Cases (FT)

CONFLICTS OF LAW CASES
[G.R. No. 124110. April 20, 2001]
UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS,

ANICETO FONTANILLA, in his personal capacity and in
behalf of his minor son MYCHAL ANDREW
FONTANILLA respondents.
DECISION
KAPUNAN, J.:
On March 1, 1989, private respondent Aniceto Fontanilla

purchased from petitioner United Airlines, through the Philippine
Travel Bureau in Manila, three (3) Visit the U.S.A. tickets for himself,
his wife and his minor son Mychal for the following routes:
(a) San Francisco to Washington (15 April 1989);
(b) Washington to Chicago (25 April 1989);
(c) Chicago to Los Angeles (29 April 1989);
(d) Los Angeles to San Francisco (01 May 1989 for petitioners wife
and 05 May 1989 for petitioner and his son).[1]
All flights had been confirmed previously by United Airlines. [2]
The Fontanillas proceeded to the United States as planned,

where they used the first coupon from San Francisco to
Washington. On April 24, 1989, Aniceto Fontanilla bought two (2)
additional coupons each for himself, his wife and his son from
petitioner at its office in Washington Dulles Airport. After paying the
penalty for rewriting their tickets, the Fontanillas were issued tickets
with corresponding boarding passes with the words CHECK-IN
REQUIRED, for United Airlines Flight No. 1108, set to leave from Los
Angeles to San Francisco at 10:30 a.m. on May 5, 1989. [3]
The cause of the non-boarding of the Fontanillas on United

Airlines Flight No. 1108 makes up the bone of contention of this
controversy.
Private respondents' version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989,
upon their arrival at the Los Angeles Airport for their flight, they
proceeded to United Airlines counter where they were attended by
an employee wearing a nameplate bearing the name LINDA. Linda
examined their tickets, punched something into her computer and
then told them that boarding would be in fifteen minutes. [4]
When the flight was called, the Fontanillas proceeded to the
plane. To their surprise, the stewardess at the gate did not allow
them to board the plane, as they had no assigned seat
numbers.They were then directed to go back to the check-in counter
where Linda subsequently informed them that the flight had been
overbooked and asked them to wait.[5]
The Fontanillas tried to explain to Linda the special
circumstances of their visit. However, Linda told them in arrogant
manner, So what, I can not do anything about it.[6]
Subsequently, three other passengers with Caucasian features
were graciously allowed to board, after the Fontanillas were told that
the flight had been overbooked.[7]
The plane then took off with the Fontanillas baggage in tow,
leaving them behind.[8]
The Fontanillas then complained to Linda, who in turn gave them
an ugly stare and rudely uttered, Its not my fault. Its the fault of the
company. Just sit down and wait.[9] When Mr. Fontanilla reminded
Linda of the inconvenience being caused to them, she bluntly
retorted, Who do you think you are? You lousy Flips are good for
nothing beggars. You always ask for American aid. After which she
remarked Dont worry about your baggage. Anyway there is nothing
in there. What are you doing here anyway? I will report you to
immigration. You Filipinos should go home.[10] Such rude statements
were made in front of other people in the airport causing the
Fontanillas to suffer shame, humiliation and embarrassment. The
chastening situation even caused the younger Fontanilla to break
into tears.[11]
After some time, Linda, without any explanation, offered the

Fontanillas $50.00 each. She simply said Take it or leave it. This, the
Fontanillas declined.[12]
The Fontanillas then proceeded to the United Airlines customer
service counter to plead their case. The male employee at the
counter reacted by shouting that he was ready for it and left without
saying anything.[13]
The Fontanillas were not booked on the next flight, which
departed for San Francisco at 11:00 a.m. It was only at 12:00 noon
that they were able to leave Los Angeles on United Airlines Flight
No. 803.
Petitioner United Airlines has a different version of what occurred
at the Los Angeles Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not initially go to
the check-in counter to get their seat assignments for UA Flight
1108. They instead proceeded to join the queue boarding the
aircraft without first securing their seat assignments as required in
their ticket and boarding passes. Having no seat assignments, the
stewardess at the door of the plane instructed them to go to the
check-in counter. When the Fontanillas proceeded to the check-in
counter, Linda Allen, the United Airlines Customer Representative at
the counter informed them that the flight was overbooked. She
booked them on the next available flight and offered them denied
boarding compensation. Allen vehemently denies uttering the
derogatory and racist words attributed to her by the Fontanillas. [14]
The incident prompted the Fontanillas to file Civil Case No. 89-
4268 for damages before the Regional Trial Court of Makati. After
trial on the merits, the trial court rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is rendered dismissing the complaint. The

counterclaim is likewise dismissed as it appears that plaintiffs were
not actuated by legal malice when they filed the instant complaint.
[15]
On appeal, the Court of Appeals ruled in favor of the

Fontanillas. The appellate court found that there was an admission
on the part of United Airlines that the Fontanillas did in fact observe
the check-in requirement. It ruled further that even assuming there
was a failure to observe the check-in requirement, United Airlines

failed to comply with the procedure laid down in cases where a
passenger is denied boarding. The appellate court likewise gave
credence to the claim of Aniceto Fontanilla that the employees of
United Airlines were discourteous and arbitrary and, worse,
discriminatory. In light of such treatment, the Fontanillas were
entitled to moral damages. The dispositive portion of the decision of
the respondent Court of Appeals dated 29 September 1995, states
as follows:
WHEREFORE, in view of the foregoing, judgment appealed herefrom

is hereby REVERSED and SET ASIDE, and a new judgment is entered
ordering defendant-appellee to pay plaintiff-appellant the following:
a) P200,000.00 as moral damages;
b) P200,000.00 as exemplary damages;
c) P50, 000.00 as attorneys fees.
No pronouncement as to costs.
SO ORDERED.[16]
Petitioner United Airlines now comes to this Court raising the

following assignment of errors:
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

THAT THE TRIAL COURT WAS WRONG IN FAILING TO CONSIDER
THE ALLEGED ADMISSION THAT PRIVATE RESPONDENT
OBSERVED THE CHECK-IN REQUIREMENT.
II

THAT PRIVATE RESPONDENTS FAILURE TO CHECK-IN WILL NOT
DEFEAT HIS CLAIMS BECAUSE THE DENIED BOARDING RULES
WERE NOT COMPLIED WITH.
III

THAT PRIVATE RESPONDENT IS ENTITLED TO MORAL DAMAGES
OF P200, 000.
IV

THAT PRIVATE RESPONDENT IS ENTITLED TO EXEMPLARY
DAMAGES OF P200,000.
V

THAT PRIVATE RESPONDENT IS ENTITLED TO ATTORNEYS FEES OF
P50, 000.[17]
On the first issue raised by the petitioner, the respondent Court

of Appeals ruled that when Rule 9, Section 1 of the Rules of Court,
[18]
there was an implied admission in petitioner's answer in the
allegations in the complaint that private respondent and his son
observed the check-in requirement at the Los Angeles Airport. Thus:
A perusal of the above pleadings filed before the trial court
disclosed that there exists a blatant admission on the part of the
defendant-appellee that the plaintiffs-appellants indeed observed
the check-in requirement at the Los Angeles Airport on May 5,
1989. In view of defendant-appellees admission of plaintiffs-
appellants material averment in the complaint, We find no reason
why the trial court should rule against such admission.[19]
We disagree with the above conclusion reached by respondent
Court of Appeals. Paragraph 7 of private respondents' complaint
states:
7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at

defendants designated counter at the airport in Los Angeles for their
scheduled flight to San Francisco on defendants Flight No. 1108. [20]
Responding to the above allegations, petitioner averred in

paragraph 4 of its answer, thus:
4. Admits the allegation set forth in paragraph 7 of the complaint

except to deny that plaintiff and his son checked in at 9:45 a.m., for
lack of knowledge or information at this point in time as to the truth

thereof.[21]
The rule authorizing an answer that the defendant has no

knowledge or information sufficient to form a belief as to the truth of
an averment and giving such answer the effect of a denial, does not
apply where the fact as to which want of knowledge is asserted is so
plainly and necessarily within the defendant's knowledge that his
averment of ignorance must be palpably untrue.[22] Whether or not
private respondents checked in at petitioner's designated counter at
the airport at 9:45 a.m. on May 5, 1989 must necessarily be within
petitioner's knowledge.
While there was no specific denial as to the fact of compliance
with the check-in requirement by private respondents, petitioner
presented evidence to support its contention that there indeed was
no compliance.
Private respondents then are said to have waived the rule on
admission. It not only presented evidence to support its contention
that there was compliance with the check-in requirement, it even
allowed petitioner to present rebuttal evidence. In the case of Yu
Chuck vs. "Kong Li Po," we ruled that:
The object of the rule is to relieve a party of the trouble and expense
in proving in the first instance an alleged fact, the existence or non-
existence of which is necessarily within the knowledge of the
adverse party, and of the necessity (to his opponents case) of
establishing which such adverse party is notified by his opponents
pleadings.
The plaintiff may, of course, waive the rule and that is what must be
considered to have done (sic) by introducing evidence as to the
execution of the document and failing to object to the defendants
evidence in refutation; all this evidence is now competent and the
case must be decided thereupon.[23]
The determination of the other issues raised is dependent on

whether or not there was a breach of contract in bad faith on the
part of the petitioner in not allowing the Fontanillas to board United
Airlines Flight 1108.
It must be remembered that the general rule in civil cases is that

the party having the burden of proof of an essential fact must
produce a preponderance of evidence thereon. [24] Although the
evidence adduced by the plaintiff is stronger than that presented by
the defendant, a judgment cannot be entered in favor of the former,
if his evidence is not sufficient to sustain his cause of action. The
plaintiff must rely on the strength of his own evidence and not upon
the weakness of the defendants.[25] Proceeding from this, and
considering the contradictory findings of facts by the Regional Trial
Court and the Court of Appeals, the question before this Court is
whether or not private respondents were able to prove with
adequate evidence his allegations of breach of contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts
should not, unless for strong and cogent reasons, reverse the
findings of facts of trial courts. This is so because trial judges are in
a better position to examine real evidence and at a vantage point to
observe the actuation and the demeanor of the witnesses. [26] While
not the sole indicator of the credibility of a witness, it is of such
weight that it has been said to be the touchstone of credibility. [27]
Aniceto Fontanillas assertion that upon arrival at the airport at
9:45 a.m., he immediately proceeded to the check-in counter, and
that Linda Allen punched in something into the computer is specious
and not supported by the evidence on record. In support of their
allegations, private respondents submitted a copy of the boarding
pass. Explicitly printed on the boarding pass are the words Check-In
Required. Curiously, the said pass did not indicate any seat
number. If indeed the Fontanillas checked in at the designated time
as they claimed, why then were they not assigned seat
numbers? Absent any showing that Linda was so motivated, we do
not buy into private respondents' claim that Linda intentionally
deceived him, and made him the laughing stock among the
passengers.[28] Hence, as correctly observed by the trial court:
Plaintiffs fail to realize that their failure to check in, as expressly

required in their boarding passes, is the very reason why they were
not given their respective seat numbers, which resulted in their
being denied boarding.[29]
Neither do we agree with the conclusion reached by the

appellate court that private respondents' failure to comply with the
check-in requirement will not defeat his claim as the denied
boarding rules were not complied with. Notably, the appellate court
relied on the Code of Federal Regulation Part on Oversales, which
states:
250.6 Exceptions to eligibility for denied boarding compensation.
A passenger denied board involuntarily from an oversold flight shall

not be eligible for denied board compensation if:
(a) The passenger does not comply with the carriers contract of
carriage or tariff provisions regarding ticketing, reconfirmation,
check-in, and acceptability for transformation.
The appellate court, however, erred in applying the laws of the

United States as, in the case at bar, Philippine law is the applicable
law. Although, the contract of carriage was to be performed in the
United States, the tickets were purchased through petitioners agent
in Manila. It is true that the tickets were rewritten in Washington,
D.C. However, such fact did not change the nature of the original
contract of carriage entered into by the parties in Manila.
In the case of Zalamea vs. Court of Appeals,[30] this Court applied
the doctrine of lex loci contractus. According to the doctrine, as a
general rule, the law of the place where a contract is made or
entered into governs with respect to its nature and validity,
obligation and interpretation. This has been said to be the rule even
though the place where the contract was made is different from the
place where it is to be performed, and particularly so, if the place of
the making and the place of performance are the same. Hence, the
court should apply the law of the place where the airline ticket was
issued, when the passengers are residents and nationals of the
forum and the ticket is issued in such State by the defendant airline.
The law of the forum on the subject matter is Economic
Regulations No. 7 as amended by Boarding Priority and Denied
Boarding Compensation of the Civil Aeronautics Board, which
provides that the check-in requirement be complied with before a
passenger may claim against a carrier for being denied boarding:
SEC. 5. Amount of Denied Boarding Compensation Subject to the

exceptions provided hereinafter under Section 6, carriers shall pay
to passengers holding confirmed reserved space and who
have presented themselves at the proper place and time and
fully complied with the carriers check-in and reconfirmation
procedures and who are acceptable for carriage under the Carriers
tariffs but who have been denied boarding for lack of space, a
compensation at the rate of: xx
Private respondents' narration that they were subjected to harsh

and derogatory remarks seems incredulous. However, this Court will
not attempt to surmise what really happened. Suffice to say, private
respondent was not able to prove his cause of action, for as the trial
court correctly observed:
xxx plaintiffs claim to have been discriminated against and insulted

in the presence of several people. Unfortunately, plaintiffs limited
their evidence to the testimony [of] Aniceto Fontanilla, without any
corroboration by the people who saw or heard the discriminatory
remarks and insults; while such limited testimony could possibly be
true, it does not enable the Court to reach the conclusion that
plaintiffs have, by a preponderance of evidence, proven that they
are entitled to P1,650,000.00 damages from defendant. [31]
As to the award of moral and exemplary damages, we find error

in the award of such by the Court of Appeals. For the plaintiff to be
entitled to an award of moral damages arising from a breach of
contract of carriage, the carrier must have acted with fraud or bad
faith. The appellate court predicated its award on our
pronouncement in the case of Zalamea vs. Court of Appeals, supra,
where we stated:
Existing jurisprudence explicitly states that overbooking amounts to

bad faith, entitling passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, where passengers
with confirmed booking were refused carriage on the last minute,
this Court held that when an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carriage. Where
an airline had deliberately overbooked, it took the risk of having

to deprive some passengers of their seats in case all of them would
show up for check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is
entitled to moral damages. (Emphasis supplied.)
However, the Courts ruling in said case should be read in

consonance with existing laws, particularly, Economic Regulations
No. 7, as amended, of the Civil Aeronautics Board:
Sec 3. Scope. This regulation shall apply to every Philippine and

foreign air carrier with respect to its operation of flights or portions
of flights originating from or terminating at, or serving a point within
the territory of the Republic of the Philippines insofar as it denies
boarding to a passenger on a flight, or portion of a flight inside or
outside the Philippines, for which he holds confirmed reserved
space. Furthermore, this Regulation is designed to cover only honest
mistakes on the part of the carriers and excludes deliberate and
willful acts of non-accommodation.Provided, however, that
overbooking not exceeding 10% of the seating capacity of
the aircraft shall not be considered as a deliberate and
willful act of non-accommodation.
What this Court considers as bad faith is the willful and

deliberate overbooking on the part of the airline carrier. The above-
mentioned law clearly states that when the overbooking does not
exceed ten percent (10%), it is not considered as deliberate and
therefore does not amount to bad faith. While there may have been
overbooking in this case, private respondents were not able to prove
that the overbooking on United Airlines Flight 1108 exceeded ten
percent.
As earlier stated, the Court is of the opinion that the private
respondents were not able to prove that they were subjected to
coarse and harsh treatment by the ground crew of United
Airlines. Neither were they able to show that there was bad faith on
part of the carrier airline. Hence, the award of moral and exemplary
damages by the Court of Appeals is improper.Corollarily, the award
of attorney's fees is, likewise, denied for lack of any legal and factual
basis.
WHEREFORE, the petition is GRANTED. The decision of the

Court of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and
SET ASIDE. The decision of the Regional Trial Court of Makati City in
Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
SO ORDERED.
G.R. No. L-104776 December 5, 1994
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and

the rest of 1,767 NAMED-COMPLAINANTS, thru and by their Attorney-in-fact,
Atty. GERARDO A. DEL MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR,
NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL,
INC. AND/OR ASIA INTERNATIONAL BUILDERS CORPORATION, respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO M. CADALIN, ET AL., petitioners,

vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT
INTERNATIONAL, INC. and/or ASIA INTERNATIONAL BUILDERS
CORPORATION, respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT

INTERNATIONAL, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN,
ROLANDO M. AMUL, DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO
REYES, IGNACIO DE VERA, SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N.
ABARQUEZ, ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN ALEJANDRE,
WILFREDO D. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B. AMUL, AMORSOLO
ANADING, ANTONIO T. ANGLO, VICENTE ARLITA, HERBERT AYO, SILVERIO
BALATAZO, ALFREDO BALOBO, FALCONERO BANAAG, RAMON BARBOSA, FELIX
BARCENA, FERNANDO BAS, MARIO BATACLAN, ROBERTO S. BATICA, ENRICO
BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M.
BOBIER, DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO,
GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE
CAILAO, IRENEO CANDOR, JOSE CASTILLO, MANUEL CASTILLO, REMAR
CASTROJERES, REYNALDO CAYAS, ROMEO CECILIO, TEODULO CREUS, BAYANI
DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO DE GUZMAN,
ONOFRE DE RAMA, IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON,
ANTONIO S. DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO
EJERCITO, JR., EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN ESGUERRA,
EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO ESPIRITU, NESTOR M.

