this
article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or
childbirth.
C. If the workman is leaving the work as a
result of a force majeure beyond his control. [17] (Emphasis
supplied.)
Respondent, however, has called the benefit other
names such as long service award and longevity pay. On
the other hand, petitioner claimed that the service
award is the same as severance pay. Notably, the Labor
Arbiter was unable to specify any law to support his
award of longevity pay.[18] He anchored the award on his
finding that respondents allegations were more credible
because his seven-year employment at MMG had
sufficiently oriented him on the benefits given to
workers. To the NLRC, respondent is entitled to service
award or longevity pay under Article 87 and
48 | Conflict of Laws
that longevity pay is different from severance pay. The
Court of Appeals agreed.
Considering that Article 87 expressly grants a service
award, why is it correct to agree with respondent that
service award is the same as longevity pay, and wrong
to agree with petitioner that service award is the same
as severance pay? And why would it be correct to say
that service award is severance pay, and wrong to call
service award as longevity pay?
We found the answer in the pleadings and evidence
presented. Respondents position paper mentioned how
his long service award or longevity pay is computed:
half-months pay per year of service and one-months
pay per year after five years of service. Article 87 has
the same formula to compute the service award.
The payroll submitted by petitioner showed that
respondent received severance pay of SR2,786 for his
sixth employment contract covering the period April 21,
1998 to April 29, 1999.[19] The computation below shows
that respondents severance pay of SR2,786 was
his service award under Article 87.
Service Award = (SR5,438)[20] + (9 days/365 days)[21] x
(SR5,438)
Service Award = SR2,786.04
Respondents service award for the sixth contract is
equivalent only to half-months pay plus the
proportionate amount for the additional nine days of
service he rendered after one year. Respondents
employment contracts expressly stated that his
employment ended upon his departure from work.
Each year he departed from work and successively new
contracts were executed before he reported for work
anew. His service was not cumulative. Pertinently,
in Brent School, Inc. v. Zamora,[22] we said that a fixed
term is an essential and natural appurtenance of
overseas employment contracts,[23] as in this case. We
also said in that case that under American law, [w]here
a contract specifies the period of its duration, it
terminates on the expiration of such period. A contract
of employment for a definite period terminates by its
own terms at the end of such period. [24] As it is, Article
72 of the Saudi Labor Law is also of similar import. It
reads:
A labor contract concluded for a specified period shall
terminate upon the expiry of its term. If both parties
continue to enforce the contract, thereafter, it shall be
considered renewed for an unspecified period.[25]
Regarding respondents 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, respondents 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

respondents computation of his supposed longevity pay
before adopting that computation as their own.
On the matter of prescription, however, we cannot agree
with petitioner that respondents action has prescribed
under Article 13 of the Saudi Labor Law. What applies is
Article 291 of our Labor Code which reads:
ART. 291. Money claims. All money claims arising from
employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued;
otherwise they shall be forever barred.
xxxx
In Cadalin v. POEAs 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 inCadalin v. POEAs 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 x x x.
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.
xxxx
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
49 | Conflict of Laws
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 forums public policy x x x. To
enforce the one-year prescriptive period of the Amiri
Decree No. 23 of 1976 as regards the claims in question
would contravene the public policy on the protection to
labor.[29]
xxxx
Thus, in our considered view, respondents 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
respondents 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
datedJanuary 31, 2003 of the NLRC in NLRC CA No.
028994-01 (NLRC RAB-CAR-12-0649-00)
are REVERSED and SET ASIDE. The Complaint of
respondent is hereby DISMISSED.
No pronouncement as to costs.