ESTEVA, BENJAMIN ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO,
JESUS GABAWAN, ROLANDO GARCIA, ANGEL GUDA, PACITO HERNANDEZ,
ANTONIO HILARIO, HENRY L. JACOB, HONESTO JARDINIANO, ANTONIO JOCSON,
GERARDO LACSAMANA, EFREN U. LIRIO LORETO LONTOC, ISRAEL LORENZO,
ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN, LEOVIGILDO MARCIAL,
NOEL MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO,
FRANCIS MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO
MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR RESURRECCION D.
NAZARENO, JUAN OLINDO, FRANCISCO R. OLIVARES, PEDRO ORBISTA, JR.,
RICARDO ORDONEZ, ERNIE PANCHO, JOSE PANCHO, GORGONIO P. PARALA,
MODESTO PINPIN, JUANITO PAREA, ROMEO I. PATAG, FRANCISCO PINPIN,
LEONARDO POBLETE, JAIME POLLOS, DOMINGO PONDALIS, EUGENIO RAMIREZ,
LUCIEN M. RESPALL, GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C.
REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G. RICAZA, RODELIO
RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES,
JOSE ROBLEZA, QUIRINO RONQUILLO, AVELINO M. ROQUE, MENANDRO L.
SABINO, PEDRO SALGATAR, EDGARDO SALONGA, NUMERIANO SAN MATEO,
FELIZARDO DE LOS SANTOS, JR., GABRIEL SANTOS, JUANITO SANTOS, PAQUITO
SOLANTE, CONRADO A. SOLIS, JR., RODOLFO SULTAN, ISAIAS TALACTAC,
WILLIAM TARUC, MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO,
BENEDICTO TORRES, MAXIMIANO TORRES, FRANCISCO G. TRIAS, SERGIO A.
URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN VICTORIA,
GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES,
DOMINGO VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO
VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO,
FRANCISCO ZARA, ROGELIO AALAGOS, NICANOR B. ABAD, ANDRES ABANES,
REYNALDO ABANES, EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO,
CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO, RODRIGO G.
ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN
ACTA, EUGENIO C. ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO
ACUPAN, MANUEL P. ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO,
MANUEL P. AGUINALDO, DANTE AGUIRRE, HERMINIO AGUIRRE, GONZALO
ALBERTO, JR., CONRADO ALCANTARA, LAMBERTO Q. ALCANTARA, MARIANITO J.
ALCANTARA, BENCIO ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN
ALEJANDRO, EDUARDO L. ALEJANDRO, MAXIMINO ALEJANDRO, ALBERTO
ALMENAR, ARNALDO ALONZO, AMADO ALORIA, CAMILO ALVAREZ, MANUEL C.
ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS AMORES, BERNARD P. ANCHETA,
TIMOTEO O. ANCHETA, JEOFREY ANI, ELINO P. ANTILLON, ARMANDRO B.
ANTIPONO, LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO,
FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR
AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O. ARATEA,
ARTURO V. ARAULLO, PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO
ARCIAGA, JOSE AREVALO, JUANTO AREVALO, RAMON AREVALO, RODOLFO
AREVALO, EULALIO ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO,
ANTONIO ASUNCION, ARTEMIO M. ASUNCION, EDGARDO ASUNCION, REXY M.
ASUNCION, VICENTE AURELIO, ANGEL AUSTRIA, RICARDO P. AVERILLA, JR.,
VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA, FELIMON BACAL,
JOSE L. BACANI, ROMULO R. BALBIERAN, VICENTE BALBIERAN, RODOLFO
BALITBIT, TEODORO Y. BALOBO, DANILO O. BARBA, BERNARDO BARRO, JUAN A.
BASILAN, CEFERINO BATITIS, VIVENCIO C. BAUAN, GAUDENCIO S. BAUTISTA,
LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO BAUTISTA, RUPERTO B.
BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA,

WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN,
EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO BENSAN, IRENEO
BERGONIO, ISABELO BERMUDEZ, ROLANDO I. BERMUDEZ, DANILO BERON,
BENJAMIN BERSAMIN, ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL,
JR., FRANCISCO BICOL, ROGELIO BICOL, ROMULO L. BICOL, ROGELIO
BILLIONES, TEOFILO N. BITO, FERNANDO BLANCO, AUGUSTO BONDOC,
DOMINGO BONDOC, PEPE S. BOOC, JAMES R. BORJA, WILFREDO BRACEROS,
ANGELES C. BRECINO, EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO
BUDILLO, ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO
BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO BUTIONG, JR., HONESTO P.
CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN, MOISES CABATAY,
HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C. CAGAYAT, ROGELIO L.
CALAGOS, REYNALDO V. CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA,
RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO, ROBERTO
CAMANA, FLORANTE C. CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS,
EPIFANIO A. CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON,
MENANDRO M. CASTAÑEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO,
JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L.
CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO CASTRO,
PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE CASTRO, JAIME B.
CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO,
VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B.
CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION,
TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA,
APOLINAR CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO
CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO, FRANCISCO O.
CORVERA, FRANCISCO COSTALES, SR., CELEDONIO CREDITO, ALBERTO A.
CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR.,
PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ, TEODORO S.
CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN
DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO
DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO
DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO,
CELERINO DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE
LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA,
GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO
DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR
DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO
DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO.
DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO
D. DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B. ELLO, UBED
B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO,
ELIAS EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO
ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU, EDUARDO S. ESPIRITU,
REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO
ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO, ERNESTO M. ESTEVA,
CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA,
WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M.
FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES,
BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO,
VALERIANO FRANCISCO, RODOLFO GABAWAN, ESMERALDO GAHUTAN, CESAR
C. GALANG, SANTIAGO N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON,

JUAN GANZON, ANDRES GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA,
MARCELO L. GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA,
PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G.
GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA,
RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D.
GUANIO, MARTIN V. GUERRERO, JR., ALEXIS GUNO, RICARDO L. GUNO,
FRANCISCO GUPIT, DENNIS J. GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO
DE GUZMAN, JR., CESAR H. HABANA, RAUL G. HERNANDEZ, REYNALDO
HERNANDEZ, JOVENIANO D. HILADO, JUSTO HILAPO, ROSTITO HINAHON,
FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO, MANUEL L.
ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL
L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES,
GENEROSO IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN,
BIENVENIDO JAVIER, ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS,
CARLOS A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W.
JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO S. JOCSON, PEDRO
B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE, GERTRUDO
KABIGTING, EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C.
LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J. LADINES,
RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO
LATANAN, VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL,
ALFREDO LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO, ARTURO S.
LEGASPI, BENITO DE LEMOS, JR., PEDRO G. DE LEON, MANOLITO C. LILOC,
GERARDO LIMUACO, ERNESTO S. LISING, RENATO LISING, WILFREDO S. LISING,
CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO M. LOPEZ,
CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ,
BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA, DANTE
LUAGE, ANTONIO M. LUALHATI, EMMANUEL LUALHATI, JR., LEONIDEZ C.
LUALHATI, SEBASTIAN LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO,
JOSELITO L. DE LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD,
ALFREDO MACALINO, RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V.
MACARAIG, RODOLFO V. MACARAIG, BENJAMIN MACATANGAY, HERMOGENES
MACATANGAY, RODEL MACATANGAY, ROMULO MACATANGAY, OSIAS Q.
MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT, EFREN C.
MAGBANUA, BENJAMIN MAGBUHAT, ALFREDO C. MAGCALENG, ANTONIO
MAGNAYE, ALFONSO MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M.
MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S. MAGSINO, ANTONIO
MAGTIBAY, VICTOR V. MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO,
RICARDO MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI, MANUEL
MANALILI, ANGELO MANALO, AGUILES L. MANALO, LEOPOLDO MANGAHAS,
BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL MANONSON, ERNESTO F.
MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON MAPILE, ROBERTO
C. MARANA, NEMESIO MARASIGAN, WENCESLAO MARASIGAN, LEONARDO
MARCELO, HENRY F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO, NARCISO
A. MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE,
RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO,
BENIGNO MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL MEMIJE,
AVELINO MENDOZA, JR., CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO
MERCADO, ERNANI DELA MERCED, RICARDO MERCENA, NEMESIO METRELLO,
RODEL MEMIJE, GASPAR MINIMO, BENJAMIN MIRANDA, FELIXBERTO D. MISA,
CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO MONTON, RENATO
MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M. MORALES,

FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU A. MUNOZ,
IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ, ERNESTO NAPALAN,
MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE,
PACIFICO D. NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE
NEGRITE, ALFREDO NEPUMUCENO, HERBERT G. NG, FLORENCIO NICOLAS,
ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA, DANILO OCAMPO,
EDGARDO OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO, REYNALDO P.
OCSON, BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO
OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ,
WILFREDO OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO,
ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO
T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA, QUINCIANO PALO, JOSE
PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO
PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR., JOSE V. PASION,
ANGELITO M. PENA, DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO M.
PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ,
ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO,
FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE
PINPIN, WILFREDO PINPIN, ARTURO POBLETE, DOMINADOR R. PRIELA,
BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE, DANTE PUEYO,
REYNALDO Q. PUEYO, RODOLFO O. PULIDO, ALEJANDRO PUNIO, FEDERICO
QUIMAN, ALFREDO L. QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO,
RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO
A. RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V. RAMIREZ,
ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO
RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D.
RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO REDAZA, ARTHUR REJUSO,
TORIBIO M. RELLAMA, JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO
RENTOZA, REDENTOR C. REY, ALFREDO S. REYES, AMABLE S. REYES,
BENEDICTO R. REYES, GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES,
ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M. RICO,
EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO
ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ,
BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS
RONQUILLO, ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P.
RONQUILLO, RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES,
ALBERTO DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO,
VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA, ERNESTO SAN
PEDRO, ADRIANO V. SANCHA, GERONIMO M. SANCHA, ARTEMIO B. SANCHEZ,
NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S. SANTIAGO, SERGIO
SANTIAGO, EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D. SANTOS,
MIGUEL SAPUYOT, ALEX S. SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO,
AMADO M. SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G.
SILVA, EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON,
DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS,
III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS, EDUARDO L. SOTTO,
ERNESTO G. STA. MARIA, VICENTE G. STELLA, FELIMON SUPANG, PETER
TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P. TALUSIK, FERMIN TARUC, JR.,
LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL TOLENTINO,
MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE
TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO UMALI,
SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON

VALDERAMA, NILO VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ,
NESTOR DE VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO
VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO, ALFREDO
VICTORIANO, TEOFILO P. VIDALLO, SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN
VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA, ALEX
VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M.
VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL,
FELICISIMO VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA, FERDINAND
VIVO, ROBERTO YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA, respondents.
Gerardo A. Del Mundo and Associates for petitioners.
Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for BRII/AIBC.
Florante M. De Castro for private respondents in 105029-32.
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine
Overseas Employment Administration's Administrator, et. al.," was filed under Rule 65 of
the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the National

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

Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period
under the Labor Code of the Philippines instead of the ten-year
prescriptive period under the Civil Code of the Philippines; and (ii) denied
the
"three-hour daily average" formula in the computation of petitioners'
overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the
motion for reconsideration of its Resolution dated September 2, 1991
(Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et.
al., v. National Labor Relations Commission, et. al." was filed under Rule 65 of the
Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA

Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it
denied the motions for reconsideration of AIBC and BRII (Rollo, pp. 2-59;
61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA
in four labor cases: (1) awarded monetary benefits only to 149 claimants and (2)
directed Labor Arbiter Fatima J. Franco to conduct hearings and to receive evidence on
the claims dismissed by the POEA for lack of substantial evidence or proof of
employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R.
Nos. 104911-14 were raffled to the Second Division. In the Resolution dated July 26,
1993, the Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos.
104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the motion filed
in G.R. Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and
105029-32, which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp.
986-1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated
October 27, 1993, the First Division granted the motion to consolidate G.R. Nos.
104911-14 with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos.
105029-32, Rollo, p. 1562).
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in
their own behalf and on behalf of 728 other overseas contract workers (OCWs)
instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from their recruitment by
AIBC and employment by BRII (POEA Case No. L-84-06-555). The claimants were
represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in

construction; while AIBC is a domestic corporation licensed as a service contractor to
recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its
foreign principals.
The amended complaint principally sought the payment of the unexpired portion of the
employment contracts, which was terminated prematurely, and secondarily, the
payment of the interest of the earnings of the Travel and Reserved Fund, interest on all
the unpaid benefits; area wage and salary differential pay; fringe benefits; refund of SSS
and premium not remitted to the SSS; refund of withholding tax not remitted to the BIR;
penalties for committing prohibited practices; as well as the suspension of the license of
AIBC and the accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was
given, together with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the
claimants to file a bill of particulars within ten days from receipt of the order and the
movants to file their answers within ten days from receipt of the bill of particulars. The
POEA Administrator also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July
23, 1984, AIBC filed a "Motion to Strike Out of the Records", the "Complaint" and the
"Compliance and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder
and Comments," averring, among other matters, the failure of AIBC and BRII to file their
answers and to attend the pre-trial conference on July 25, 1984. The claimants alleged
that AIBC and BRII had waived their right to present evidence and had defaulted by
failing to file their answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the
Records" filed by AIBC but required the claimants to correct the deficiencies in the
complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with the Order of
October 2, 1984 and filed an "Urgent Manifestation," praying that the POEA
Administrator direct the parties to submit simultaneously their position papers, after
which the case should be deemed submitted for decision. On the same day, Atty.
Florante de Castro filed another complaint for the same money claims and benefits in
behalf of several claimants, some of whom were also claimants in POEA Case No. L-84-
06-555 (POEA Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order dated October
2, 1984 and an "Urgent Manifestation," praying that the POEA direct the parties to
submit simultaneously their position papers after which the case would be deemed
submitted for decision. On the same day, AIBC asked for time to file its comment on the
"Compliance" and "Urgent Manifestation" of claimants. On November 6, 1984, it filed a
second motion for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its motion for
extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for extension of
time and asked that AIBC and BRII be declared in default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs,
that claimants should be ordered to amend their complaint.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII
to file their answers within ten days from receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said
order of the POEA Administrator. Claimants opposed the appeal, claiming that it was
dilatory and praying that AIBC and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position
Paper" dated March 24, 1985, adding new demands: namely, the payment of overtime
pay, extra night work pay, annual leave differential pay, leave indemnity pay,
retirement and savings benefits and their share of forfeitures (G.R. No. 104776, Rollo,
pp. 14-16). On April 15, 1985, the POEA Administrator directed AIBC to file its answer to
the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the
same day, the POEA issued an order directing AIBC and BRII to file their answers to the
"Amended Complaint," otherwise, they would be deemed to have waived their right to
present evidence and the case would be resolved on the basis of complainant's
evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and
Motion for Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants
opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII
to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a
petition for the issuance of a writ of injunction. On September 19, 1985, NLRC enjoined
the POEA Administrator from hearing the labor cases and suspended the period for the
filing of the answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional
claimants in the case and to investigate alleged wrongdoings of BRII, AIBC and their
respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case
No. L-85-10-777) against AIBC and BRII with the POEA, demanding monetary claims
similar to those subject of POEA Case No. L-84-06-555. In the same month, Solomon
Reyes also filed his own complaint (POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the
substitution of the original counsel of record and the cancellation of the special powers
of attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce
attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-
05-460) in behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case
No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985
and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA Administrator, it is not
amiss to mention that two cases were filed in the Supreme Court by the claimants,
namely — G.R. No. 72132 on September 26, 1985 and Administrative Case No. 2858 on
March 18, 1986. On May 13, 1987, the Supreme Court issued a resolution in
Administrative Case No. 2858 directing the POEA Administrator to resolve the issues
raised in the motions and oppositions filed in POEA Cases Nos. L-84-06-555 and L-86-05-
460 and to decide the labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order
dated September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC
to answer the amended complaint in POEA Case No. L-84-06-555. In a resolution dated
November 9, 1987, we dismissed the petition by informing AIBC that all its technical
objections may properly be resolved in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on September 22,
1988 by claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator
and several NLRC Commissioners. The Ombudsman merely referred the complaint to
the Secretary of Labor and Employment with a request for the early disposition of POEA
Case No. L-84-06-555. The second was filed on April 28, 1989 by claimants Emigdio P.
Bautista and Rolando R. Lobeta charging AIBC and BRII for violation of labor and social
legislations. The third was filed by Jose R. Santos, Maximino N. Talibsao and Amado B.
Bruce denouncing AIBC and BRII of violations of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution
dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for
suspension of the period for filing an answer or motion for extension of time to file the
same until the resolution of its motion for reconsideration of the order of the NLRC
dismissing the two appeals. On April 28, 1987, NLRC en banc denied the motion for
reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the
same hearing, the parties were given a period of 15 days from said date within which to
submit their respective position papers. On June 24, 1987 claimants filed their "Urgent
Motion to Strike Out Answer," alleging that the answer was filed out of time. On June 29,
1987, claimants filed their "Supplement to Urgent Manifestational Motion" to comply
with the POEA Order of June 19, 1987. On February 24, 1988, AIBC and BRII submitted
their position paper. On March 4, 1988, claimants filed their "Ex-Parte Motion to
Expunge from the Records" the position paper of AIBC and BRII, claiming that it was
filed out of time.
On September 1, 1988, the claimants represented by Atty. De Castro filed their

memorandum in POEA Case No. L-86-05-460. On September 6, 1988, AIBC and BRII
submitted their Supplemental Memorandum. On September 12, 1988, BRII filed its
"Reply to Complainant's Memorandum." On October 26, 1988, claimants submitted their
"Ex-Parte Manifestational Motion and Counter-Supplemental Motion," together with 446
individual contracts of employments and service records. On October 27, 1988, AIBC
and BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in POEA Case No. L-
84-06-555 and the other consolidated cases, which awarded the amount of $824,652.44
in favor of only 324 complainants.
On February 10, 1989, claimants submitted their "Appeal Memorandum For Partial
Appeal" from the decision of the POEA. On the same day, AIBC also filed its motion for
reconsideration and/or appeal in addition to the "Notice of Appeal" filed earlier on
February 6, 1989 by another counsel for AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal," praying for the
dismissal of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal

Memorandum," together with their "newly discovered evidence" consisting of payroll
records.
On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating among
other matters that there were only 728 named claimants. On April 20, 1989, the
claimants filed their "Counter-Manifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision
dated January 30, 1989 on the grounds that BRII had failed to appeal on time and AIBC
had not posted the supersedeas bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the
1,767 claimants be awarded their monetary claims for failure of private respondents to
file their answers within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
WHEREFORE, premises considered, the Decision of the POEA in these

consolidated cases is modified to the extent and in accordance with the
following dispositions:
1. The claims of the 94 complainants identified and listed in

Annex "A" hereof are dismissed for having prescribed;
2. Respondents AIBC and Brown & Root are hereby ordered,

jointly and severally, to pay the 149 complainants, identified
and listed in Annex "B" hereof, the peso equivalent, at the
time of payment, of the total amount in US dollars indicated
opposite their respective names;
3. The awards given by the POEA to the 19 complainants

classified and listed in Annex "C" hereof, who appear to have
worked elsewhere than in Bahrain are hereby set aside.
4. All claims other than those indicated in Annex "B",

including those for overtime work and favorably granted by
the POEA, are hereby dismissed for lack of substantial
evidence in support thereof or are beyond the competence
of this Commission to pass upon.
In addition, this Commission, in the exercise of its powers and authority

under Article 218(c) of the Labor Code, as amended by R.A. 6715, hereby
directs Labor Arbiter Fatima J. Franco of this Commission to summon
parties, conduct hearings and receive evidence, as expeditiously as
possible, and thereafter submit a written report to this Commission (First
Division) of the proceedings taken, regarding the claims of the following:
(a) complainants identified and listed in Annex "D" attached

and made an integral part of this Resolution, whose claims
were dismissed by the POEA for lack of proof of employment
in Bahrain (these complainants numbering 683, are listed in
pages 13 to 23 of the decision of POEA, subject of the
appeals) and,
(b) complainants identified and listed in Annex "E" attached

and made an integral part of this Resolution, whose awards
decreed by the POEA, to Our mind, are not supported by
substantial evidence" (G.R. No. 104776; Rollo, pp. 113-115;
G.R. Nos. 104911-14, pp. 85-87; G.R. Nos. 105029-31, pp.
120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12

co-claimants, who were former clients of Atty. Del Mundo, filed a petition
for certiorari with the Supreme Court (G.R. Nos. 120741-44). The petition was dismissed
in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC
were filed. The first, by the claimants represented by Atty. Del Mundo; the second, by
the claimants represented by Atty. De Castro; and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del Mundo (G.R. No.
104776), the claimants represented by Atty. De Castro (G.R. Nos. 104911-14) and by
AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have
submitted, from time to time, compromise agreements for our approval and jointly
moved for the dismissal of their respective petitions insofar as the claimants-parties to
the compromise agreements were concerned (See Annex A for list of claimants who
signed quitclaims).
Thus the following manifestations that the parties had arrived at a compromise
agreement and the corresponding motions for the approval of the agreements were
filed by the parties and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio Abarquez and

47 co-claimants dated September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp.
263-406; G.R. Nos. 105029-32, Rollo, pp.
470-615);
2) Joint Manifestation and Motion involving petitioner Bienvenido Cadalin

and 82 co-petitioners dated September 3, 1992 (G.R. No. 104776, Rollo,
pp. 364-507);
3) Joint Manifestation and Motion involving claimant Jose

M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos.
105029-32, Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-626; G.R.
Nos. 104911-14, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving claimant Antonio T. Anglo and

17 co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713; G.R.
Nos. 104911-14, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant Dionisio Bobongo and

6 co-claimants dated January 15, 1993 (G.R. No. 104776, Rollo, pp. 813-
836; G.R. Nos. 104911-14, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista

and 4 co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp.
731-746; G.R. No. 104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri Banaag

and 5 co-claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp.
1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio

and 15 other co-claimants dated May 4, 1993 (G.R. Nos. 105029-32, Rollo,
pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No.
104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-

claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829);
10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo

and 36 co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp.
974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864; G.R. No.
104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo and
19 co-claimants dated July 22, 1993 (G.R. No. 104776, Rollo, pp. 1173-
1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-
14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit

and 2 co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254;
G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C. Aceres and
37 co-claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp.
1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-
32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-
claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano and six co-
claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776;
G.R. Nos. 104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more than fifty volumes
now comprising the records of these cases. From the records, it appears
that the complainants-appellants allege that they were recruited by
respondent-appellant AIBC for its accredited foreign principal, Brown &
Root, on various dates from 1975 to 1983. They were all deployed at
various projects undertaken by Brown & Root in several countries in the
Middle East, such as Saudi Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia.
Having been officially processed as overseas contract workers by the

Philippine Government, all the individual complainants signed standard
overseas employment contracts (Records, Vols. 25-32. Hereafter,
reference to the records would be sparingly made, considering their
chaotic arrangement) with AIBC before their departure from the
Philippines. These overseas employment contracts invariably contained
the following relevant terms and conditions.
PART B —
(1) Employment Position Classification :—————————

(Code) :—————————
(2) Company Employment Status :—————————

(3) Date of Employment to Commence on :—————————
(4) Basic Working Hours Per Week :—————————
(5) Basic Working Hours Per Month :—————————
(6) Basic Hourly Rate :—————————
(7) Overtime Rate Per Hour :—————————

(8) Projected Period of Service
(Subject to C(1) of this [sic]) :—————————
Months and/or
Job Completion
xxx xxx xxx
3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and overtime rate as set
out in Part B of this Document.
b) The hours of work shall be those set forth by the Employer, and
Employer may, at his sole option, change or adjust such hours as maybe
deemed necessary from time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this agreement, the

Employer may, at his sole discretion, terminate employee's service with
cause, under this agreement at any time. If the Employer terminates the
services of the Employee under this Agreement because of the completion
or termination, or suspension of the work on which the Employee's
services were being utilized, or because of a reduction in force due to a
decrease in scope of such work, or by change in the type of construction
of such work. The Employer will be responsible for his return
transportation to his country of origin. Normally on the most expeditious
air route, economy class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or satisfactory completion

of contract, employee shall be entitled to 12-days vacation leave with pay.
This shall be computed at the basic wage rate. Fractions of a year's
service will be computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the employee for every year of
service for non-work connected injuries or illness. If the employee failed to
avail of such leave benefits, the same shall be forfeited at the end of the
year in which said sick leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will be accrued and
payable only upon satisfactory completion of this contract.
12. OFFDAY PAY

The seventh day of the week shall be observed as a day of rest with 8
hours regular pay. If work is performed on this day, all hours work shall be
paid at the premium rate. However, this offday pay provision is applicable
only when the laws of the Host Country require payments for rest day.
In the State of Bahrain, where some of the individual complainants were

deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued his
Amiri Decree No. 23 on June 16, 1976, otherwise known as the Labour Law
for the Private Sector (Records, Vol. 18). This decree took effect on August
16, 1976. Some of the provisions of Amiri Decree No. 23 that are relevant
to the claims of the complainants-appellants are as follows (italics supplied
only for emphasis):
Art. 79: . . . A worker shall receive payment for each extra

hour equivalent to his wage entitlement increased by a
minimum of twenty-five per centum thereof for hours worked
during the day; and by a minimum of fifty per centum
thereof for hours worked during the night which shall be
deemed to being from seven o'clock in the evening until
seven o'clock in the morning. . . .
Art. 80: Friday shall be deemed to be a weekly day of rest on

full pay.
. . . an employer may require a worker, with his consent, to

work on his weekly day of restif circumstances so require
and in respect of which an additional sum equivalent to
150% of his normal wage shall be paid to him. . . .
Art. 81: . . . When conditions of work require the worker to

work on any official holiday, he shall be paid an additional
sum equivalent to 150% of his normal wage.
Art. 84: Every worker who has completed one year's

continuous service with his employer shall be entitled to
leave on full pay for a period of not less than 21 days for
each year increased to a period not less than 28 days after
five continuous years of service.
A worker shall be entitled to such leave upon a quantum

meruit in respect of the proportion of his service in that year.
Art. 107: A contract of employment made for a period of

indefinite duration may be terminated by either party
thereto after giving the other party thirty days' prior notice
before such termination, in writing, in respect of monthly
paid workers and fifteen days' notice in respect of other
workers. The party terminating a contract without giving the
required notice shall pay to the other party compensation
equivalent to the amount of wages payable to the worker for
the period of such notice or the unexpired portion thereof.
Art. 111: . . . the employer concerned shall pay to such

worker, upon termination of employment, a leaving
indemnity for the period of his employment calculated on
the basis of fifteen days' wages for each year of the first
three years of service and of one month's wages for each
year of service thereafter. Such worker shall be entitled to
payment of leaving indemnity upon a quantum meruit in
proportion to the period of his service completed within a
year.
All the individual complainants-appellants have already been

repatriated to the Philippines at the time of the filing of these
cases (R.R. No. 104776, Rollo, pp. 59-65).
IV
The issues raised before and resolved by the NLRC were:
First: — Whether or not complainants are entitled to the benefits provided

by Amiri Decree No. 23 of Bahrain;
(a) Whether or not the complainants who have worked in

Bahrain are entitled to the above-mentioned benefits.
(b) Whether or not Art. 44 of the same Decree (allegedly

prescribing a more favorable treatment of alien employees)
bars complainants from enjoying its benefits.
Second: — Assuming that Amiri Decree No. 23 of Bahrain is applicable in

these cases, whether or not complainants' claim for the benefits provided
therein have prescribed.
Third: — Whether or not the instant cases qualify as a class suit.
Fourth: — Whether or not the proceedings conducted by the POEA, as well

as the decision that is the subject of these appeals, conformed with the
requirements of due process;
(a) Whether or not the respondent-appellant was denied its

right to due process;
(b) Whether or not the admission of evidence by the POEA

after these cases were submitted for decision was valid;
(c) Whether or not the POEA acquired jurisdiction over Brown

& Root International, Inc.;
(d) Whether or not the judgment awards are supported by

substantial evidence;
(e) Whether or not the awards based on the averages and

formula presented by the complainants-appellants are
supported by substantial evidence;
(f) Whether or not the POEA awarded sums beyond what the
complainants-appellants prayed for; and, if so, whether or
not these awards are valid.
Fifth: — Whether or not the POEA erred in holding respondents AIBC and
Brown & Root jointly are severally liable for the judgment awards despite
the alleged finding that the former was the employer of the complainants;
(a) Whether or not the POEA has acquired jurisdiction over

Brown & Root;
(b) Whether or not the undisputed fact that AIBC was a

licensed construction contractor precludes a finding that
Brown & Root is liable for complainants claims.
Sixth: — Whether or not the POEA Administrator's failure to hold

respondents in default constitutes a reversible error.
Seventh: — Whether or not the POEA Administrator erred in dismissing the

following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of at least 100% of basic

pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to SSS;
j. Refund of withholding tax not remitted to BIR;
k. Fringe benefits under B & R's "A Summary of Employee

Benefits" (Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;

m. Attorney's fees of at least ten percent of the judgment

award;
n. Other reliefs, like suspending and/or cancelling the license

to recruit of AIBC and the accreditation of B & R issued by
POEA;
o. Penalty for violations of Article 34 (prohibited practices),

not excluding reportorial requirements thereof.
Eighth: — Whether or not the POEA Administrator erred in not dismissing

POEA Case No. (L) 86-65-460 on the ground of multiplicity of suits (G.R.
Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on
Evidence governing the pleading and proof of a foreign law and admitted in evidence a
simple copy of the Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector). NLRC invoked Article 221 of the Labor Code of the Philippines, vesting on the
Commission ample discretion to use every and all reasonable means to ascertain the
facts in each case without regard to the technicalities of law or procedure. NLRC agreed
with the POEA Administrator that the Amiri Decree No. 23, being more favorable and
beneficial to the workers, should form part of the overseas employment contract of the
complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who
worked in Bahrain, and set aside awards of the POEA Administrator in favor of the
claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing of the claims
of the complainants was three years, as provided in Article 291 of the Labor Code of the
Philippines, and not ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the labor cases
cannot be treated as a class suit for the simple reason that not all the complainants
worked in Bahrain and therefore, the subject matter of the action, the claims arising
from the Bahrain law, is not of common or general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal rules of
administrative due process: namely, (1) the failure of the POEA Administrator to
consider the evidence presented by AIBC and BRII; (2) some findings of fact were not
supported by substantial evidence; and (3) some of the evidence upon which the
decision was based were not disclosed to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and
AIBC are solidarily liable for the claims of the complainants and held that BRII was the
actual employer of the complainants, or at the very least, the indirect employer, with
AIBC as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator
through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in denying the
Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the Amiri
Decree No. 23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims for
refund of the SSS premiums and refund of withholding taxes and the
claimants should file their claims for said refund with the appropriate
government agencies;
(2) the claimants failed to establish that they are entitled to the claims
which are not based on the overseas employment contracts nor the Amiri
Decree No. 23 of 1976;
(3) that the POEA Administrator has no jurisdiction over claims for moral
and exemplary damages and nonetheless, the basis for granting said
damages was not established;
(4) that the claims for salaries corresponding to the unexpired portion of
their contract may be allowed if filed within the three-year prescriptive
period;
(5) that the allegation that complainants were prematurely repatriated

prior to the expiration of their overseas contract was not established; and
(6) that the POEA Administrator has no jurisdiction over the complaint for
the suspension or cancellation of the AIBC's recruitment license and the
cancellation of the accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460
should have been dismissed on the ground that the claimants in said case were also
claimants in POEA Case No. (L) 84-06-555. Instead of dismissing POEA Case No. (L) 86-
65-460, the POEA just resolved the corresponding claims in POEA Case No. (L) 84-06-
555. In other words, the POEA did not pass upon the same claims twice.
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to a
speedy disposition of their cases as guaranteed by Section 16, Article III of
the 1987 Constitution. The POEA Administrator allowed private
respondents to file their answers in two years (on June 19, 1987) after the
filing of the original complaint (on April 2, 1985) and NLRC, in total
disregard of its own rules, affirmed the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared AIBC and
BRII in default and should have rendered summary judgment on the basis
of the pleadings and evidence submitted by claimants;
(3) the NLRC and POEA Administrator erred in not holding that the labor
cases filed by AIBC and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims is ten years; and
(5) that NLRC and the POEA Administrator should have dismissed POEA
Case No. L-86-05-460, the case filed by Atty. Florante de Castro (Rollo, pp.
31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of the
labor cases, considering the great difficulty of getting all the records of the
more than 1,500 claimants, the piece-meal filing of the complaints and the
addition of hundreds of new claimants by petitioners;
(2) that considering the number of complaints and claimants, it was

impossible to prepare the answers within the ten-day period provided in
the NLRC Rules, that when the motion to declare AIBC in default was filed
on July 19, 1987, said party had already filed its answer, and that
considering the staggering amount of the claims (more than
US$50,000,000.00) and the complicated issues raised by the parties, the
ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that

there was no common or general interest in the subject matter of the
controversy — which was the applicability of the Amiri Decree No. 23.
Likewise, the nature of the claims varied, some being based on salaries
pertaining to the unexpired portion of the contracts while others being for
pure money claims. Each claimant demanded separate claims peculiar
only to himself and depending upon the particular circumstances
obtaining in his case;
(4) that the prescriptive period for filing the claims is that prescribed by
Article 291 of the Labor Code of the Philippines (three years) and not the
one prescribed by Article 1144 of the Civil Code of the Philippines (ten
years); and
(5) that they are not concerned with the issue of whether POEA Case No.
L-86-05-460 should be dismissed, this being a private quarrel between the
two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint
manifestations and motions of AIBC and BRII dated September 2 and 11, 1992, claiming
that all the claimants who entered into the compromise agreements subject of said
manifestations and motions were his clients and that Atty. Florante M. de Castro had no
right to represent them in said agreements. He also claimed that the claimants were
paid less than the award given them by NLRC; that Atty. De Castro collected additional
attorney's fees on top of the 25% which he was entitled to receive; and that the consent
of the claimants to the compromise agreements and quitclaims were procured by fraud
(G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated November 23, 1992, the
Court denied the motion to strike out the Joint Manifestations and Motions dated
September 2 and 11, 1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's
Lien," alleging that the claimants who entered into compromise agreements with AIBC
and BRII with the assistance of Atty. De Castro, had all signed a retainer agreement with
his law firm (G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De
Castro and Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and
16 of the Code of Professional Responsibility. The said lawyers allegedly misled this
Court, by making it appear that the claimants who entered into the compromise
agreements were represented by Atty. De Castro, when in fact they were represented by
Atty. Del Mundo (G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro
for unethical practices and moved for the voiding of the quitclaims submitted by some
of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the grounds
that NLRC gravely abused its discretion when it: (1) applied the three-year prescriptive
period under the Labor Code of the Philippines; and (2) it denied the claimant's formula
based on an average overtime pay of three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the negotiation
for an amicable settlement of their money claims in Bahrain as shown in the
Memorandum dated April 16, 1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the
prescriptive period in the Labor Code of the Philippines, a special law, prevails over that
provided in the Civil Code of the Philippines, a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of computing

the overtime pay, BRII and AIBC claimed that they were not bound by what appeared
therein, because such memorandum was proposed by a subordinate Bahrain official and
there was no showing that it was approved by the Bahrain Minister of Labor. Likewise,
they claimed that the averaging method was discussed in the course of the negotiation
for the amicable settlement of the dispute and any offer made by a party therein could
not be used as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion
when it: (1) enforced the provisions of the Amiri Decree No. 23 of 1976 and not the
terms of the employment contracts; (2) granted claims for holiday, overtime and leave
indemnity pay and other benefits, on evidence admitted in contravention of petitioner's
constitutional right to due process; and (3) ordered the POEA Administrator to hold new
hearings for the 683 claimants whose claims had been dismissed for lack of proof by the
POEA Administrator or NLRC itself. Lastly, they allege that assuming that the Amiri
Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply the one-year
prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed as to
the time that should be embraced within the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article 1144
of the Civil Code of the Philippines. NLRC believed otherwise, fixing the prescriptive
period at three years as provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds,
insisted that NLRC erred in ruling that the prescriptive period applicable to the claims
was three years, instead of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period was one
year as prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of
NLRC that Article 291 of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to those
arising from the employer's violation of the employee's right as provided
by the Labor Code.
In the instant case, what the respondents violated are not the rights of the
workers as provided by the Labor Code, but the provisions of the Amiri
Decree No. 23 issued in Bahrain, which ipso facto amended the worker's
contracts of employment. Respondents consciously failed to conform to
these provisions which specifically provide for the increase of the worker's
rate. It was only after June 30, 1983, four months after the brown builders
brought a suit against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments in Bahrain for
the new hires/renewals (Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to this

instant case is Article 1144 of the Civil Code of the Philippines, which
provides:
Art. 1144. The following actions may be brought within ten

years from the time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the respondents

shall prescribe in ten years from August 16, 1976. Inasmuch as all claims
were filed within the ten-year prescriptive period, no claim suffered the
infirmity of being prescribed (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period is three
years as provided in Article 291 of the Labor Code of the Philippines, the NLRC argued
as follows:
The Labor Code provides that "all money claims arising from employer-
employee relations . . . shall be filed within three years from the time the
cause of action accrued; otherwise they shall be forever barred" (Art. 291,
Labor Code, as amended). This three-year prescriptive period shall be the
one applied here and which should be reckoned from the date of
repatriation of each individual complainant, considering the fact that the
case is having (sic) filed in this country. We do not agree with the POEA
Administrator that this three-year prescriptive period applies only to
money claims specifically recoverable under the Philippine Labor Code.
Article 291 gives no such indication. Likewise, We can not consider
complainants' cause/s of action to have accrued from a violation of their
employment contracts. There was no violation; the claims arise from the
benefits of the law of the country where they worked. (G.R. No.
104776, Rollo, pp.
90-91).
Anent the applicability of the one-year prescriptive period as provided by the Amiri
Decree No. 23 of 1976, NLRC opined that the applicability of said law was one of
characterization, i.e., whether to characterize the foreign law on prescription or statute
of limitation as "substantive" or "procedural." NLRC cited the decision in Bournias v.
Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955], where the issue was the
applicability of the Panama Labor Code in a case filed in the State of New York for claims
arising from said Code. In said case, the claims would have prescribed under the
Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit
Court of Appeals held that the Panamanian Law was procedural as it was not
"specifically intended to be substantive," hence, the prescriptive period provided in the
law of the forum should apply. The Court observed:
. . . And where, as here, we are dealing with a statute of limitations of a

foreign country, and it is not clear on the face of the statute that its
purpose was to limit the enforceability, outside as well as within the
foreign country concerned, of the substantive rights to which the statute
pertains, we think that as a yardstick for determining whether that was
the purpose this test is the most satisfactory one. It does not lead
American courts into the necessity of examining into the unfamiliar
peculiarities and refinements of different foreign legal systems. . .
The court further noted:

xxx xxx xxx
Applying that test here it appears to us that the libelant is entitled to

succeed, for the respondents have failed to satisfy us that the Panamanian
period of limitation in question was specifically aimed against the
particular rights which the libelant seeks to enforce. The Panama Labor
Code is a statute having broad objectives, viz: "The present Code
regulates the relations between capital and labor, placing them on a basis
of social justice, so that, without injuring any of the parties, there may be
guaranteed for labor the necessary conditions for a normal life and to
capital an equitable return to its investment." In pursuance of these
objectives the Code gives laborers various rights against their employers.
Article 623 establishes the period of limitation for all such rights, except
certain ones which are enumerated in Article 621. And there is nothing in
the record to indicate that the Panamanian legislature gave special
consideration to the impact of Article 623 upon the particular rights
sought to be enforced here, as distinguished from the other rights to
which that Article is also applicable. Were we confronted with the question
of whether the limitation period of Article 621 (which carves out particular
rights to be governed by a shorter limitation period) is to be regarded as
"substantive" or "procedural" under the rule of "specifity" we might have a
different case; but here on the surface of things we appear to be dealing
with a "broad," and not a "specific," statute of limitations (G.R. No.
104776, Rollo, pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of
the Philippines, which was applied by NLRC, refers only to claims "arising from the
employer's violation of the employee's right as provided by the Labor Code." They
assert that their claims are based on the violation of their employment contracts, as
amended by the Amiri Decree No. 23 of 1976 and therefore the claims may be brought
within ten years as provided by Article 1144 of the Civil Code of the Philippines (Rollo,
G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA
244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri
Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law,"
which is Section 48 of the Code of Civil Procedure and that where such kind of law
exists, it takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo,
pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of action based on

the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the
governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be actionable

after the lapse of one year from the date of the expiry of the contract.
(G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal,
and so forth, are governed by the laws of the forum. This is true even if the action is
based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685;
Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may
be viewed either as procedural or substantive, depending on the characterization given
such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the
statute of limitations of New York, instead of the Panamanian law, after finding that
there was no showing that the Panamanian law on prescription was intended to be
substantive. Being considered merely a procedural law even in Panama, it has to give
way to the law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law becomes

irrelevant when the country of the forum has a "borrowing statute." Said statute has the
practical effect of treating the foreign statute of limitation as one of substance
(Goodrich, Conflict of Laws 152-153 [1938]). A "borrowing statute" directs the state of
the forum to apply the foreign statute of limitations to the pending claims based on a
foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing
statutes," one form provides that an action barred by the laws of the place where it
accrued, will not be enforced in the forum even though the local statute has not run
against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our
Code of Civil Procedure is of this kind. Said Section provides:
If by the laws of the state or country where the cause of action arose, the
action is barred, it is also barred in the Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines.
Article 2270 of said Code repealed only those provisions of the Code of Civil Procedures
as to which were inconsistent with it. There is no provision in the Civil Code of the
Philippines, which is inconsistent with or contradictory to Section 48 of the Code of Civil
Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri
Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's
public policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L.
ed. 713 [1920]). To enforce the one-year prescriptive period of the Amiri Decree No. 23
of 1976 as regards the claims in question would contravene the public policy on the
protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized
that:
The state shall promote social justice in all phases of national

development. (Sec. 10).
The state affirms labor as a primary social economic force. It shall protect
the rights of workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
Having determined that the applicable law on prescription is the Philippine law, the next
question is whether the prescriptive period governing the filing of the claims is three
years, as provided by the Labor Code or ten years, as provided by the Civil Code of the
Philippines.
The claimants are of the view that the applicable provision is Article 1144 of the Civil
Code of the Philippines, which provides:
The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is Article 291 of the
Labor Code of the Philippines, which in pertinent part provides:
Money claims-all money claims arising from employer-employee relations

accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued, otherwise they shall be
forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70
SCRA 244 (1976) invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the
cases at bench (Rollo, p. 21). The said case involved the correct computation of
overtime pay as provided in the collective bargaining agreements and not the Eight-
Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any reference as
to the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4,
CA No. 494) and instead insisted that work computation provided in the collective
bargaining agreements between the parties be observed. Since the claim for pay
differentials is primarily anchored on the written contracts between the litigants, the
ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933)
provides:
Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued otherwise
such action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA
No. 444 as amended) will apply, if the claim for differentials for overtime
work is solely based on said law, and not on a collective bargaining
agreement or any other contract. In the instant case, the claim for
overtime compensation is not so much because of Commonwealth Act No.
444, as amended but because the claim is demandable right of the
employees, by reason of the above-mentioned collective bargaining
agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing
"actions to enforce any cause of action under said law." On the other hand, Article 291
of the Labor Code of the Philippines provides the prescriptive period for filing "money
claims arising from employer-employee relations." The claims in the cases at bench all
arose from the employer-employee relations, which is broader in scope than claims
arising from a specific law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period under
Article 291 of the Labor Code of the Philippines applies only to money claims specifically
recoverable under said Code, does not find support in the plain language of the
provision. Neither is the contention of the claimants in G.R. Nos. 104911-14 that said
Article refers only to claims "arising from the employer's violation of the employee's
right," as provided by the Labor Code supported by the facial reading of the provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that
while their complaints were filed on June 6, 1984 with POEA, the case was decided only
on January 30, 1989, a clear denial of their right to a speedy disposition of the case; and
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in default
(Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:
Sec. 16. All persons shall have the right to a speedy disposition of their
cases before all judicial, quasi-judicial, or administrative bodies.
It is true that the constitutional right to "a speedy disposition of cases" is not limited to
the accused in criminal proceedings but extends to all parties in all cases, including civil
and administrative cases, and in all proceedings, including judicial and quasi-judicial
hearings. Hence, under the Constitution, any party to a case may demand expeditious
action on all officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition
of cases" is a relative term. Just like the constitutional guarantee of "speedy trial"
accorded to the accused in all criminal proceedings, "speedy disposition of cases" is a
flexible concept. It is consistent with delays and depends upon the circumstances of
each case. What the Constitution prohibits are unreasonable, arbitrary and oppressive
delays which render rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining
whether or not the right to a "speedy disposition of cases" has been violated, thus:
In the determination of whether or not the right to a "speedy trial" has

been violated, certain factors may be considered and balanced against
each other. These are length of delay, reason for the delay, assertion of
the right or failure to assert it, and prejudice caused by the delay. The
same factors may also be considered in answering judicial inquiry whether
or not a person officially charged with the administration of justice has
violated the speedy disposition of cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
It must be here emphasized that the right to a speedy disposition of a

case, like the right to speedy trial, is deemed violated only when the
proceeding is attended by vexatious, capricious, and oppressive delays; or
when unjustified postponements of the trial are asked for and secured, or
when without cause or justified motive a long period of time is allowed to
elapse without the party having his case tried.
Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the
amended complaint, claimants had been asking that AIBC and BRII be declared in
default for failure to file their answers within the ten-day period provided in Section 1,
Rule III of Book VI of the Rules and Regulations of the POEA. At that time, there was a
pending motion of AIBC and BRII to strike out of the records the amended complaint and
the "Compliance" of claimants to the order of the POEA, requiring them to submit a bill
of particulars.
The cases at bench are not of the run-of-the-mill variety, such that their final disposition
in the administrative level after seven years from their inception, cannot be said to be
attended by unreasonable, arbitrary and oppressive delays as to violate the
constitutional rights to a speedy disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said
complaint had undergone several amendments, the first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They were deployed in
different areas, one group in and the other groups outside of, Bahrain. The monetary
claims totalling more than US$65 million according to Atty. Del Mundo, included:
1. Unexpired portion of contract;

2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue

(B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees
Benefits consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to recruit of
AIBC and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not excluding

reportorial requirements thereof (NLRC Resolution, September 2, 1991, pp.
18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some
facts, the claimants were ordered to comply with the motion of AIBC for a bill of
particulars. When claimants filed their "Compliance and Manifestation," AIBC moved to
strike out the complaint from the records for failure of claimants to submit a proper bill
of particulars. While the POEA Administrator denied the motion to strike out the
complaint, he ordered the claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the records of
employment of the more than 1,700 claimants had to be retrieved from various
countries in the Middle East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA Administrator were
interrupted several times by the various appeals, first to NLRC and then to the Supreme
Court.
Aside from the inclusion of additional claimants, two new cases were filed against AIBC
and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA
Case No. L-86-05-460). NLRC, in exasperation, noted that the exact number of claimants
had never been completely established (Resolution, Sept. 2, 1991, G.R. No.
104776, Rollo, p. 57). All the three new cases were consolidated with POEA Case No. L-
84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the proceedings,
thus:
These cases could have been spared the long and arduous route towards
resolution had the parties and their counsel been more interested in
pursuing the truth and the merits of the claims rather than exhibiting a
fanatical reliance on technicalities. Parties and counsel have made these
cases a litigation of emotion. The intransigence of parties and counsel is
remarkable. As late as last month, this Commission made a last and final
attempt to bring the counsel of all the parties (this Commission issued a
special order directing respondent Brown & Root's resident agent/s to
appear) to come to a more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of
the cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these

consolidated cases appear to be not only the individual complainants, on
the one hand, and AIBC and Brown & Root, on the other hand. The two
lawyers for the complainants, Atty. Gerardo Del Mundo and Atty. Florante
De Castro, have yet to settle the right of representation, each one
persistently claiming to appear in behalf of most of the complainants. As a
result, there are two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of their respective
authority to represent the complainants prove futile. The bickerings by
these two counsels are reflected in their pleadings. In the charges and
countercharges of falsification of documents and signatures, and in the
disbarment proceedings by one against the other. All these have, to a
large extent, abetted in confounding the issues raised in these cases,
jumble the presentation of evidence, and even derailed the prospects of
an amicable settlement. It would not be far-fetched to imagine that both
counsel, unwittingly, perhaps, painted a rainbow for the complainants,
with the proverbial pot of gold at its end containing more than US$100
million, the aggregate of the claims in these cases. It is, likewise, not
improbable that their misplaced zeal and exuberance caused them to
throw all caution to the wind in the matter of elementary rules of
procedure and evidence (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties
and the public respondents would not know which claim of which petitioner was
dismissed and which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class suit"
because "all the named complainants have similar money claims and similar rights
sought irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu
Dhabi, Libya or in any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of common or
general interest to many and the parties are so numerous that it is impracticable to
bring them all before the court (Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law, many of the
claimants worked outside Bahrain. Some of the claimants were deployed in Indonesia
and Malaysia under different terms and conditions of employment.
NLRC and the POEA Administrator are correct in their stance that inasmuch as the first
requirement of a class suit is not present (common or general interest based on the
Amiri Decree of the State of Bahrain), it is only logical that only those who worked in
Bahrain shall be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the
same (for employee's benefits), there is no common question of law or fact. While some
claims are based on the Amiri Law of Bahrain, many of the claimants never worked in
that country, but were deployed elsewhere. Thus, each claimant is interested only in his
own demand and not in the claims of the other employees of defendants. The named
claimants have a special or particular interest in specific benefits completely different
from the benefits in which the other named claimants and those included as members
of a "class" are claiming (Berses v. Villanueva, 25 Phil. 473 [1913]). It appears that each
claimant is only interested in collecting his own claims. A claimants has no concern in
protecting the interests of the other claimants as shown by the fact, that hundreds of
them have abandoned their co-claimants and have entered into separate compromise
settlements of their respective claims. A principle basic to the concept of "class suit" is
that plaintiffs brought on the record must fairly represent and protect the interests of
the others (Dimayuga v. Court of Industrial Relations, 101 Phil. 590 [1957]). For this
matter, the claimants who worked in Bahrain can not be allowed to sue in a class suit in
a judicial proceeding. The most that can be accorded to them under the Rules of Court
is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule 3,
Sec. 6).
The Court is extra-cautious in allowing class suits because they are the exceptions to
the condition sine qua non, requiring the joinder of all indispensable parties.
In an improperly instituted class suit, there would be no problem if the decision secured
is favorable to the plaintiffs. The problem arises when the decision is adverse to them,
in which case the others who were impleaded by their self-appointed representatives,
would surely claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC
should have declared Atty. Florante De Castro guilty of "forum shopping, ambulance
chasing activities, falsification, duplicity and other unprofessional activities" and his
appearances as counsel for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to
the practice of some parties of filing multiple petitions and complaints involving the
same issues, with the result that the courts or agencies have to resolve the same
issues. Said Rule, however, applies only to petitions filed with the Supreme Court and
the Court of Appeals. It is entitled "Additional Requirements For Petitions Filed with the
Supreme Court and the Court of Appeals To Prevent Forum Shopping or Multiple Filing of
Petitioners and Complainants." The first sentence of the circular expressly states that
said circular applies to an governs the filing of petitions in the Supreme Court and the
Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum
shopping rule to the lower courts and administrative agencies, said circular took effect
only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical conduct against
Atty. De Castro because NLRC and POEA have no jurisdiction to investigate charges of
unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed
by Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services
rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or administrative
agency which renders and executes the money judgment secured by the lawyer for his
clients. The lawyer shall cause written notice thereof to be delivered to his clients and to
the adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the
claim for the charging lien of Atty. Del Mundo should have been filed with the
administrative agency that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty.
Katz Tierra for violation of the Code of Professional Responsibility should be filed in a
separate and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting their formula of
"Three Hours Average Daily Overtime" in computing the overtime payments. They claim
that it was BRII itself which proposed the formula during the negotiations for the
settlement of their claims in Bahrain and therefore it is in estoppel to disclaim said offer
(Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16,
1983, which in pertinent part states:
After the perusal of the memorandum of the Vice President and the Area
Manager, Middle East, of Brown & Root Co. and the Summary of the
compensation offered by the Company to the employees in respect of the
difference of pay of the wages of the overtime and the difference of

vacation leave and the perusal of the documents attached thereto i.e.,
minutes of the meetings between the Representative of the employees
and the management of the Company, the complaint filed by the
employees on 14/2/83 where they have claimed as hereinabove stated,
sample of the Service Contract executed between one of the employees
and the company through its agent in (sic) Philippines, Asia International
Builders Corporation where it has been provided for 48 hours of work per
week and an annual leave of 12 days and an overtime wage of 1 & 1/4 of
the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35

months for the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is
US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in all public holidays
and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation for

the difference of the wages of the overtime done for each Philippino (sic)
employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a
subordinate official in the Bahrain Department of Labor; (2) that there was no showing
that the Bahrain Minister of Labor had approved said memorandum; and (3) that the
offer was made in the course of the negotiation for an amicable settlement of the claims
and therefore it was not admissible in evidence to prove that anything is due to the
claimants.
While said document was presented to the POEA without observing the rule on
presenting official documents of a foreign government as provided in Section 24, Rule
132 of the 1989 Revised Rules on Evidence, it can be admitted in evidence in
proceedings before an administrative body. The opposing parties have a copy of the
said memorandum, and they could easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as contained in the

memorandum is another matter. Under Section 27, Rule 130 of the 1989 Revised Rules
on Evidence, an offer to settle a claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. — In civil cases, an offer of

compromise is not an admission of any liability, and is not admissible in
evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record with
unwanted evidence but a statement of public policy. There is great public interest in
having the protagonists settle their differences amicable before these ripen into
litigation. Every effort must be taken to encourage them to arrive at a settlement. The
submission of offers and counter-offers in the negotiation table is a step in the right
direction. But to bind a party to his offers, as what claimants would make this Court do,
would defeat the salutary purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits
than those stipulated in the overseas-employment contracts of the claimants. It was of
the belief that "where the laws of the host country are more favorable and beneficial to
the workers, then the laws of the host country shall form part of the overseas
employment contract." It quoted with approval the observation of the POEA
Administrator that ". . . in labor proceedings, all doubts in the implementation of the
provisions of the Labor Code and its implementing regulations shall be resolved in favor
of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to
enforce the overseas-employment contracts, which became the law of the parties. They
contend that the principle that a law is deemed to be a part of a contract applies only to
provisions of Philippine law in relation to contracts executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC and BRII

themselves, provided that the laws of the host country became applicable to said
contracts if they offer terms and conditions more favorable that those stipulated
therein. It was stipulated in said contracts that:
The Employee agrees that while in the employ of the Employer, he will not
engage in any other business or occupation, nor seek employment with
anyone other than the Employer; that he shall devote his entire time and
attention and his best energies, and abilities to the performance of such
duties as may be assigned to him by the Employer; that he shall at all
times be subject to the direction and control of the Employer; and that the
benefits provided to Employee hereunder are substituted for and in lieu of
all other benefits provided by any applicable law, provided of course, that
total remuneration and benefits do not fall below that of the host country
regulation or custom, it being understood that should applicable laws
establish that fringe benefits, or other such benefits additional to the
compensation herein agreed cannot be waived, Employee agrees that
such compensation will be adjusted downward so that the total
compensation hereunder, plus the non-waivable benefits shall be
equivalent to the compensation herein agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more felicitously. While a
part thereof provides that the compensation to the employee may be "adjusted
downward so that the total computation (thereunder) plus the non-waivable benefits
shall be equivalent to the compensation" therein agreed, another part of the same
provision categorically states "that total remuneration and benefits do not fall below
that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts should be interpreted against

AIBC and BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-
Verkaufs-Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a contract shall not

favor the party who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion where there is already a

prepared form containing the stipulations of the employment contract and the
employees merely "take it or leave it." The presumption is that there was an imposition
by one party against the other and that the employees signed the contracts out of
necessity that reduced their bargaining power (Fieldmen's Insurance Co., Inc. v. Songco,
25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment contracts in

question as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and
parcel thereof.
The parties to a contract may select the law by which it is to be governed (Cheshire,
Private International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a
"system" to regulate the relations of the parties, including questions of their capacity to
enter into the contract, the formalities to be observed by them, matters of performance,
and so forth (16 Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may just agree that
specific provisions of a foreign statute shall be deemed incorporated into their contract
"as a set of terms." By such reference to the provisions of the foreign law, the contract
does not become a foreign contract to be governed by the foreign law. The said law
does not operate as a statute but as a set of contractual terms deemed written in the
contract (Anton, Private International Law, 197 [1967]; Dicey and Morris, The Conflict of
Laws, 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese, Choice of
Law in Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]).
Such party expectation is protected by giving effect to the parties' own choice of the
applicable law (Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice
of law must, however, bear some relationship to the parties or their transaction (Scoles
and Hayes, Conflict of Law 644-647 [1982]). There is no question that the contracts
sought to be enforced by claimants have a direct connection with the Bahrain law
because the services were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management Co. and the late husband of the
private respondent, expressly provided that in the event of illness or injury to the
employee arising out of and in the course of his employment and not due to his own
misconduct, "compensation shall be paid to employee in accordance with and subject to
the limitation of the Workmen's Compensation Act of the Republic of the Philippines or
the Worker's Insurance Act of registry of the vessel, whichever is greater." Since the
laws of Singapore, the place of registry of the vessel in which the late husband of
private respondent served at the time of his death, granted a better compensation
package, we applied said foreign law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor Relations

Commission, 135 SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the
facts of the cases at bench. The issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the shipboard
employment contract executed in the Philippines or the Hongkong law. Holding that the
shipboard employment contract was controlling, the court differentiated said case from
Norse Management Co. in that in the latter case there was an express stipulation in the
employment contract that the foreign law would be applicable if it afforded greater
compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right to due process when
said administrative agency granted Friday-pay differential, holiday-pay differential,
annual-leave differential and leave indemnity pay to the claimants listed in Annex B of
the Resolution. At first, NLRC reversed the resolution of the POEA Administrator granting
these benefits on a finding that the POEA Administrator failed to consider the evidence
presented by AIBC and BRII, that some findings of fact of the POEA Administrator were
not supported by the evidence, and that some of the evidence were not disclosed to
AIBC and BRII (Rollo, pp. 35-36; 106-107). But instead of remanding the case to the
POEA Administrator for a new hearing, which means further delay in the termination of
the case, NLRC decided to pass upon the validity of the claims itself. It is this procedure
that AIBC and BRII complain of as being irregular and a "reversible error."
They pointed out that NLRC took into consideration evidence submitted on appeal, the
same evidence which NLRC found to have been "unilaterally submitted by the claimants
and not disclosed to the adverse parties" (Rollo, pp. 37-39).
NLRC noted that so many pieces of evidentiary matters were submitted to the POEA
administrator by the claimants after the cases were deemed submitted for resolution
and which were taken cognizance of by the POEA Administrator in resolving the cases.
While AIBC and BRII had no opportunity to refute said evidence of the claimants before
the POEA Administrator, they had all the opportunity to rebut said evidence and to
present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves were able
to present before NLRC additional evidence which they failed to present before the
POEA Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use every
and all reasonable means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law or procedure, all in the interest of due
process."
In deciding to resolve the validity of certain claims on the basis of the evidence of both
parties submitted before the POEA Administrator and NLRC, the latter considered that it
was not expedient to remand the cases to the POEA Administrator for that would only
prolong the already protracted legal controversies.
Even the Supreme Court has decided appealed cases on the merits instead of
remanding them to the trial court for the reception of evidence, where the same can be
readily determined from the uncontroverted facts on record (Development Bank of the
Philippines v. Intermediate Appellate Court, 190 SCRA 653 [1990]; Pagdonsalan v.
National Labor Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution
dated September 2, 1991 whose claims had been denied by the POEA Administrator "for
lack of proof" and for 69 claimants listed in Annex E of the same Resolution, whose
claims had been found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines, which
empowers it "[to] conduct investigation for the determination of a question, matter or
controversy, within its jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to
remand a case involving claims which had already been dismissed because such
provision contemplates only situations where there is still a question or controversy to
be resolved (Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of procedure
and evidence do not apply to the proceedings conducted by administrative agencies
(First Asian Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld
Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in
Article 221 of the Labor Code of the Philippines and is now the bedrock of proceedings
before NLRC.
Notwithstanding the non-applicability of technical rules of procedure and evidence in

administrative proceedings, there are cardinal rules which must be observed by the
hearing officers in order to comply with the due process requirements of the
Constitution. These cardinal rules are collated in Ang Tibay v. Court of Industrial
Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court on the
grounds that NLRC had committed grave abuse of discretion amounting to lack of
jurisdiction in issuing the questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.
CADALIN ET AL VS. POEA ET AL

MARCH 28, 2013 ~ VBDIAZ
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.

EVANGELISTA, and the rest of 1,767 NAMED-COMPLAINANTS,
thru and by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDOvs. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION’S ADMINISTRATOR, NLRC, BROWN & ROOT
INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL
BUILDERS CORPORATION
GRN 104776, December 5,1994.
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the
Supreme Court for Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf

and on behalf of 728 other OCWs instituted a class suit by filing an
“Amended Complaint” with the POEA for money claims arising from
their recruitment by ASIA INTERNATIONAL BUILDERS CORPORATION
(AIBC) and employment by BROWN & ROOT INTERNATIONAL, INC
(BRI) which is a foreign corporation with headquarters in Houston,
Texas, and is engaged in construction; while AIBC is a domestic
corporation licensed as a service contractor to recruit, mobilize and
deploy Filipino workers for overseas employment on behalf of its
foreign principals.
The amended complaint sought the payment of the unexpired

portion of the employment contracts, which was terminated
prematurely, and secondarily, the payment of the interest of the
earnings of the Travel and Reserved Fund; interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits;
reimbursement of SSS and premium not remitted to the SSS; refund
of withholding tax not remitted to the BIR; penalties for committing
prohibited practices; as well as the suspension of the license of AIBC

and the accreditation of BRII
On October 2, 1984, the POEA Administrator denied the “Motion to

Strike Out of the Records” filed by AIBC but required the claimants
to correct the deficiencies in the complaint pointed out.
AIB and BRII kept on filing Motion for Extension of Time to file their
answer. The POEA kept on granting such motions.
On November 14, 1984, claimants filed an opposition to the motions

for extension of time and asked that AIBC and BRII declared in
default for failure to file their answers.
On December 27, 1984, the POEA Administrator issued an order

directing AIBC and BRII to file their answers within ten days from
receipt of the order.
(at madami pang motions ang na-file, new complainants joined the
case, ang daming inavail na remedies ng both parties)
On June 19, 1987, AIBC finally submitted its answer to the
complaint. At the same hearing, the parties were given a period of
15 days from said date within which to submit their respective
position papers. On February 24, 1988, AIBC and BRII submitted
position paper. On October 27, 1988, AIBC and BRII filed a
“Consolidated Reply,” POEA Adminitartor rendered his decision
which awarded the amount of $824, 652.44 in favor of only 324
complainants. Claimants submitted their “Appeal Memorandum For
Partial Appeal” from the decision of the POEA. AIBC also filed its MR
and/or appeal in addition to the “Notice of Appeal” filed earlier.
NLRC promulgated its Resolution, modifying the decision of the

POEA. The resolution removed some of the benefits awarded in favor
of the claimants. NLRC denied all the MRs. Hence, these petitions
filed by the claimants and by AlBC and BRII.
The case rooted from the Labor Law enacted by Bahrain where most
of the complainants were deployed. His Majesty Ise Bin Selman Al
Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on June 16,
1176, otherwise known re the Labour Law for the Private Sector.
Some of the provision of Amiri Decree No. 23 that are relevant to the
claims of the complainants-appellants are as follows:
“Art. 79: x x x A worker shall receive payment for each extra hour
equivalent to his wage entitlement increased by a minimum of
twenty-rive per centurn thereof for hours worked during the day;
and by a minimum off fifty per centurn thereof for hours worked
during the night which shall be deemed to being from seven o’clock
in the evening until seven o’clock in the morning .”
Art. 80: Friday shall be deemed to be a weekly day of rest on full

pay.
If employee worked, 150% of his normal wage shall be paid to him x
x x.”
Art. 81; x x x When conditions of work require the worker to work on

any official holiday, he shall be paid an additional sum equivalent to
150% of his normal wage.”
Art. 84: Every worker who has completed one year’s continuous
service with his employer shall be entitled to Laos on full pay for a
period of not less than 21 days for each year increased to a period
not less than 28 days after five continuous years of service.”
A worker shall be entitled to such leave upon a quantum meruit in

respect of the proportion of his service in that year.”
Art. 107: A contract of employment made for a period of indefinite

duration may be terminated by either party thereto after giving the
other party prior notice before such termination, in writing, in
respect of monthly paid workers and fifteen days’ notice in respect
of other workers. The party terminating a contract without the
required notice shall pay to the other party compensation equivalent
to the amount of wages payable to the worker for the period of such
notice or the unexpired portion thereof.”
Art. Ill: x x x the employer concerned shall pay to such worker, upon
termination of employment, a leaving indemnity for the period of his
employment calculated on the basis of fifteen days’ wages for each
year of the first three years of service and of one month’s wages for
each year of service thereafter. Such worker shall be entitled to
payment of leaving indemnity upon a quantum meruit in proportion
to the period of his service completed within a year.”
ISSUE:
1. WON the foreign law should govern or the contract of the parties.
(WON the complainants who have worked in Bahrain are entitled to
the above-mentioned benefits provided by Amiri Decree No. 23 of
Bahrain).
2. WON the Bahrain Law should apply in the case. (Assuming it is

applicable WON complainants’ claim for the benefits provided
therein have prescribed.)
3. Whether or not the instant cases qualify as; a class suit (siningit
ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)
RULING:
1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on
Evidence governing the pleading and proof of a foreign law and
admitted in evidence a simple copy of the Bahrain’s Amiri Decree
No. 23 of 1976 (Labour Law for the Private Sector).
NLRC applied the Amiri Deere, No. 23 of 1976, which provides for
greater benefits than those stipulated in the overseas-employment
contracts of the claimants. It was of the belief that where the laws of
the host country are more favorable and beneficial to the workers,
then the laws of the host country shall form part of the overseas
employment contract. It approved the observation of the POEA
Administrator that in labor proceedings, all doubts in the
implementation of the provisions of the Labor Code and its
implementing regulations shall be resolved in favor of labor.
The overseas-employment contracts, which were prepared by AIBC

and BRII themselves, provided that the laws of the host country
became applicable to said contracts if they offer terms and
conditions more favorable than those stipulated therein. However
there was a part of the employment contract which provides that
the compensation of the employee may be “adjusted downward so
that the total computation plus the non-waivable benefits shall be
equivalent to the compensation” therein agree,’ another part of the

same provision categorically states “that total remuneration and
benefits do not fall below that of the host country regulation and
custom.”
Any ambiguity in the overseas-employment contracts should be

interpreted against AIBC and BRII, the parties that drafted it. Article
1377 of the Civil Code of the Philippines provides:
‘The interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity.”
Said rule of interpretation is applicable to contracts of adhesion

where there is already a prepared form containing the stipulations of
the employment contract and the employees merely “take it or
leave it.” The presumption is that there was an imposition by one
party against the other and that the employees signed the contracts
out of necessity that reduced their bargaining power.
We read the overseas employment contracts in question as adopting
the provisions of the Amiri Decree No. 23 of 1976 as part and parcel
thereof. The parties to a contract may select the law by which it is to
be governed. In such a case, the foreign law is adopted as a
“system” to regulate the relations of the parties, including questions
of their capacity to enter into the contract, the formalities to be
observed by them, matters of performance, and so forth. Instead of
adopting the entire mass of the foreign law, the parties may just
agree that specific provisions of a foreign statute shall be deemed
incorporated into their contract “as a set of terms.” By such
reference to the provisions of the foreign law, the contract does not
become a foreign contract to be governed by the foreign law. The
said law does not operate as a statute but as a set of contractual
terms deemed written in the contract.
A basic policy of contract is to protect the expectation of the parties.

Such party expectation is protected by giving effect to the parties’
own choice of the applicable law. The choice of law must, however,
bear some relationship the parties or their transaction. There is no
question that the contracts sought to be enforced by claimants have
a direct connection with the Bahrain law because the services were
rendered in that country.
2. NLRC ruled that the prescriptive period for the filing of the claims
of the complainants was 3 years, as provided in Article 291 of the
Labor Code of the Philippines, and not ten years as provided in
Article 1144 of the Civil Code of the Philippines nor one year as
provided in the Amiri Decree No. 23 of 1976.
Article 156 of the Amiri Decree No. 23 of 1976 provides:

“A claim arising out of a contract of employment shall not actionable
after the lapse of one year from the date of the expiry of the
Contract”.
As a general rule, a foreign procedural law will not be applied in the

forum (local court), 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.
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. In Bournias v.
Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955]), where
the issue was the applicability of the Panama Labor Code in a case
filed in the State of New York for claims arising from said Code, the
claims would have prescribed under the Panamanian Law but not
under the Statute of Limitations of New York. The U.S. Circuit Court
of Appeals held that the Panamanian Law was procedural as it was
not “specifically intended to be substantive,” hence, the prescriptive
period provided in the law of the forum should apply. The Court
observed: “. . . we are dealing with a statute of limitations of a
foreign country, and it is not clear on the face of the statute that its
purpose was to limit the enforceability, outside as well as within the
foreign country concerned, of the substantive rights to which the
statute pertains. We think that as a yardstick for determining
whether that was the purpose, this test is the most satisfactory one.
The Court further noted: “Applying that test here it appears to us

that the libellant is entitled to succeed, for the respondents have
failed to satisfy us that the Panamanian period of limitation in
question was specifically aimed against the particular rights which
the libellant seeks to enforce. The Panama Labor Code is a statute
having broad objectives.” The American court applied the statute of
limitations of New York, instead of the Panamanian law, after finding
that there was no showing that the Panamanian law on prescription
was intended to be substantive. Being considered merely a
procedural law even in Panama, it has to give way to the law of the
forum (local Court) on prescription of actions.
However the characterization of a statute into a procedural or

substantive law becomes irrelevant when the country of the forum
(local Court) has a “borrowing statute.” Said statute has the
practical effect of treating the foreign statute of limitation as one of
substance. A “borrowing statute” directs the state of the forum
(local Court) to apply the foreign statute of limitations to the
pending claims based on a foreign law. While there are several kinds
of “borrowing statutes,” one form provides that an action barred by

the laws of the place where it accrued will not be enforced in the
forum even though the local statute was not run against it.
Section 48 of Code of Civil Procedure is of this kind. It 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. In the light of the 1987 Constitution, however,
Section 48 cannot be enforced ex proprio vigore insofar as it ordains
the application in this jurisdiction of Section 156 of the Amiri Decree
No. 23 of 1976.
The courts of the forum (local Court) will not enforce any foreign
claim obnoxious to the forum’s public policy. To enforce the one-year
prescriptive period of the Amiri Decree No. 23 of 1976 as regards
the claims in question would contravene the public policy on the
protection to labor.
In the Declaration of Principles and State Policies, the 1987

Constitution emphasized that:“The state shall promote social justice
in all phases of national development” (Sec. 10).
‘The state affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare” (Sec. 18).
In Article XIII on Social Justice and Human Rights, the 1987

Constitution provides:
“Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.”
Thus, the applicable law on prescription is the Philippine law.
The next question is whether the prescriptive period governing the

filing of the claims is 3 years, as provided by the Labor Code or 10
years, as provided by the Civil Code of the Philippines.
Article 1144 of the Civil Code of the Philippines provides:

“The following actions must be brought within ten years from the
time the right of action accross:
(1) Upon a written contract; (2) Upon an obligation created by law;

(3) Upon a judgment”
In this case, the claim for pay differentials is primarily anchored on
the written contracts between the litigants, the ten-year prescriptive
period provided by Art. 1144(l) of the New Civil Code should govern.
3. NO. A class suit is proper where the subject matter of the

controversy is one of common or general interest to many and the
parties are so numerous that it is impracticable to bring them all
before the court. When all the claims are for benefits granted under
the Bahrain law many of the claimants worked outside Bahrain.
Some of the claimants were deployed in Indonesia under different
terms and condition of employment.
Inasmuch as the First requirement of a class suit is not present

(common or general interest based on the Amiri Decree of the State
of Bahrain), it is only logical that only those who worked in Bahrain
shall be entitled to rile their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature
of the claims is the same (for employee’s benefits), there is no
common question of law or fact. While some claims are based on the
Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is
interested only in his own demand and not in the claims of the other
employees of defendants. A claimant has no concern in protecting
the interests of the other claimants as shown by the fact, that
hundreds of them have abandoned their co-claimants and have
entered into separate compromise settlements of their respective
claims. The claimants who worked in Bahrain can not be allowed to
sue in a class suit in a judicial proceeding.
WHEREFORE, all the three petitioners are DISMISSED.
G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,

vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE
LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES
and MARIA MOONYEEN MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.
FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation licensed to do
business in the Philippines, executed in Manila two (2) separate contracts of employment, one with private respondent
Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. 1The contracts, which became effective on 9
January 1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by
the mutual consent of the parties.
xxx xxx xxx

6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the

right to terminate this agreement at any time by giving the EMPLOYEE
notice in writing in advance one month before the intended termination or
in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's
salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of
Pakistan, and only the Courts of Karachi, Pakistan shall have the
jurisdiction to consider any matter arising out of or under this agreement.
Respondents then commenced training in Pakistan. After their training period, they
began discharging their job functions as flight attendants, with base station in Manila
and flying assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of
the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of
the local branch of PIA, sent separate letters both dated 1 August 1980 to private
respondents Farrales and Mamasig advising both that their services as flight
stewardesses would be terminated "effective 1 September 1980, conformably to clause
6 (b) of the employment agreement [they had) executed with [PIA]." 2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a

complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of
company benefits and bonuses, against PIA with the then Ministry of Labor and
Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE
hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers
and evidence supporting their respective positions. The PIA submitted its position
paper, but no evidence, and there claimed that both private respondents were habitual
3
absentees; that both were in the habit of bringing in from abroad sizeable quantities of
"personal effects"; and that PIA personnel at the Manila International Airport had been
discreetly warned by customs officials to advise private respondents to discontinue that
practice. PIA further claimed that the services of both private respondents were
terminated pursuant to the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the
reinstatement of private respondents with full backwages or, in the alternative, the
payment to them of the amounts equivalent to their salaries for the remainder of the
fixed three-year period of their employment contracts; the payment to private
respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-
USA Manila; and payment of a bonus to each of the private respondents equivalent to
their one-month salary. The Order stated that private respondents had attained the
4
status of regular employees after they had rendered more than a year of continued
service; that the stipulation limiting the period of the employment contract to three (3)
years was null and void as violative of the provisions of the Labor Code and its
implementing rules and regulations on regular and casual employment; and that the
dismissal, having been carried out without the requisite clearance from the MOLE, was
illegal and entitled private respondents to reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy
Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director
and affirmed the latter's award save for the portion thereof giving PIA the option, in lieu
of reinstatement, "to pay each of the complainants [private respondents] their salaries
corresponding to the unexpired portion of the contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional
Director and the Order of the Deputy Minister as having been rendered without
jurisdiction; for having been rendered without support in the evidence of record since,
allegedly, no hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and for
having been issued in disregard and in violation of petitioner's rights under the
employment contracts with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction
over the subject matter of the complaint initiated by private respondents for illegal
dismissal, jurisdiction over the same being lodged in the Arbitration Branch of the
National Labor Relations Commission ("NLRC") It appears to us beyond dispute,
however, that both at the time the complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on January 1981 (by Regional Director
Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the
Regional Director had jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of
employees with at least one (1) year of service without prior clearance from the
Department of Labor and Employment:
Art. 278. Miscellaneous Provisions — . . .
(b) With or without a collective agreement, no employer may shut down

his establishment or dismiss or terminate the employment of employees
with at least one year of service during the last two (2) years, whether
such service is continuous or broken, without prior written authority issued
in accordance with such rules and regulations as the Secretary may
promulgate . . . (emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code,
made clear that in case of a termination without the necessary clearance, the
Regional Director was authorized to order the reinstatement of the employee
concerned and the payment of backwages; necessarily, therefore, the Regional
Director must have been given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or

dismissal without prior clearance shall be conclusively presumed to be
termination of employment without a just cause. The Regional Director
shall, in such case order the immediate reinstatement of the employee
and the payment of his wages from the time of the shutdown or dismissal
until the time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976,
was similarly very explicit about the jurisdiction of the Regional Director over
termination of employment cases:
Under PD 850, termination cases — with or without CBA — are now placed
under the original jurisdiction of the Regional Director. Preventive
suspension cases, now made cognizable for the first time, are also placed
under the Regional Director. Before PD 850, termination cases where there
was a CBA were under the jurisdiction of the grievance machinery and
voluntary arbitration, while termination cases where there was no CBA
were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its

implementing rules and regulations with respect to termination and
preventive suspension cases are:
1. The Regional Director is now required to rule on every application for

clearance, whether there is opposition or not, within ten days from receipt
thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation of
petitioner's right to procedural due process . This claim, however, cannot be given
6
serious consideration. Petitioner was ordered by the Regional Director to submit not only
its position paper but also such evidence in its favor as it might have. Petitioner opted to
rely solely upon its position paper; we must assume it had no evidence to sustain its
assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample
opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to
the Ministry of Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be
rejected. At the time the complaint was filed by private respondents on 21 September
1980 and at the time the Regional Director issued his questioned order on 22 January
1981, applicable regulation, as noted above, specified that a "dismissal without prior
clearance shall be conclusively presumed to be termination of employment without a
cause", and the Regional Director was required in such case to" order the immediate
reinstatement of the employee and the payment of his wages from the time of the
shutdown or dismiss until . . . reinstatement." In other words, under the then applicable
rule, the Regional Director did not even have to require submission of position papers by
the parties in view of the conclusive (juris et de jure) character of the presumption
created by such applicable law and regulation. In Cebu Institute of Technology v.
Minister of Labor and Employment, the Court pointed out that "under Rule 14, Section
8
2, of the Implementing Rules and Regulations, the termination of [an employee] which
was without previous clearance from the Ministry of Labor is conclusively presumed to
be without [just] cause . . . [a presumption which] cannot be overturned by any contrary

proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of
employment with private respondents Farrales and Mamasig, arguing that its
relationship with them was governed by the provisions of its contract rather than by the
general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship,
extendible by agreement between the parties; while paragraph 6 provided that,
notwithstanding any other provision in the Contract, PIA had the right to terminate the
employment agreement at any time by giving one-month's notice to the employee or, in
lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. The principle of party autonomy in contracts is
10
not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem
convenient, "provided they are not contrary to law, morals, good customs, public order
or public policy." Thus, counter-balancing the principle of autonomy of contracting
parties is the equally general rule that provisions of applicable law, especially provisions
relating to matters affected with public policy, are deemed written into the
contract. Put a little differently, the governing principle is that parties may not contract
11
away applicable provisions of law especially peremptory provisions dealing with matters
heavily impressed with public interest. The law relating to labor and employment is
clearly such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with
each other. It is thus necessary to appraise the contractual provisions invoked by
petitioner PIA in terms of their consistency with applicable Philippine law and
regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held
that paragraph 5 of that employment contract was inconsistent with Articles 280 and
281 of the Labor Code as they existed at the time the contract of employment was
entered into, and hence refused to give effect to said paragraph 5. These Articles read
as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the

employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed from the time his
compensation was withheld from him up to the time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions of written

agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the

employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the

preceding paragraph: provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered as regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., the Court had occasion to
12
examine in detail the question of whether employment for a fixed term has been
outlawed under the above quoted provisions of the Labor Code. After an extensive
examination of the history and development of Articles 280 and 281, the Court reached
the conclusion that a contract providing for employment with a fixed period was not
necessarily unlawful:
There can of course be no quarrel with the proposition that where from
the circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employee, they should be
struck down or disregarded as contrary to public policy, morals, etc. But
where no such intent to circumvent the law is shown, or stated otherwise,
where the reason for the law does not exist e.g. where it is indeed the
employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project,
a definite date of termination is a sine qua non would an agreement fixing
a period be essentially evil or illicit, therefore anathema Would such an
agreement come within the scope of Article 280 which admittedly was
enacted "to prevent the circumvention of the right of the employee to be
secured in . . . (his) employment?"
As it is evident from even only the three examples already given

that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be
eschewed or avoided. The law must be given reasonable interpretation, to
preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to
remedy the evil of employers" using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the nose to
spite the face or, more relevantly, curing a headache by lopping off the
head.
xxx xxx xxx
Accordingly, and since the entire purpose behind the development of

legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements

conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security
of tenure. It should have no application to instances where a fixed period
of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to purposes other
than those explicitly stated by its framers; it thus becomes pointless and
arbitrary, unjust in its effects and apt to lead to absurd and unintended
consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or
absence of a substantial indication that the period specified in an employment
agreement was designed to circumvent the security of tenure of regular
employees which is provided for in Articles 280 and 281 of the Labor Code. This
indication must ordinarily rest upon some aspect of the agreement other than the
mere specification of a fixed term of the ernployment agreement, or upon
evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between

petitioner PIA and private respondents, we consider that those provisions must be read
together and when so read, the fixed period of three (3) years specified in paragraph 5
will be seen to have been effectively neutralized by the provisions of paragraph 6 of
that agreement. Paragraph 6 in effect took back from the employee the fixed three (3)-
year period ostensibly granted by paragraph 5 by rendering such period in effect a
facultative one at the option of the employer PIA. For petitioner PIA claims to be
authorized to shorten that term, at any time and for any cause satisfactory to itself, to a
one-month period, or even less by simply paying the employee a month's salary.
Because the net effect of paragraphs 5 and 6 of the agreement here involved is to
render the employment of private respondents Farrales and Mamasig basically
employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5 and
6 were intended to prevent any security of tenure from accruing in favor of private
respondents even during the limited period of three (3) years, and thus to escape
13
completely the thrust of Articles 280 and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement and,
secondly, lays the venue for settlement of any dispute arising out of or in connection
with the agreement "only [in] courts of Karachi Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application of Philippine labor laws and regulations
to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon
some other law to govern their relationship. Neither may petitioner invoke the second
clause of paragraph 10, specifying the Karachi courts as the sole venue for the
settlement of dispute; between the contracting parties. Even a cursory scrutiny of the
relevant circumstances of this case will show the multiple and substantive contacts
between Philippine law and Philippine courts, on the one hand, and the relationship
between the parties, upon the other: the contract was not only executed in the
Philippines, it was also performed here, at least partially; private respondents are
Philippine citizens and respondents, while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business) and hence resident in the
Philippines; lastly, private respondents were based in the Philippines in between their
assigned flights to the Middle East and Europe. All the above contacts point to the
Philippine courts and administrative agencies as a proper forum for the resolution of
contractual disputes between the parties. Under these circumstances, paragraph 10 of
the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event,
the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on
the matter; it must therefore be presumed that the applicable provisions of the law of
Pakistan are the same as the applicable provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally dismissed
and that public respondent Deputy Minister, MOLE, had not committed any grave abuse
of discretion nor any act without or in excess of jurisdiction in ordering their
reinstatement with backwages. Private respondents are entitled to three (3) years
backwages without qualification or deduction. Should their reinstatement to their former
or other substantially equivalent positions not be feasible in view of the length of time
which has gone by since their services were unlawfully terminated, petitioner should be
required to pay separation pay to private respondents amounting to one (1) month's
salary for every year of service rendered by them, including the three (3) years service
putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the
Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1)
private respondents are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to their former
positions or to substantially equivalent positions not be feasible, then petitioner shall, in
lieu thereof, pay to private respondents separation pay amounting to one (1)-month's
salary for every year of service actually rendered by them and for the three (3) years
putative service by private respondents. The Temporary Restraining Order issued on 13
September 1982 is hereby LIFTED. Costs against petitioner.
SO ORDERED.
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.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.

Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.

J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of
First Instance of Manila dated April 30, 1964, approving the project of partition filed by
the executor in Civil Case No. 37089 therein. 1äwphï1.ñët
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United
States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate
children: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A.
Bellis, Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who
survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis and
Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he

directed that after all taxes, obligations, and expenses of administration are paid for, his
distributable estate should be divided, in trust, in the following order and manner: (a)
$240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each
and (c) after the foregoing two items have been satisfied, the remainder shall go to his
seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry
A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and
Dorothy E. Bellis, in equal shares.1äwphï1.ñët
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas,
U.S.A. His will was admitted to probate in the Court of First Instance of Manila on
September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests
therein including the amount of $240,000.00 in the form of shares of stock to Mary E.
Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis, various amounts totalling P40,000.00 each in satisfaction of their
respective legacies, or a total of P120,000.00, which it released from time to time
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, Congress deleted the phrase, "notwithstanding the provisions of this
and the next preceding article" when they incorporated Art. 11 of the old Civil Code as
Art. 17 of the new Civil Code, while reproducing without substantial change the second
paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must have been their
purpose to make the second paragraph of Art. 16 a specific provision in itself which
must be applied in testate and intestate succession. As further indication of this
legislative intent, Congress added a new provision, under Art. 1039, which decrees that
capacity to succeed is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in
our System of legitimes, Congress has not intended to extend the same to the
succession of foreign nationals. For it has specifically chosen to leave, inter alia,
the amount of successional rights, to the decedent's national law. Specific provisions
must prevail over general ones.
Appellants would also point out that the decedent executed two wills — one to govern
his Texas estate and the other his Philippine estate — arguing from this that he intended
Philippine law to govern his Philippine estate. Assuming that such was the decedent's
intention in executing a separate Philippine will, it would not alter the law, for as this
Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the
effect that his properties shall be distributed in accordance with Philippine law and not
with his national law, is illegal and void, for his national law cannot be ignored in regard
to those matters that Article 10 — now Article 16 — of the Civil Code states said
national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas,
U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes.
Accordingly, since the intrinsic validity of the provision of the will and the amount of
successional rights are to be determined under Texas law, the Philippine law on
legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against
appellants. So ordered.
G.R. No. 104235 November 18, 1993
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners,

vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES,

INC., respondents.
Sycip, Salazar, Hernandez, Gatmaitan for petitioners.
Quisumbing, Torres & Evangelista for private-respondent.
NOCON, J.:
Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight
007 departing from New York to Los Angeles on June 6, 1984 despite possession of
confirmed tickets, petitioners filed an action for damages before the Regional Trial Court
of Makati, Metro Manila, Branch 145. Advocating petitioner's position, the trial court
categorically ruled that respondent TransWorld Airlines (TWA) breached its contract of
carriage with petitioners and that said breach was "characterized by bad faith." On
appeal, however, the appellate court found that while there was a breach of contract on
respondent TWA's part, there was neither fraud nor bad faith because under the Code of
Federal Regulations by the Civil Aeronautics Board of the United States of America it is
allowed to overbook flights.
The factual backdrop of the case is as follows:
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana
Zalamea, purchased three (3) airline tickets from the Manila agent of respondent
TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The
tickets of petitioners-spouses were purchased at a discount of 75% while that of their
daughter was a full fare ticket. All three tickets represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of
their reservations for said flight. On the appointed date, however, petitioners checked in
at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed
on the wait-list because the number of passengers who had checked in before them had
already taken all the seats available on the flight. Liana Zalamea appeared as the No.
13 on the wait-list while the two other Zalameas were listed as "No. 34, showing a party
of two." Out of the 42 names on the wait list, the first 22 names were eventually allowed
to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others,
on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it
were, those holding full-fare tickets were given first priority among the wait-listed
passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was
allowed to board the plane; while his wife and daughter, who presented the discounted
tickets were denied boarding. According to Mr. Zalamea, it was only later when he
discovered the he was holding his daughter's full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
accommodated because it was also fully booked. Thus, they were constrained to book in
another flight and purchased two tickets from American Airlines at a cost of Nine
Hundred Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for damages based on
breach of contract of air carriage before the Regional Trial Court of Makati, Metro Manila,
Branch 145. As aforesaid, the lower court ruled in favor of petitioners in its
decision dated January 9, 1989 the dispositive portion of which states as follows:
1
WHEREFORE, judgment is hereby rendered ordering the defendant to pay

plaintiffs the following amounts:
(1) US $918.00, or its peso equivalent at the time of payment representing

the price of the tickets bought by Suthira and Liana Zalamea from
American Airlines, to enable them to fly to Los Angeles from New York City;
(2) US $159.49, or its peso equivalent at the time of payment,

representing the price of Suthira Zalamea's ticket for TWA Flight 007;
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos
(P8,934.50, Philippine Currency, representing the price of Liana Zalamea's
ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency,

as moral damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as

and for attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are recoverable in
a damage suit predicated upon a breach of contract of carriage only where there is
fraud or bad faith. Since it is a matter of record that overbooking of flights is a common
and accepted practice of airlines in the United States and is specifically allowed under
the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith
could be imputed on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight
was overbooked and that even a person with a confirmed reservation may be denied
accommodation on an overbooked flight, nevertheless it ruled that such omission or
negligence cannot under the circumstances be considered to be so gross as to amount
to bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list
along with forty-eight (48) other passengers where full-fare first class tickets were given
priority over discounted tickets.
The dispositive portion of the decision of respondent Court of Appeals dated October
3
25, 1991 states as follows:
WHEREFORE, in view of all the foregoing, the decision under review is

hereby MODIFIED in that the award of moral and exemplary damages to
the plaintiffs is eliminated, and the defendant-appellant is hereby ordered

to pay the plaintiff the following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment,

representing the price of Suthira Zalamea's ticket for TWA Flight 007;
(2) US$159.49, or its peso equivalent at the time of the payment,

representing the price of Cesar Zalamea's ticket for TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED. 4
Not satisfied with the decision, petitioners raised the case on petition for review
on certiorari and alleged the following errors committed by the respondent Court of
Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART

OF RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET

AND PAYMENT FOR THE AMERICAN AIRLINES
TICKETS. 5
That there was fraud or bad faith on the part of respondent airline when it did not allow
petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be
disputed. The U.S. law or regulation allegedly authorizing overbooking has never been
proved. Foreign laws do not prove themselves nor can the courts take judicial notice of
them. Like any other fact, they must be alleged and proved. Written law may be
6
evidenced by an official publication thereof or by a copy attested by the officer having

the legal custody of the record, or by his deputy, and accompanied with a certificate
that such officer has custody. The certificate may be made by a secretary of an embassy
or legation, consul general, consul, vice-consul, or consular agent or by any officer in
the foreign service of the Philippines stationed in the foreign country in which the record
is kept, and authenticated by the seal of his office.
7
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer
service agent, in her deposition dated January 27, 1986 that the Code of Federal
Regulations of the Civil Aeronautics Board allows overbooking. Aside from said
statement, no official publication of said code was presented as evidence. Thus,
respondent court's finding that overbooking is specifically allowed by the US Code of

Federal Regulations has no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
applicable to the case at bar in accordance with the principle of lex loci
contractus which require that the law of the place where the airline ticket was issued
should be applied by the court where the passengers are residents and nationals of the
forum and the ticket is issued in such State by the defendant airline. Since the tickets
8
were sold and issued in the Philippines, the applicable law in this case would be
Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling
the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of
Appeals, where passengers with confirmed bookings were refused carriage on the last
9
minute, this Court held that when an airline issues a ticket to a passenger confirmed on
a particular flight, on a certain date, a contract of carriage arises, and the passenger
has every right to expect that he would fly on that flight and on that date. If he does
not, then the carrier opens itself to a suit for breach of contract of carriage. Where an
airline had deliberately overbooked, it took the risk of having to deprive some
passengers of their seats in case all of them would show up for the check in. For the
indignity and inconvenience of being refused a confirmed seat on the last minute, said
passenger is entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, where private respondent
10
was not allowed to board the plane because her seat had already been given to another
passenger even before the allowable period for passengers to check in had lapsed
despite the fact that she had a confirmed ticket and she had arrived on time, this Court
held that petitioner airline acted in bad faith in violating private respondent's rights
under their contract of carriage and is therefore liable for the injuries she has sustained
as a result.
In fact, existing jurisprudence abounds with rulings where the breach of contract of
carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate
Appellate Court, where a would-be passenger had the necessary ticket, baggage claim
11
and clearance from immigration all clearly and unmistakably showing that she was, in
fact, included in the passenger manifest of said flight, and yet was denied
accommodation in said flight, this Court did not hesitate to affirm the lower court's
finding awarding her damages.
A contract to transport passengers is quite different in kind and degree from any other
contractual relation. So ruled this Court in Zulueta v. Pan American World Airways,
Inc. This is so, for a contract of carriage generates a relation attended with public duty
12
— a duty to provide public service and convenience to its passengers which must be
paramount to self-interest or enrichment. Thus, it was also held that the switch of
planes from Lockheed 1011 to a smaller Boeing 707 because there were only 138
confirmed economy class passengers who could very well be accommodated in the
smaller planes, thereby sacrificing the comfort of its first class passengers for the sake
of economy, amounts to bad faith. Such inattention and lack of care for the interest of
its passengers who are entitled to its utmost consideration entitles the passenger to an
award of moral damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of
bad faith in not informing its passengers beforehand that it could breach the contract of
carriage even if they have confirmed tickets if there was overbooking. Respondent TWA
should have incorporated stipulations on overbooking on the tickets issued or to
properly inform its passengers about these policies so that the latter would be prepared
for such eventuality or would have the choice to ride with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were
written the name of the passenger and the points of origin and destination, contained
such a notice. An examination of Exhibit I does not bear this out. At any rate, said
exhibit was not offered for the purpose of showing the existence of a notice of
overbooking but to show that Exhibit I was used for flight 007 in first class of June 11,
1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged
policy of giving less priority to discounted tickets. While the petitioners had checked in
at the same time, and held confirmed tickets, yet, only one of them was allowed to
board the plane ten minutes before departure time because the full-fare ticket he was
holding was given priority over discounted tickets. The other two petitioners were left
behind.
It is respondent TWA's position that the practice of overbooking and the airline system
of boarding priorities are reasonable policies, which when implemented do not amount
to bad faith. But the issue raised in this case is not the reasonableness of said policies
but whether or not said policies were incorporated or deemed written on petitioners'
contracts of carriage. Respondent TWA failed to show that there are provisions to that
effect. Neither did it present any argument of substance to show that petitioners were
duly apprised of the overbooked condition of the flight or that there is a hierarchy of
boarding priorities in booking passengers. It is evident that petitioners had the right to
rely upon the assurance of respondent TWA, thru its agent in Manila, then in New York,
that their tickets represented confirmed seats without any qualification. The failure of
respondent TWA to so inform them when it could easily have done so thereby enabling
respondent to hold on to them as passengers up to the last minute amounts to bad
faith. Evidently, respondent TWA placed its self-interest over the rights of petitioners
under their contracts of carriage. Such conscious disregard of petitioners' rights makes
respondent TWA liable for moral damages. To deter breach of contracts by respondent
TWA in similar fashion in the future, we adjudge respondent TWA liable for exemplary
damages, as well.
Petitioners also assail the respondent court's decision not to require the refund of Liana
Zalamea's ticket because the ticket was used by her father. On this score, we uphold the
respondent court. Petitioners had not shown with certainty that the act of respondent
TWA in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence
or deliberate act. Petitioners had also failed to establish that they did not accede to said
agreement. The logical conclusion, therefore, is that both petitioners and respondent
TWA agreed, albeit impliedly, to the course of action taken.
The respondent court erred, however, in not ordering the refund of the American
Airlines tickets purchased and used by petitioners Suthira and Liana. The evidence
shows that petitioners Suthira and Liana were constrained to take the American Airlines
flight to Los Angeles not because they "opted not to use their TWA tickets on another
TWA flight" but because respondent TWA could not accommodate them either on the
next TWA flight which was also fully booked. The purchase of the American Airlines
14
tickets by petitioners Suthira and Liana was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage with petitioners. In accordance with
Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all
damages which may be reasonably attributed to the non-performance of its obligation.
In the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly
15
held that a passenger is entitled to be reimbursed for the cost of the tickets he had to
buy for a flight to another airline. Thus, instead of simply being refunded for the cost of
the unused TWA tickets, petitioners should be awarded the actual cost of their flight
from New York to Los Angeles. On this score, we differ from the trial court's ruling which
ordered not only the reimbursement of the American Airlines tickets but also the refund
of the unused TWA tickets. To require both prestations would have enabled petitioners
to fly from New York to Los Angeles without any fare being paid.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the
Civil Code which allows recovery when the defendant's act or omission has compelled
plaintiff to litigate or to incur expenses to protect his interest. However, the award for
moral damages and exemplary damages by the trial court is excessive in the light of the
fact that only Suthira and Liana Zalamea were actually "bumped off." An award of
P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice
under the circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court
of Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld
Airlines to pay damages to petitioners in the following amounts, to wit:
(1) US$918.00 or its peso equivalent at the time of payment representing the price of
the tickets bought by Suthira and Liana Zalamea from American Airlines, to enable them
to fly to Los Angeles from New York City;
(2) P50,000.00 as moral damages;
(3) P50,000.00 as exemplary damages;
(4) P50,000.00 as attorney's fees; and
(5) Costs of suit.
SO ORDERED.
[G.R. No. 138322. October 2, 2001]
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-

RECIO, petitioner, vs. REDERICK A. RECIO, respondent.
DECISION
PANGANIBAN, J.:
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 judgments; 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 Decision [1] and the March 24, 1999
Order[2] of the Regional Trial Court of Cabanatuan City, Branch 28, in Civil
Case No. 3026AF. 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 respondents 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 and its subsequent dissolution.[11] He
contended that his first marriage to an Australian citizen had been validly
dissolved by a divorce decree obtained in Australia in 1989; [12] thus, he was
legally capacitated to marry petitioner in 1994.
On July 7, 1998 -- or about five years after the couples 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 Complaint 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, respondents 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 marital union to nullify or annul.
Hence, this Petition.[18]
Issues
Petitioner submits the following issues for our consideration:

1
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 petitioners marriage to the
respondent
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 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 Courts Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial courts 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 celebrationis). 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 17[23] of the Civil Code.[24] In mixed marriages involving a
Filipino and a foreigner, Article 26[25] 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:
xxxxxxxxx
(5) If previously married, how, when and where the previous

marriage was dissolved or annulled;
xxxxxxxxx
ART. 13. In case either of the contracting parties has been previously
married, the applicant shall be required to
ART. 13. In case either of the contracting parties has been previously
married, the applicant shall be required to furnish, instead of the
birth or baptismal certificate required in the last preceding article,
the death certificate of the deceased spouse or the judicial decree of
the absolute divorce, 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 childrens 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
official 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 attested [33] 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 sufficient; compliance with the aforementioned rules on

evidence must be demonstrated.
Fortunately for respondents 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 petitioners qualification. [37] Hence, it was admitted in
evidence and accorded weight by the judge. Indeed, petitioners 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: Respondents 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.
Respondents 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
marrying 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 respondents 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 39[49] 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]
As it is, however, there is absolutely no evidence that proves respondents
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. Recio (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. Recio and Editha D. Samson
was in its records;[54] and (e) Exhibit E Certificate of Australian Citizenship of
Rederick A. Recio;[55] (2) for respondent: (a) Exhibit 1 -- Amended Answer;
[56]
(b) Exhibit 2 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. Recio;[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. Recio 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 petitioners 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 petitioners 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 petitioners 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 respondents 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.
SO ORDERED.
[G.R. No. 110263. July 20, 2001]
ASIAVEST MERCHANT BANKERS (M)

BERHAD, petitioner, vs. COURT OF APPEALS and
PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision [1] of

the Court of Appeals dated May 19, 1993 in CA-G.R. CV No. 35871
affirming the Decision[2] dated October 14, 1991 of the Regional Trial
Court of Pasig, Metro Manila, Branch 168 in Civil Case No. 56368
which dismissed the complaint of petitioner Asiavest Merchant
Bankers (M) Berhad for the enforcement of the money judgment of
the High Court of Malaya in Kuala Lumpur against private
respondent Philippine National Construction Corporation.
The petitioner Asiavest Merchant Bankers (M) Berhad is a
corporation organized under the laws of Malaysia while private
respondent Philippine National Construction Corporation is a

corporation duly incorporated and existing under Philippine laws.
It appears that sometime in 1983, petitioner initiated a suit for
collection against private respondent, then known as Construction
and Development Corporation of the Philippines, before the High
Court of Malaya in Kuala Lumpur entitled Asiavest Merchant Bankers
(M) Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and
Development Corporation of the Philippines.[3]
Petitioner sought to recover the indemnity of the performance
bond it had put up in favor of private respondent to guarantee the
completion of the Felda Project and the non-payment of the loan it
extended to Asiavest-CDCP Sdn. Bhd. for the completion of Paloh
Hanai and Kuantan By-Pass Project.
On September 13, 1985, the High Court of Malaya (Commercial
Division) rendered judgment in favor of the petitioner and against
the private respondent which is also designated therein as the
2nd Defendant. The judgment reads in full:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest-CDCP Sdn. Bhd.
2. Construction & Development
Corporation of the Philippines Defendant
JUDGMENT
The 2nd Defendant having entered appearance herein and the Court
having under Order 14, rule 3 ordered that judgment as hereinafter
provided be entered for the Plaintiffs against the 2 ndDefendant.
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the

Plaintiffs the sum of $5,108,290.23 (Ringgit Five million one hundred
and eight thousand two hundred and ninety and Sen twenty-three)
together with interest at the rate of 12% per annum on: -
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and
(ii) the sum of $2,521,423.32 from the 11 th day of March 1983 to the date of
payment; and $350.00 (Ringgit Three Hundred and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits
Trading Building, No. 4, Leboh Pasar, Besar, Kuala Lumpur, Solicitors
for the Plaintiffs abovenamed. (VP/Ong/81194.7/83) [4]
On the same day, September 13, 1985, the High Court of Malaya
issued an Order directing the private respondent (also designated
therein as the 2nd Defendant) to pay petitioner interest on the sums
covered by the said Judgment, thus:
SUIT NO. C638 OF 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest-CDCP Sdn. Bhd.
2. Construction & Development
Corporation of the Philippines Defendants
BEFORE THE SENIOR ASSISTANT REGISTRAR

CIK SUSILA S. PARAM
THIS 13th DAY OF SEPTEMBER, 1985 IN CHAMBERS
ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad, the

Plaintiffs in this action AND UPON READING the Summons in
Chambers dated the 16th day of August, 1984 and the Affidavit of
Lee Foong Mee affirmed on the 14th day of August 1984 both filed
herein AND UPON HEARING Mr. T. Thomas of Counsel for the
Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant
abovenamed on the 26th day of December 1984 IT WAS
ORDERED that the Plaintiffs be at liberty to sign final judgment
against the 2nd Defendant for the sum of $5,108.290.23 AND IT
WAS ORDERED that the 2nd Defendant do pay the Plaintiffs the
costs of suit at $350.00 AND IT WAS FURTHER ORDERED that the
plaintiffs be at liberty to apply for payment of interest AND upon the
application of the Plaintiffs for payment of interest coming on for
hearing on the 1st day of August in the presence of Mr. Palpanaban
Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of
Counsel for the 2nd Defendant above-named AND UPON HEARING
Counsel as aforesaid BY CONSENT IT WAS ORDERED that the
2nd Defendant do pay the Plaintiffs interest at a rate to be
assessed AND the same coming on for assessment this day in the
presence of Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs
and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant AND UPON
HEARING Counsel as aforesaid BY CONSENT IT IS ORDERED that the
2nd Defendant do pay the Plaintiffs interest at the rate of 12% per
annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and
(ii) the sum of $2,521,423.32 from the 11 th day of March 1983 to the date of
Payment.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur.[5]
Following unsuccessful attempts[6] to secure payment from

private respondent under the judgment, petitioner initiated on
September 5, 1988 the complaint before Regional Trial Court of
Pasig, Metro Manila, to enforce the judgment of the High Court of
Malaya.[7]
Private respondent sought the dismissal of the case via a Motion

to Dismiss filed on October 5, 1988, contending that the alleged
judgment of the High Court of Malaya should be denied recognition
or enforcement since on its face, it is tainted with want of
jurisdiction, want of notice to private respondent, collusion and/or
fraud, and there is a clear mistake of law or fact. [8]Dismissal was,
however, denied by the trial court considering that the grounds
relied upon are not the proper grounds in a motion to dismiss under
Rule 16 of the Revised Rules of Court.[9]
On May 22, 1989, private respondent filed its Answer with
Compulsory Counterclaim[10] and therein raised the grounds it
brought up in its motion to dismiss. In its Reply [11] filed on June 8,
1989, the petitioner contended that the High Court of Malaya
acquired jurisdiction over the person of private respondent by its
voluntary submission to the courts jurisdiction through its appointed
counsel, Mr. Khay Chay Tee. Furthermore, private respondents
counsel waived any and all objections to the High Courts jurisdiction
in a pleading filed before the court.
In due time, the trial court rendered its Decision dated October
14, 1991 dismissing petitioners complaint. Petitioner interposed an
appeal with the Court of Appeals, but the appellate court dismissed
the same and affirmed the decision of the trial court in a Decision
dated May 19, 1993.
Hence, the instant petition which is anchored on two (2) assigned
errors,[12] to wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT

THE MALAYSIAN COURT DID NOT ACQUIRE PERSONAL
JURISDICTION OVER PNCC, NOTWITHSTANDING THAT (a) THE
FOREIGN COURT HAD SERVED SUMMONS ON PNCC AT ITS
MALAYSIA OFFICE, AND (b) PNCC ITSELF APPEARED BY
COUNSEL IN THE CASE BEFORE THAT COURT.
II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION

AND ENFORCEMENT TO (SIC) THE MALAYSIAN COURT
JUDGMENT.
Generally, in the absence of a special compact, no sovereign is

bound to give effect within its dominion to a judgment rendered by a
tribunal of another country;[13] however, the rules of comity, utility
and convenience of nations have established a usage among
civilized states by which final judgments of foreign courts of
competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different
countries.[14]
In this jurisdiction, a valid judgment rendered by a foreign
tribunal may be recognized insofar as the immediate parties and the
underlying cause of action are concerned so long as it is
convincingly shown that there has been an opportunity for a full and
fair hearing before a court of competent jurisdiction; that the trial
upon regular proceedings has been conducted, following due
citation or voluntary appearance of the defendant and under a
system of jurisprudence likely to secure an impartial administration
of justice; and that there is nothing to indicate either a prejudice in
court and in the system of laws under which it is sitting or fraud in
procuring the judgment.[15]
A foreign judgment is presumed to be valid and binding in the
country from which it comes, until a contrary showing, on the basis
of a presumption of regularity of proceedings and the giving of due
notice in the foreign forum. Under Section 50(b),[16] Rule 39 of the
Revised Rules of Court, which was the governing law at the time the
instant case was decided by the trial court and respondent appellate
court, a judgment, against a person, of a tribunal of a foreign
country having jurisdiction to pronounce the same is presumptive
evidence of a right as between the parties and their successors in
interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. In addition,
under Section 3(n), Rule 131 of the Revised Rules of Court, a court,
whether in the Philippines or elsewhere, enjoys the presumption that
it was acting in the lawful exercise of its jurisdiction. Hence, once
the authenticity of the foreign judgment is proved, the party
attacking a foreign judgment, is tasked with the burden of
overcoming its presumptive validity.
In the instant case, petitioner sufficiently established the
existence of the money judgment of the High Court of Malaya by the
evidence it offered. Vinayak Prabhakar Pradhan, presented as

petitioners sole witness, testified to the effect that he is in active
practice of the law profession in Malaysia; [17] that he was connected
with Skrine and Company as Legal Assistant up to 1981; [18] that
private respondent, then known as Construction and Development
Corporation of the Philippines, was sued by his client, Asiavest
Merchant Bankers (M) Berhad, in Kuala Lumpur;[19] that the writ of
summons were served on March 17, 1983 at the registered office of
private respondent and on March 21, 1983 on Cora S. Deala, a
financial planning officer of private respondent for Southeast Asia
operations;[20] that upon the filing of the case, Messrs. Allen and
Gledhill, Advocates and Solicitors, with address at 24 th Floor, UMBC
Building, Jalan Sulaiman, Kuala Lumpur, entered their conditional
appearance for private respondent questioning the regularity of the
service of the writ of summons but subsequently withdrew the same
when it realized that the writ was properly served; [21] that because
private respondent failed to file a statement of defense within two
(2) weeks, petitioner filed an application for summary judgment and
submitted affidavits and documentary evidence in support of its
claim;[22] that the matter was then heard before the High Court of
Kuala Lumpur in a series of dates where private respondent was
represented by counsel;[23] and that the end result of all these
proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the
following documentary evidence:
(a) A certified and authenticated copy of the Judgment promulgated by the
Malaysian High Court dated September 13, 1985 directing private
respondent to pay petitioner the sum of $5,108,290.23 Malaysian Ringgit
plus interests from March 1983 until fully paid; [24]
(b) A certified and authenticated copy of the Order dated September 13,
1985 issued by the Malaysian High Court in Civil Suit No. C638 of 1983; [25]
(c) Computation of principal and interest due as of January 31, 1990 on the
amount adjudged payable to petitioner by private respondent; [26]
(d) Letter and Statement of Account of petitioners counsel in Malaysia
indicating the costs for prosecuting and implementing the Malaysian High
Courts Judgment;[27]
(e) Letters between petitioners Malaysian counsel, Skrine and Co., and its
local counsel, Sycip Salazar Law Offices, relative to institution of the
action in the Philippines;[28]
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990
showing attorneys fees paid by and due from petitioner; [29]
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such

writ in petitioners suit against private respondent before the Malaysian
High Court;[30]
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed by
counsel for private respondent with the Malaysian High Court; [31]
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, counsel for
private respondent, submitted during the proceedings before the
Malaysian High Court;[32]
(j) Record of the Courts Proceedings in Civil Case No. C638 of 1983; [33]
(k) Petitioners verified Application for Summary Judgment dated August 14,
1984;[34] and
(l) Letter dated November 6, 1985 from petitioners Malaysian counsel to
private respondents counsel in Malaysia. [35]
Having thus proven, through the foregoing evidence, the

existence and authenticity of the foreign judgment, said foreign
judgment enjoys presumptive validity and the burden then fell upon
the party who disputes its validity, herein private respondent, to
prove otherwise.
Private respondent failed to sufficiently discharge the burden that
fell upon it to prove by clear and convincing evidence the grounds
which it relied upon to prevent enforcement of the Malaysian High
Court judgment, namely, (a) that jurisdiction was not acquired by
the Malaysian Court over the person of private respondent due to
alleged improper service of summons upon private respondent and
the alleged lack of authority of its counsel to appear and represent
private respondent in the suit; (b) the foreign judgment is allegedly
tainted by evident collusion, fraud and clear mistake of fact or law;
and (c) not only were the requisites for enforcement or recognition
allegedly not complied with but also that the Malaysian judgment is
allegedly contrary to the Constitutional prescription that the every
decision must state the facts and law on which it is based.[36]
Private respondent relied solely on the testimony of its two (2)
witnesses, namely, Mr. Alfredo N. Calupitan, an accountant of
private respondent, and Virginia Abelardo, Executive Secretary and
a member of the staff of the Corporate Secretariat Section of the
Corporate Legal Division, of private respondent, both of whom failed
to shed light and amplify its defense or claim for non-enforcement of
the foreign judgment against it.
Mr. Calupitans testimony centered on the following: that from

January to December 1982 he was assigned in Malaysia as Project
Comptroller of the Pahang Project Package A and B for road
construction under the joint venture of private respondent and
Asiavest Holdings;[37] that under the joint venture, Asiavest Holdings
would handle the financial aspect of the project, which is fifty-one
percent (51%) while private respondent would handle the technical
aspect of the project, or forty-nine percent (49%); [38] and, that Cora
Deala was not authorized to receive summons for and in behalf of
the private respondent.[39] Ms. Abelardos testimony, on the other
hand, focused on the following: that there was no board resolution
authorizing Allen and Gledhill to admit all the claims of petitioner in
the suit brought before the High Court of Malaya, [40] though on cross-
examination she admitted that Allen and Gledhill were the retained
lawyers of private respondent in Malaysia.[41]
The foregoing reasons or grounds relied upon by private
respondent in preventing enforcement and recognition of the
Malaysian judgment primarily refer to matters of remedy and
procedure taken by the Malaysian High Court relative to the suit for
collection initiated by petitioner. Needless to stress, the recognition
to be accorded a foreign judgment is not necessarily affected by the
fact that the procedure in the courts of the country in which such
judgment was rendered differs from that of the courts of the country
in which the judgment is relied on. [42]Ultimately, matters of remedy
and procedure such as those relating to the service of summons or
court process upon the defendant, the authority of counsel to
appear and represent a defendant and the formal requirements in a
decision are governed by the lex fori or the internal law of the
forum,[43] i.e., the law of Malaysia in this case.
In this case, it is the procedural law of Malaysia where the
judgment was rendered that determines the validity of the service of
court process on private respondent as well as other matters raised
by it. As to what the Malaysian procedural law is, remains a question
of fact, not of law. It may not be taken judicial notice of and must be
pleaded and proved like any other fact.Sections 24 and 25 of Rule
132 of the Revised Rules of Court provide that it may be evidenced
by an official publication or by a duly attested or authenticated copy
thereof. It was then incumbent upon private respondent to present
evidence as to what that Malaysian procedural law is and to show
that under it, the assailed service of summons upon a financial
officer of a corporation, as alleged by it, is invalid. It did

not. Accordingly, the presumption of validity and regularity of
service of summons and the decision thereafter rendered by the
High Court of Malaya must stand.[44]
On the matter of alleged lack of authority of the law firm of Allen
and Gledhill to represent private respondent, not only did the private
respondents witnesses admit that the said law firm of Allen and
Gledhill were its counsels in its transactions in Malaysia, [45] but of
greater significance is the fact that petitioner offered in evidence
relevant Malaysian jurisprudence[46] to the effect that (a) it is not
necessary under Malaysian law for counsel appearing before the
Malaysian High Court to submit a special power of attorney
authorizing him to represent a client before said court, (b) that
counsel appearing before the Malaysian High Court has full authority
to compromise the suit, and (c) that counsel appearing before the
Malaysian High Court need not comply with certain pre-requisites as
required under Philippine law to appear and compromise judgments
on behalf of their clients before said court.[47]
Furthermore, there is no basis for or truth to the appellate courts
conclusion that the conditional appearance of private respondents
counsel who was allegedly not authorized to appear and represent,
cannot be considered as voluntary submission to the jurisdiction of
the High Court of Malaya, inasmuch as said conditional appearance
was not premised on the alleged lack of authority of said counsel
but the conditional appearance was entered to question the
regularity of the service of the writ of summons. Such conditional
appearance was in fact subsequently withdrawn when counsel
realized that the writ was properly served.[48]
On the ground that collusion, fraud and clear mistake of fact and
law tainted the judgment of the High Court of Malaya, no clear
evidence of the same was adduced or shown. The facts which the
trial court found intriguing amounted to mere conjectures and
specious observations. The trial courts finding on the absence of
judgment against Asiavest-CDCP Sdn. Bhd. is contradicted by
evidence on record that recovery was also sought against Asiavest-
CDCP Sdn. Bhd. but the same was found insolvent. [49] Furthermore,
even when the foreign judgment is based on the drafts prepared by
counsel for the successful party, such is not per se indicative of
collusion or fraud. Fraud to hinder the enforcement within the
jurisdiction of a foreign judgment must be extrinsic, i.e., fraud based

on facts not controverted or resolved in the case where judgment is
rendered,[50] or that which would go to the jurisdiction of the court or
would deprive the party against whom judgment is rendered a
chance to defend the action to which he has a meritorious defense.
[51]
Intrinsic fraud is one which goes to the very existence of the
cause of action is deemed already adjudged, and it, therefore,
cannot militate against the recognition or enforcement of the foreign
judgment.[52] Evidence is wanting on the alleged extrinsic fraud.
Hence, such unsubstantiated allegation cannot give rise to liability
therein.
Lastly, there is no merit to the argument that the foreign
judgment is not enforceable in view of the absence of any statement
of facts and law upon which the award in favor of the petitioner was
based. As aforestated, the lex fori or the internal law of the forum
governs matters of remedy and procedure. [53] Considering that under
the procedural rules of the High Court of Malaya, a valid judgment
may be rendered even without stating in the judgment every fact
and law upon which the judgment is based, then the same must be
accorded respect and the courts in this jurisdiction cannot invalidate
the judgment of the foreign court simply because our rules provide
otherwise.
All in all, private respondent had the ultimate duty to
demonstrate the alleged invalidity of such foreign judgment, being
the party challenging the judgment rendered by the High Court of
Malaya. But instead of doing so, private respondent merely argued,
to which the trial court agreed, that the burden lay upon petitioner
to prove the validity of the money judgment. Such is clearly
erroneous and would render meaningless the presumption of validity
accorded a foreign judgment were the party seeking to enforce it be
required to first establish its validity.[54]
WHEREFORE, the instant petition is GRANTED. The Decision of
the Court of Appeals dated May 19, 1993 in CA-G.R. CV No. 35871
sustaining the Decision dated October 14, 1991 in Civil Case No.
56368 of the Regional Trial Court of Pasig, Branch 168 denying the
enforcement of the Judgment dated September 13, 1985 of the High
Court of Malaya in Kuala Lumpur is REVERSED and SET ASIDE, and
another in its stead is hereby rendered ORDERING private
respondent Philippine National Construction Corporation to pay
petitioner Asiavest Merchant Bankers (M) Berhad the amounts

adjudged in the said foreign Judgment, subject of the said case.
Costs against the private respondent.
SO ORDERED.
Bellosillo, (Chairman), Mendoza and Buena, JJ., concur.

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CONFLICTS OF LAW CASES

[G.R. No. 124110. April 20, 2001]

UNITED AIRLINES, INC., petitioner, vs. COURT OF APPEALS,

On March 1, 1989, private respondent Aniceto Fontanilla

(a) San Francisco to Washington (15 April 1989);

(b) Washington to Chicago (25 April 1989);

(c) Chicago to Los Angeles (29 April 1989);

All flights had been confirmed previously by United Airlines. [2]

The Fontanillas proceeded to the United States as planned,

The cause of the non-boarding of the Fontanillas on United

After some time, Linda, without any explanation, offered the

WHEREFORE, judgment is rendered dismissing the complaint. The

On appeal, the Court of Appeals ruled in favor of the

was a failure to observe the check-in requirement, United Airlines

WHEREFORE, in view of the foregoing, judgment appealed herefrom

a) P200,000.00 as moral damages;

b) P200,000.00 as exemplary damages;

c) P50, 000.00 as attorneys fees.

Petitioner United Airlines now comes to this Court raising the

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING

On the first issue raised by the petitioner, the respondent Court

7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at

Responding to the above allegations, petitioner averred in

4. Admits the allegation set forth in paragraph 7 of the complaint

lack of knowledge or information at this point in time as to the truth

The rule authorizing an answer that the defendant has no

The determination of the other issues raised is dependent on

It must be remembered that the general rule in civil cases is that

Plaintiffs fail to realize that their failure to check in, as expressly

Neither do we agree with the conclusion reached by the

250.6 Exceptions to eligibility for denied boarding compensation.

A passenger denied board involuntarily from an oversold flight shall

The appellate court, however, erred in applying the laws of the

SEC. 5. Amount of Denied Boarding Compensation Subject to the

Private respondents' narration that they were subjected to harsh

xxx plaintiffs claim to have been discriminated against and insulted

As to the award of moral and exemplary damages, we find error

Existing jurisprudence explicitly states that overbooking amounts to

an airline had deliberately overbooked, it took the risk of having

However, the Courts ruling in said case should be read in

Sec 3. Scope. This regulation shall apply to every Philippine and

What this Court considers as bad faith is the willful and

WHEREFORE, the petition is GRANTED. The decision of the

G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and

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

BIENVENIDO M. CADALIN, ET AL., petitioners,

G.R. Nos. 105029-32 December 5, 1994

ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT

EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO ESPIRITU, NESTOR M.

BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA,

C. GALANG, SANTIAGO N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON,

MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M. MORALES,

SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON

Gerardo A. Del Mundo and Associates for petitioners.

Florante M. De Castro for private respondents in 105029-32.

(1) to modify the Resolution dated September 2, 1991 of the National

(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA

(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA