Week 2 and 3: Continuation of Chapter II Choice of Law

1. Saudi Arabian Airlines vs. Court of Appeals 297 SCRA 469 (1998)

FIRST DIVISION

[G.R. No. 122191. October 8, 1998]

SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and HON.
RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial Court of Quezon
City, respondents.

DECISION

QUISUMBING, J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the
Resolution[1] dated September 27, 1995 and the Decision[2] dated April 10, 1996 of the Court of
Appeals[3] in CA-G.R. SP No. 36533,[4] and the Orders[5] dated August 29, 1994[6] and February 2,
1995[7] that were issued by the trial court in Civil Case No. Q-93-18394.[8]

The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision[9], are as follows:

On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in
Jeddah, Saudi Arabia. x x x

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow
crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost
morning when they returned to their hotels, they agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for
help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the
latter as an accomplice.

When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the
Jakarta incident. They then requested her to go back to Jakarta to help arrange the release of Thamer
and Allah. In Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated with the
police for the immediate release of the detained crew members but did not succeed because plaintiff
refused to cooperate. She was afraid that she might be tricked into something she did not want because
of her inability to understand the local dialect. She also declined to sign a blank paper and a document
written in the local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred her from
the Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah after two weeks of detention.Eventually, they were again
put in service by defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred plaintiff to
Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her
superiors requested her to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her to the police station where the police took her passport and
questioned her about the Jakarta incident.Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon flight out of Jeddah.

One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the case against Thamer and
Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from
SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about
the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take flight. At
the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took away her
passport and told her to remain in Jeddah, at the crew quarters, until further orders.

On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to her
astonishment and shock, rendered a decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her, together
with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2)
going to a disco, dancing and listening to the music in violation of Islamic laws; and (3) socializing with
the male crew, in contravention of Islamic tradition. [10]

Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah
to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic
flight of SAUDIA, while Thamer and Allah continued to serve in the international flights. [11]

Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and allowed
her to leave Saudi Arabia. Shortly before her return to Manila,[12] she was terminated from the service
by SAUDIA, without her being informed of the cause.

On November 23, 1993, Morada filed a Complaint[13] for damages against SAUDIA, and Khaled Al-Balawi
(Al- Balawi), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss [14] which raised the following grounds,
to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant Al-Balawi is
not a real party in interest; (3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case.

On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) [15] Saudia filed a
reply[16] thereto on March 3, 1994.

On June 23, 1994, Morada filed an Amended Complaint[17] wherein Al-Balawi was dropped as party
defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss Amended
Complaint[18].

The trial court issued an Order[19] dated August 29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.

From the Order of respondent Judge[20] denying the Motion to Dismiss, SAUDIA filed on September 20,
1994, its Motion for Reconsideration[21] of the Order dated August 29, 1994. It alleged that the trial court
has no jurisdiction to hear and try the case on the basis of Article 21 of the Civil Code, since the proper
law applicable is the law of the Kingdom of Saudi Arabia.On October 14, 1994, Morada filed her
Opposition[22] (To Defendants Motion for Reconsideration).

In the Reply[23] filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion for
Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not
apply, even if that ground is raised for the first time on appeal. Additionally, SAUDIA alleged that the
Philippines does not have any substantial interest in the prosecution of the instant case, and hence,
without jurisdiction to adjudicate the same.

Respondent Judge subsequently issued another Order[24] dated February 2, 1995, denying SAUDIAs
Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on
September 20, 1994, and the Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994,
as well as the Reply therewith of defendant Saudi Arabian Airlines filed, thru counsel, on October 24,
1994, considering that a perusal of the plaintiffs Amended Complaint, which is one for the recovery of
actual, moral and exemplary damages plus attorneys fees, upon the basis of the applicable Philippine
law, Article 21 of the New Civil Code of the Philippines, is, clearly, within the jurisdiction of this Court as
regards the subject matter, and there being nothing new of substance which might cause the reversal or
modification of the order sought to be reconsidered, the motion for reconsideration of the defendant, is
DENIED.

SO ORDERED.[25]

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with Prayer
for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining Order [26] with the Court of
Appeals.

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining Order [27] dated
February 23, 1995, prohibiting the respondent Judge from further conducting any proceeding, unless
otherwise directed, in the interim.
In another Resolution[28] promulgated on September 27, 1995, now assailed, the appellate court denied
SAUDIAs Petition for the Issuance of a Writ of Preliminary Injunction dated February 18, 1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the
Answer, with Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it
appearing that herein petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al.,
v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division).

SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition [29] for Review with
Prayer for Temporary Restraining Order dated October 13, 1995.

However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision[30] dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaints basis for recovery of damages is Article 21 of the Civil Code,
and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the
proper remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to
trial, and in case of an adverse ruling, find recourse in an appeal.

On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order[31] dated April 30, 1996, given due course by this Court. After both parties submitted
their Memoranda,[32] the instant case is now deemed submitted for decision.

Petitioner SAUDIA raised the following issues:

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the
New Civil Code since the proper law applicable is the law of the Kingdom of Saudi Arabia inasmuch as
this case involves what is known in private international law as a conflicts problem. Otherwise, the
Republic of the Philippines will sit in judgment of the acts done by another sovereign state which is
abhorred.

II.

Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the
matter as to absence of leave of court is now moot and academic when this Honorable Court required
the respondents to comment on petitioners April 30, 1996 Supplemental Petition For Review With
Prayer For A Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further, the
Revised Rules of Court should be construed with liberality pursuant to Section 2, Rule 1 thereof.

III.

Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533 entitled Saudi
Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its April 30, 1996 Supplemental Petition For
Review With Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-
day reglementary period as provided for under Section 1, Rule 45 of the Revised Rules of
Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet become final and executory and this
Honorable Court can take cognizance of this case.[33]
From the foregoing factual and procedural antecedents, the following issues emerge for our resolution:

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT OF
QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED MILAGROS P.
MORADA V. SAUDI ARABIAN AIRLINES.

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THE CASE PHILIPPINE LAW
SHOULD GOVERN.

Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It
maintains that private respondents claim for alleged abuse of rights occurred in the Kingdom of Saudi
Arabia. It alleges that the existence of a foreign element qualifies the instant case for the application of
the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule.[34]

On the other hand, private respondent contends that since her Amended Complaint is based on Articles
19[35] and 21[36] of the Civil Code, then the instant case is properly a matter of domestic law. [37]

Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi Arabia.

As stated by private respondent in her Amended Complaint[38] dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation doing business in the
Philippines. It may be served with summons and other court processes at Travel Wide Associated Sales
(Phils.), Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.

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6. Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian
authorities agreed to deport Thamer and Allah after two weeks of detention.Eventually, they were again
put in service by defendant SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to
Manila.

7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her
superiors requested her to see MR. Ali Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi
Arabia. When she saw him, he brought her to the police station where the police took her passport and
questioned her about the Jakarta incident.Miniewy simply stood by as the police put pressure on her to
make a statement dropping the case against Thamer and Allah. Not until she agreed to do so did the
police return her passport and allowed her to catch the afternoon flight out of Jeddah.

8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the
departure of her flight to Manila, plaintiff was not allowed to board the plane and instead ordered to
take a later flight to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the case against Thamer and
Allah. As it turned out, plaintiff signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance from
SAUDIAs Manila manager, Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.

10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge interrogated plaintiff through an interpreter about
the Jakarta incident. After one hour of interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the airline had forbidden her to take that
flight. At the Inflight Service Office where she was told to go, the secretary of Mr. Yahya Saddick took
away her passport and told her to remain in Jeddah, at the crew quarters, until further orders.

11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where the judge, to
her astonishment and shock, rendered a decision, translated to her in English, sentencing her to five
months imprisonment and to 286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing, and listening to the music in violation of Islamic laws; (3)
socializing with the male crew, in contravention of Islamic tradition.

12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the help of the Philippine
Embassy in Jeddah. The latter helped her pursue an appeal from the decision of the court. To pay for her
upkeep, she worked on the domestic flights of defendant SAUDIA while, ironically, Thamer and Allah
freely served the international flights.[39]

Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree with
petitioner that the problem herein could present a conflicts case.

A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more
states is said to contain a foreign element. The presence of a foreign element is inevitable since social
and economic affairs of individuals and associations are rarely confined to the geographic limits of their
birth or conception.[40]

The forms in which this foreign element may appear are many.[41] The foreign element may simply
consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a
contract between nationals of one State involves properties situated in another State. In other cases,
the foreign element may assume a complex form.[42]

In the instant case, the foreign element consisted in the fact that private respondent Morada is a
resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue
of the employment of Morada with the petitioner Saudia as a flight stewardess, events did transpire
during her many occasions of travel across national borders, particularly from Manila, Philippines to
Jeddah, Saudi Arabia, and vice versa, that caused a conflicts situation to arise.
We thus find private respondents assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of jurisdiction [43] confronts the
court a quo.

After a careful study of the private respondents Amended Complaint,[44] and the Comment thereon, we
note that she aptly predicated her cause of action on Articles 19 and 21 of the New Civil Code.

On one hand, Article 19 of the New Civil Code provides;

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice give everyone his due and observe honesty and good faith.

On the other hand, Article 21 of the New Civil Code provides:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals,[45] this Court held that:

The aforecited provisions on human relations were intended to expand the concept of torts in this
jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is
impossible for human foresight to specifically provide in the statutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we
agree with private respondents assertion that violations of Articles 19 and 21 are actionable, with
judicially enforceable remedies in the municipal forum.

Based on the allegations[46] in the Amended Complaint, read in the light of the Rules of Court on
jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction over the
subject matter of the suit.[48] Its authority to try and hear the case is provided for under Section 1 of
Republic Act No. 7691, to wit:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act
of 1980, is hereby amended to read as follows:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive jurisdiction:

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(8) In all other cases in which demand, exclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs or the value of the property in controversy exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of
the above-mentioned items exceeds Two hundred Thousand pesos (P200,000.00). (Emphasis ours)

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And following Section 2 (b), Rule 4 of the Revised Rules of Courtthe venue, Quezon City, is appropriate:

SEC. 2 Venue in Courts of First Instance. [Now Regional Trial Court]

(a) x x x x x x x x x
(b) Personal actions. All other actions may be commenced and tried where the defendant or any of the
defendants resides or may be found, or where the plaintiff or any of the plaintiff resides, at the election
of the plaintiff.

Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the
RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of
a judgment if one is obtained is quite obvious. Relative advantages and obstacles to a fair trial are
equally important. Plaintiff may not, by choice of an inconvenient forum, vex, harass, or oppress the
defendant, e.g. by inflicting upon him needless expense or disturbance. But unless the balance is
strongly in favor of the defendant, the plaintiffs choice of forum should rarely be disturbed. [49]

Weighing the relative claims of the parties, the court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private
respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no
longer maintains substantial connections. That would have caused a fundamental unfairness to her.

Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have
been shown by either of the parties. The choice of forum of the plaintiff (now private respondent)
should be upheld.

Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing her
Complaint and Amended Complaint with the trial court, private respondent has voluntary submitted
herself to the jurisdiction of the court.

The records show that petitioner SAUDIA has filed several motions [50] praying for the dismissal of
Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February
20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs
under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial courts
jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack of
jurisdiction.

As held by this Court in Republic vs. Ker and Company, Ltd.:[51]

We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower courts
jurisdiction over defendants person, prayed for dismissal of the complaint on the ground that plaintiffs
cause of action has prescribed. By interposing such second ground in its motion to dismiss, Ker and Co.,
Ltd. availed of an affirmative defense on the basis of which it prayed the court to resolve controversy in
its favor. For the court to validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had to
acquire jurisdiction upon the latters person, who, being the proponent of the affirmative defense,
should be deemed to have abandoned its special appearance and voluntarily submitted itself to the
jurisdiction of the court.

Similarly, the case of De Midgely vs. Ferandos, held that:

When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the
person, it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If his
motion is for any other purpose than to object to the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the court.A special appearance by motion made for the
purpose of objecting to the jurisdiction of the court over the person will be held to be a general
appearance, if the party in said motion should, for example, ask for a dismissal of the action upon the
further ground that the court had no jurisdiction over the subject matter. [52]

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City. Thus, we
find that the trial court has jurisdiction over the case and that its exercise thereof, justified.

As to the choice of applicable law, we note that choice-of-law problems seek to answer two important
questions: (1) What legal system should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the chosen legal system regulate the
situation.[53]

Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of justice
and predictability, they do not always do so. The forum is then faced with the problem of deciding which
of these two important values should be stressed. [54]

Before a choice can be made, it is necessary for us to determine under what category a certain set of
facts or rules fall. This process is known as characterization, or the doctrine of qualification. It is the
process of deciding whether or not the facts relate to the kind of question specified in a conflicts
rule.[55] The purpose of characterization is to enable the forum to select the proper law.[56]

Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact.[57] An essential element of conflict rules is the indication of a test or connecting factor or point of
contact. Choice-of-law rules invariably consist of a factual relationship (such as property right, contract
claim) and a connecting factor or point of contact, such as the situsof the res, the place of celebration,
the place of performance, or the place of wrongdoing.[58]

Note that one or more circumstances may be present to serve as the possible test for the determination
of the applicable law.[59] These test factors or points of contact or connecting factors could be any of the
following:

(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;

(2) the seat of a legal or juridical person, such as a corporation;

(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular,
the lex situs is decisive when real rights are involved;

(4) the place where an act has been done, the locus actus, such as the place where a contract has been
made, a marriage celebrated, a will signed or a tort committed.The lex loci actus is particularly
important in contracts and torts;

(5) the place where an act is intended to come into effect, e.g., the place of performance of contractual
duties, or the place where a power of attorney is to be exercised;

(6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci
intentionis;
(7) the place where judicial or administrative proceedings are instituted or done. The lex forithe law of
the forumis particularly important because, as we have seen earlier, matters of procedure not going to
the substance of the claim involved are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from application in a given case for the
reason that it falls under one of the exceptions to the applications of foreign law; and

(8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and
of its master or owner as such. It also covers contractual relationships particularly contracts of
affreightment.[60] (Underscoring ours.)

After a careful study of the pleadings on record, including allegations in the Amended Complaint
deemed submitted for purposes of the motion to dismiss, we are convinced that there is reasonable
basis for private respondents assertion that although she was already working in Manila, petitioner
brought her to Jeddah on the pretense that she would merely testify in an investigation of the charges
she made against the two SAUDIA crew members for the attack on her person while they were in
Jakarta. As it turned out, she was the one made to face trial for very serious charges, including adultery
and violation of Islamic laws and tradition.

There is likewise logical basis on record for the claim that the handing over or turning over of the person
of private respondent to Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioners purported act contributed to and amplified or even proximately caused additional
humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the
arrest, detention and prosecution of private respondent under the guise of petitioners authority as
employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found
by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was
wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for
which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done,
once duly proven.

Considering that the complaint in the court a quo is one involving torts, the connecting factor or point of
contact could be the place or places where the tortious conduct or lex loci actusoccurred. And applying
the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the
place where the alleged tortious conduct took place). This is because it is in the Philippines where
petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her,
she had honestly believed that petitioner would, in the exercise of its rights and in the performance of
its duties, act with justice, give her her due and observe honesty and good faith. Instead, petitioner
failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another
country is of no moment. For in our view what is important here is the place where the over-all harm or
the fatality of the alleged injury to the person, reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff below (herein private respondent). All told, it is not
without basis to identify the Philippines as the situs of the alleged tort.

Moreover, with the widespread criticism of the traditional rule of lex loci delicti commissi, modern
theories and rules on tort liability[61] have been advanced to offer fresh judicial approaches to arrive at
just results. In keeping abreast with the modern theories on tort liability, we find here an occasion to
apply the State of the most significant relationship rule, which in our view should be appropriate to
apply now, given the factual context of this case.
In applying said principle to determine the State which has the most significant relationship, the
following contacts are to be taken into account and evaluated according to their relative importance
with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the
conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any, between the parties is
centered.[62]

As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national, working
with petitioner, a resident foreign corporation engaged here in the business of international air
carriage. Thus, the relationship between the parties was centered here, although it should be stressed
that this suit is not based on mere labor law violations. From the record, the claim that the Philippines
has the most significant contact with the matter in this dispute, [63] raised by private respondent as
plaintiff below against defendant (herein petitioner), in our view, has been properly established.

Prescinding from this premise that the Philippines is the situs of the tort complaint of and the place
having the most interest in the problem, we find, by way of recapitulation, that the Philippine law on
tort liability should have paramount application to and control in the resolution of the legal issues
arising out of this case. Further, we hold that the respondent Regional Trial Court has jurisdiction over
the parties and the subject matter of the complaint; the appropriate venue is in Quezon City, which
could properly apply Philippine law. Moreover, we find untenable petitioners insistence that [s]ince
private respondent instituted this suit, she has the burden of pleading and proving the applicable Saudi
law on the matter.[64] As aptly said by private respondent, she has no obligation to plead and prove the
law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21 of the Civil
Code of the Philippines. In her Amended Complaint and subsequent pleadings she never alleged that
Saudi law should govern this case.[65] And as correctly held by the respondent appellate court,
considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia, thus
the burden was on it [petitioner] to plead and to establish what the law of Saudi Arabia is. [66]

Lastly, no error could be imputed to the respondent appellate court in upholding the trial courts denial
of defendants (herein petitioners) motion to dismiss the case. Not only was jurisdiction in order and
venue properly laid, but appeal after trial was obviously available, and the expeditious trial itself
indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately
concerned with the ultimate outcome of the case below not just for the benefit of all the litigants, but
also for the vindication of the countrys system of law and justice in a transnational setting. With these
guidelines in mind, the trial court must proceed to try and adjudge the case in the light of relevant
Philippine law, with due consideration of the foreign element or elements involved. Nothing said herein,
of course, should be construed as prejudging the results of the case in any manner whatsoever.

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-18394 entitled
Milagros P. Morada vs. Saudi Arabia Airlines is hereby REMANDED to Regional Trial Court of Quezon
City, Branch 89 for further proceedings.

SO ORDERED.

Davide, Jr., (Chairman), Bellosillo, Vitug, and Panganiban, JJ., concur.

[1]
Annex A, PETITION, October 13, 1995, rollo, p. 36.
[2]
Annex A, SUPPLEMENTAL PETITION, April 30, 1996, rollo, pp. 88-102.
[3]
Penned by Associate Justice Bernardo Ll. Salas, and concurred in by Associate Justice Jorge S.
Imperial and Associate Justice Pacita Caizares-Nye.
[4]
Entitled Saudi Arabian Airlines vs. Hon. Judge Rodolfo A. Ortiz, in his capacity as Presiding Judge of
Branch 89 of the Regional Trial Court of Quezon City and Milagros P. Morada.
[5]
Issued by respondent Judge Hon. Rodolfo A. Ortiz of Branch 89, Regional Trial Court of Quezon City.
[6]
Annex B, PETITION, October 13, 1995, rollo, pp. 37-39.
[7]
Annex B, PETITION, October 13, 1995, rollo, p. 40.
[8]
Entitled Milagros P. Morada vs. Saudi Arabian Airlines.
[9]
Supra, note 2.
[10]
Decision, pp. 2-4; See Rollo, pp. 89-91.
[11]
Private respondent's Comment; rollo, p. 50.
[12]
Ibid., at pp. 50-51.
[13]
Dated November 19, 1993 and docketed as Civil Case No. Q-93-18394, Branch 89, Regional Trial
Court of Quezon City.
[14]
Dated January 14, 1994.
[15]
Dated February 4, 1994.
[16]
Reply dated March 1, 1994.
[17]
Records, pp. 65-84.
[18]
Rollo, p. 65.
[19]
Supra, note 6.
[20]
Hon. Rodolfo A. Ortiz.
[21]
Dated September 19, 1994.
[22]
Records, pp. 108-116.
[23]
Records, pp. 117-128.
[24]
Supra, note 7.
[25]
Ibid.
[26]
Dated February 18, 1995; see supra note 4.
[27]
Supra, note 7.
[28]
Records, p. 180.
[29]
Rollo, pp. 1-44.
[30]
Supra, note 2.
[31]
Rollo, pp. 80-86.
[32]
Memorandum for Petitioner dated October 9, 1996; rollo, pp. 149-180; and Memorandum for Private
Respondent, 30 October 1996, rollo, pp. 182-210.
[33]
Rollo, pp. 157-159. All caps in the original.
[34]
Memorandum for Petitioner, p. 14, rollo, p. 162;.
[35]
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
[36]
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damages.
[37]
Memorandum for Private Respondent, p. 9, rollo, p. 190.
[38]
Records, pp. 65-71.
[39]
Supra, note 17, at pp. 65-68.
[40]
Salonga, Private International Law, 1995 edition, p. 3.
[41]
Ibid., citing Cheshire and North, Private International Law, p. 5 by P.M. North and J.J. Faucett
(Butterworths; London, 1992).
[42]
Ibid.
[43]
Paras, Philippine Conflict of Laws, sixth edition (1984), p. 24, citing Leflar, The Law of Conflict of
Laws, pp. 5-6.
[44]
Supra, note 17.
[45]
83 SCRA 237, 247.
[46]
Supra, note at 17, at p. 6. Morada prays that judgment be rendered against Saudia, ordering it to pay:
(1) not less than P250,000.00 as actual damages; (2) P4 million in moral damages; (3) P500,000.00 in
exemplary damages; and (4) P500,000.00 in attorneys fees.
[47]
Baguioro v. Barrios, 77 Phil. 120.
[48]
Jurisdiction over the subject matter is conferred by law and is defined as the authority of a court to
hear and decide cases of the general class to which the proceedings in question belong. (Reyes v. Diaz,
73 Phil. 484,487)
[49]
Supra, note 37, p. 58, citing Gulf Oil Corporation v. Gilbert, 350 U.S. 501, 67 Sup. Ct. 839 (1947).
[50]
Omnibus Motion to Dismiss dated January 14, 1994; Reply (to Plaintiffs Opposition) dated February
19, 1994; Comment (to Plaintiffs Motion to Admit Amended Complaint dated June 23, 1994) dated July
20, 1994; Manifestation and Motion to Dismiss Amended Complaint dated June 23, 1994 under date
August 11, 1994; and Motion for Reconsideration dated September 19, 1994.
[51]
18 SCRA 207, 213-214.
[52]
64 SCRA 23, 31.
[53]
Coquia and Pangalangan, Conflict of Laws, 1995 edition, p. 65, citing Von Mehren, Recent Trends in
Choice-of-Law Methodology, 60 Cornell L. Rev. 927 (1975).
[54]
Ibid.
[55]
Supra, note 40 at p. 94, citing Falconbridge, Essays on the Conflict of Laws, p. 50.
[56]
Ibid.
[57]
Supra, note 37, at p. 136; cf. Mussbaum, Principle of Private International Law, p. 173; and Rabel, The
Conflict of Laws: A Comparative Study, pp. 51-52.
[58]
Supra, note 37, at p. 137.
[59]
Ibid.
[60]
Supra, note 37, at pp. 138-139.
[61]
Includes the (1) German rule of elective concurrence; (2) State of the most significant relationship
rule (the Second Restatement of 1969); (3) State interest analysis; and (4) Cavers Principle of Preference.
[62]
Supra, note 37, p. 396.
[63]
Supra, note 59, at p. 79, citing Ruben v. Irving Trust Co., 305 N.Y. 288, 305, 113 N.E. 2d 424, 431.
[64]
Memorandum for Petitioner, p. 22; Rollo, p. 170.
[65]
Memorandum for Private Respondent, pp. 21-22; rollo, pp. 202-203.
[66]
CA Decision, p. 10; rollo, p. 97.
2. Hasegawa vs. Kitamura, G.R. No. 149177, November 23, 2007

THIRD DIVISION

KAZUHIRO HASEGAWA and NIPPON ENGINEERING G.R. No. 149177

CONSULTANTS CO., LTD.,

Petitioners,
Present:

YNARES-SANTIAGO, J.,

Chairperson,
- versus -
AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and

REYES, JJ.

MINORU KITAMURA,
Promulgated:
Respondent.

November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
April 18, 2001 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001
Resolution[2] denying the motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and management support in the infrastructure projects of foreign
governments,[3] entered into an Independent Contractor Agreement (ICA) with respondent Minoru
Kitamura, a Japanese national permanently residing in the Philippines.[4] The agreement provides that
respondent was to extend professional services to Nippon for a year starting on April 1,
1999.[5] Nippon then assigned respondent to work as the project manager of the Southern Tagalog
Access Road (STAR) Project in the Philippines, following the company's consultancy contract with the
Philippine Government.[6]

When the STAR Project was near completion, the Department of Public Works and Highways (DPWH)
engaged the consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering
and construction supervision of the Bongabon-Baler Road Improvement (BBRI) Project.[7] Respondent
was named as the project manager in the contract's Appendix 3.1. [8]

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International
Division, informed respondent that the company had no more intention of automatically renewing
his ICA. His services would be engaged by the company only up to the substantial completion of the
STAR Project on March 31, 2000, just in time for the ICA's expiry.[9]

Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation
conference and demanded that he be assigned to the BBRI project. Nipponinsisted that respondents
contract was for a fixed term that had already expired, and refused to negotiate for the renewal of
the ICA.[10]

As he was not able to generate a positive response from the petitioners, respondent consequently
initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with
the Regional Trial Court of Lipa City.[11]

For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and
between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted that
the claim for improper pre-termination of respondent's ICA could only be heard and ventilated in the
proper courts of Japan following the principles of lex loci celebrationis and lex contractus.[12]
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of
Kitamura by a certain Y. Kotake as project manager of the BBRI Project. [13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank[14] that matters connected
with the performance of contracts are regulated by the law prevailing at the place of
performance,[15] denied the motion to dismiss.[16] The trial court subsequently denied petitioners'
motion for reconsideration,[17] prompting them to file with the appellate court, on August 14, 2000,
their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205].[18] On August 23,
2000, the CA resolved to dismiss the petition on procedural groundsfor lack of statement of material
dates and for insufficient verification and certification against forum shopping. [19] An Entry of Judgment
was later issued by the appellate court on September 20, 2000.[20]

Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the
reglementary period, a second Petition for Certiorari under Rule 65 already stating therein the material
dates and attaching thereto the proper verification and certification. This second petition, which
substantially raised the same issues as those in the first, was docketed as CA-G.R. SP No. 60827.[21]

Ruling on the merits of the second petition, the appellate court rendered the assailed April 18,
2001 Decision[22] finding no grave abuse of discretion in the trial court's denial of the motion to dismiss.
The CA ruled, among others, that the principle of lex loci celebrationis was not applicable to the case,
because nowhere in the pleadings was the validity of the written agreement put in issue. The CA thus
declared that the trial court was correct in applying instead the principle of lex loci solutionis.[23]

Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25,
2001 Resolution.[24]

Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant
Petition for Review on Certiorari[25] imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY
EXERCISED JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT
SUBJECT MATTER OF THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE
NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED TO REVIEW OUR
ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONISIN THE LIGHT OF RECENT DEVELOPMENT[S] IN
PRIVATE INTERNATIONAL LAWS.[26]
The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of
Philippine courts in civil cases for specific performance and damages involving contracts executed
outside the country by foreign nationals may be assailed on the principles of lex loci celebrationis, lex
contractus, the state of the most significant relationship rule, or forum non conveniens.

However, before ruling on this issue, we must first dispose of the procedural matters raised by the
respondent.

Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already
barred the filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the
same issues as those in the first one) and the instant petition for review thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective
certification of non-forum shopping, it was a dismissal without prejudice.[27] The same holds true in the
CA's dismissal of the said case due to defects in the formal requirement of verification [28] and in the
other requirement in Rule 46 of the Rules of Court on the statement of the material dates. [29] The
dismissal being without prejudice, petitioners can re-file the petition, or file a second petition attaching
thereto the appropriate verification and certificationas they, in fact didand stating therein the material
dates, within the prescribed period[30] in Section 4, Rule 65 of the said Rules.[31]

The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the
parties free to litigate the matter in a subsequent action as though the dismissed action had not been
commenced. In other words, the termination of a case not on the merits does not bar another action
involving the same parties, on the same subject matter and theory. [32]

Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and even if
petitioners still indicated in the verification and certification of the secondcertiorari petition that the
first had already been dismissed on procedural grounds,[33] petitioners are no longer required by the
Rules to indicate in their certification of non-forum shopping in the instant petition for review of the
second certiorari petition, the status of the aforesaid first petition before the CA. In any case, an
omission in the certificate of non-forum shopping about any event that will not
constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant
the dismissal and nullification of the entire proceedings, considering that the evils sought to be
prevented by the said certificate are no longer present.[34]
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to
verify and certify, on behalf of Nippon, the certiorari petition filed with the CA and not the instant
petition. True, the Authorization[35] dated September 4, 2000, which is attached to the
second certiorari petition and which is also attached to the instant petition for review, is limited in
scopeits wordings indicate that Hasegawa is given the authority to sign for and act on behalf of the
company only in the petition filed with the appellate court, and that authority cannot extend to the
instant petition for review.[36] In a plethora of cases, however, this Court has liberally applied the Rules
or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment of
the requirements have been made.[37] Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply[38] an updated Authorization[39] for Hasegawa to act
on behalf of the company in the instant petition, the Court finds the same as sufficient compliance with
the Rules.

However, the Court cannot extend the same liberal treatment to the defect in the verification and
certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized to act
on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even the
subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief executive
officer, not by the company's board of directors. In not a few cases, we have ruled that corporate
powers are exercised by the board of directors; thus, no person, not even its officers, can bind
the corporation, in the absence of authority from the board. [40] Considering that Hasegawa verified and
certified the petition only on his behalf and not on behalf of the other petitioner, the petition has to be
denied pursuant to Loquias v. Office of the Ombudsman.[41] Substantial compliance will not suffice in a
matter that demands strict observance of the Rules. [42] While technical rules of procedure are designed
not to frustrate the ends of justice, nonetheless, they are intended to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court dockets. [43]

Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the trial
court's denial of their motion to dismiss. It is a well-established rule that an order denying
a motion to dismiss is interlocutory,
and cannot be the subject of the extraordinary petition for certiorari or mandamus. The appropriate
recourse is to file an answer and to interpose as defenses the objections raised in the motion, to
proceed to trial, and, in case of an adverse decision, to elevate the entire case by appeal in due
course.[44] While there are recognized exceptions to this rule,[45] petitioners' case does not fall among
them.

This brings us to the discussion of the substantive issue of the case.

Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear
and resolve the civil case for specific performance and damages filed by the respondent. The ICA subject
of the litigation was entered into and perfected in Tokyo, Japan, by Japanese nationals, and written
wholly in the Japanese language. Thus, petitioners posit that local courts have no substantial
relationship to the parties[46] following the [state of the] most significant relationship rule in Private
International Law.[47]

The Court notes that petitioners adopted an additional but different theory when they elevated the case
to the appellate court. In the Motion to Dismiss[48] filed with the trial court, petitioners never contended
that the RTC is an inconvenient forum. They merely argued that the applicable law which will determine
the validity or invalidity of respondent's claim is that of Japan, following the principles of lex loci
celebrationis and lex contractus.[49] While not abandoning this stance in their petition before the
appellate court, petitioners on certiorari significantly invoked the defense of forum non
conveniens.[50] On petition for review before this Court, petitioners dropped their other arguments,
maintained the forum non conveniens defense, and introduced their new argument that the applicable
principle is the [state of the] most significant relationship rule. [51]

Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in
theory, as explained in Philippine Ports Authority v. City of Iloilo.[52] We only pointed out petitioners'
inconstancy in their arguments to emphasize their incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved:
jurisdiction, choice of law, and recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should litigation be initiated? (2) Which law will
the court apply? and (3) Where can the resulting judgment be enforced?[53]

Analytically, jurisdiction and choice of law are two distinct concepts. [54] Jurisdiction considers whether it
is fair to cause a defendant to travel to this state; choice of law asks the further question whether the
application of a substantive law which will determine the merits of the case is fair to both parties. The
power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often coincide, the minimum contacts for one
do not always provide the necessary significant contacts for the other. [55] The question of whether the
law of a state can be applied to a transaction is different from the question of whether the courts of that
state have jurisdiction to enter a judgment.[56]

In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff
or the petitioner, over the defendant or the respondent, over the subject matter, over the issues of the
case and, in cases involving property, over theres or the thing which is the subject of the litigation. [57] In
assailing the trial court's jurisdiction herein, petitioners are actually referring to subject matter
jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which
establishes and organizes the court. It is given only by law and in the manner prescribed by law.[58] It is
further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to
all or some of the claims asserted therein.[59] To succeed in its motion for the dismissal of an action for
lack of jurisdiction over the subject matter of the claim,[60] the movant must show that the court or
tribunal cannot act on the matter submitted to it because no law grants it the power to adjudicate the
claims.[61]

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not
properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-
0264 for specific performance and damages is one not capable of pecuniary estimation and is properly
cognizable by the RTC of Lipa City.[62] What they rather raise as grounds to question subject matter
jurisdiction are the principles of lex loci celebrationis and lex contractus, and the state of the most
significant relationship rule.

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the law of the place of the ceremony[63] or the law of the place where a
contract is made.[64] The doctrine of lex contractus or lex loci contractusmeans the law of the place
where a contract is executed or to be performed.[65] It controls the nature, construction, and validity of
the contract[66] and it may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly.[67] Under the state of the most significant relationship rule, to
ascertain what state law to apply to a dispute, the court should determine which state has the most
substantial connection to the occurrence and the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be performed, and the domicile, place of
business, or place of incorporation of the parties.[68] This rule takes into account several contacts and
evaluates them according to their relative importance with respect to the particular issue to be
resolved.[69]

Since these three principles in conflict of laws make reference to the law applicable to a dispute, they
are rules proper for the second phase, the choice of law. [70] They determine which state's law is to be
applied in resolving the substantive issues of a conflicts problem. [71] Necessarily, as the only issue in this
case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have
not yet pointed out any conflict between the laws of Japan and ours. Before determining which law
should apply, first there should exist a conflict of laws situation requiring the application of the conflict
of laws rules.[72] Also, when the law of a foreign country is invoked to provide the proper rules for the
solution of a case, the existence of such law must be pleaded and proved.[73]
It should be noted that when a conflicts case, one involving a foreign element, is brought before a court
or administrative agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the
case, either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume
jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction over the
case and take into account or apply the law of some other State or States. [74] The courts power to hear
cases and controversies is derived from the Constitution and the laws. While it may choose to recognize
laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other formal
agreements, even in matters regarding rights provided by foreign sovereigns.[75]

Neither can the other ground raised, forum non conveniens,[76] be used to deprive the trial court of its
jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the
Rules of Court does not include it as a ground.[77] Second, whether a suit should be entertained or
dismissed on the basis of the said doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court.[78] In this case, the RTC decided to assume
jurisdiction. Third, the propriety of dismissing a case based on this principle requires a factual
determination; hence, this conflicts principle is more properly considered a matter of defense. [79]

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by
respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial
and appellate courts correctly denied the petitioners motion to dismiss.

WHEREFORE, premises considered, the petition for review on certiorari is DENIED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:
CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

RUBEN T. REYES

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

[1]
Penned by Associate Justice Bienvenido L. Reyes, with the late Associate Justice Eubulo G. Verzola and
Associate Justice Marina L. Buzon, concurring; rollo, pp. 37-44.
[2]
Id. at 46-47.
[3]
CA rollo (CA-G.R. SP No. 60827), p. 84.
[4]
Id. at 116-120.
[5]
Id. at 32-36.
[6]
Id. at 85.
[7]
Id. at 121-148.
[8]
Id. at 166-171.
[9]
Id. at 38.
[10]
Id. at 39-41.
[11]
Id. at 109.
[12]
Id. at 53-57.
[13]
Id. at 42-43.
[14]
13 Phil. 236 (1909).
[15]
Insular Government v. Frank, id. at 240.
[16]
CA rollo (CA-G.R. SP No. 60827), pp. 25-26.
[17]
Id. at 27-28.
[18]
CA rollo (CA-G.R. SP No. 60205), pp. 2-42.
[19]
Id. at 44. The August 23, 2000 Resolution penned by Associate Justice Delilah Vidallon-Magtolis
(retired), with the concurrence of Associate Justices Eloy R. Bello, Jr. (retired) and Elvi John S. Asuncion
(dismissed) pertinently provides as follows:

A cursory reading of the petition indicates no statement as to the date when the petitioners filed their
motion for reconsideration and when they received the order of denial thereof, as required in Section 3,
paragraph 2, Rule 46 of the 1997 Rules of Civil Procedure as amended by Circular No. 39-98 dated
August 18, 1998 of the Supreme Court. Moreover, the verification and certification of non-forum
shopping was executed by petitioner Kazuhiro Hasegawa for both petitioners without any indication
that the latter had authorized him to file the same.

WHEREFORE, the [petition] is DENIED due course and DISMISSED outright.

SO ORDERED.
[20]
Id. at 45.
[21]
CA rollo (CA-G.R. SP No. 60827), pp. 2-24.
[22]
Supra note 1.
[23]
Id. at 222.
[24]
Supra note 2.
[25]
Rollo, pp. 3-35.
[26]
Id. at 15.
[27]
See Spouses Melo v. Court of Appeals, 376 Phil. 204, 213-214 (1999), in which the Supreme Court
ruled that compliance with the certification against forum shopping is separate from, and independent
of, the avoidance of forum shopping itself. Thus, there is a difference in the treatmentin terms of
imposable sanctionsbetween failure to comply with the certification requirement and violation of the
prohibition against forum shopping. The former is merely a cause for the dismissal, without prejudice, of
the complaint or initiatory pleading, while the latter is a ground for summary dismissal thereof and
constitutes direct contempt. See also Philippine Radiant Products, Inc. v. Metropolitan Bank & Trust
Company, Inc., G.R. No. 163569, December 9, 2005, 477 SCRA 299, 314, in which the Court ruled that
the dismissal due to failure to append to the petition the board resolution authorizing a corporate
officer to file the same for and in behalf of the corporation is without prejudice. So is the dismissal of the
petition for failure of the petitioner to append thereto the requisite copies of the assailed order/s.
[28]
See Torres v. Specialized Packaging Development Corporation, G.R. No. 149634, July 6, 2004, 433
SCRA 455, 463-464, in which the Court made the pronouncement that the requirement of verification is
simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily
render it fatally defective.
[29]
Section 3, Rule 46 of the Rules of Court pertinently states that x x x [i]n actions filed under Rule 65,
the petition shall further indicate the material dates showing when notice of the judgment or final order
or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was
filed and when notice of the denial thereof was received. x x x
[30]
Estrera v. Court of Appeals, G.R. Nos. 154235-36, August 16, 2006, 499 SCRA 86, 95;
and Spouses Melo v. Court of Appeals, supra note 27, at 214.
[31]
The Rules of Court pertinently provides in Section 4, Rule 65 that [t]he petition may be filed not later
than sixty (60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day
period shall be counted from notice of the denial of said motion. x x x
[32]
Delgado v. Court of Appeals, G.R. No. 137881, December 21, 2004, 447 SCRA 402, 415.
[33]
CA rollo (CA-G.R. SP No. 60827), p. 21.
[34]
Fuentebella v. Castro, G.R. No. 150865, June 30, 2006, 494 SCRA 183, 193-194; see Roxas v. Court of
Appeals, 415 Phil. 430 (2001).
[35]
Rollo, p. 33; CA rollo (CA-G.R. SP No. 60827), p. 23. The Authorization dated September 4,
2000 pertinently reads:

I, KEN TAKAGI, President and Chief Executive Officer of NIPPON ENGINEERING CONSULTANTS CO., LTD.,
a corporation duly organized and existing in accordance with the corporation laws of Japan, with
principal address at 3-23-1 Komagome, Toshima-ku Tokyo, Japan, hereby authorize its International
Division General Manager, Mr. Kazuhiro Hasegawa, to sign and act for and in behalf of Nippon
Engineering Consultants Co., Ltd., for purposes of filing a Petition for Certiorari before the proper
tribunal in the case entitled: Kazuhiro Hasegawa and Nippon Engineering Consultants Co., Ltd. vs.
Minoru Kitamura and Hon. Avelino C. Demetria of the Regional Trial Court, Fourth Judicial Region-
Branch 85, Lipa City, and to do such other things, acts and deals which may be necessary and proper for
the attainment of the said objectives [Underscoring ours].
[36]
Cf. Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180, 199-200, in which the Court
ruled that the agent's signing therein of the verification and certification is already covered by the
provisions of the general power of attorney issued by the principal.
[37]
Barcenas v. Tomas, G.R. No. 150321, March 31, 2005, 454 SCRA 593, 604.
[38]
Dated October 11, 2001; rollo, pp. 192-203.
[39]
Dated August 17, 2001, id. at 202.
[40]
San Pablo Manufacturing Corporation v. Commissioner of Internal Revenue, G.R. No. 147749, June 22,
2006, 492 SCRA 192, 197; LDP Marketing, Inc. v. Monter, G.R. No. 159653, January 25, 2006, 480 SCRA
137, 142; Expertravel & Tours, Inc. v. Court of Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA 147,
160.
[41]
392 Phil. 596, 603-604 (2000).
[42]
Loquias v. Office of the Ombudsman, id. at 604.
[43]
Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).
[44]
Yutingco v. Court of Appeals, 435 Phil. 83, 92 (2002).
[45]
Bank of America NT & SA v. Court of Appeals, 448 Phil. 181, 193 (2003). As stated herein, under
certain situations resort to certiorari is considered appropriate when: (1) the trial court issued the order
without or in excess of jurisdiction; (2) there is patent grave abuse of discretion by the trial court; or (3)
appeal would not prove to be a speedy and adequate remedy as when an appeal would not promptly
relieve a defendant from the injurious effects of the patently mistaken order maintaining the plaintiffs
baseless action and compelling the defendants needlessly to go through a protracted trial and clogging
the court dockets with another futile case.
[46]
Rollo, p. 228.
[47]
Id. at 234-245.
[48]
Dated June 5, 2000; CA rollo (CA-G.R. SP No. 60827), pp. 53-57.
[49]
Id. at 55.
[50]
Id. at 14.
[51]
Rollo, pp. 19-28.
[52]
453 Phil. 927, 934 (2003).
[53]
Scoles, Hay, Borchers, Symeonides, Conflict of Laws, 3rd ed. (2000), p. 3.
[54]
Coquia and Aguiling-Pangalangan, Conflict of Laws, 1995 ed., p. 64.
[55]
Supra note 53, at 162, citing Hay, The Interrelation of Jurisdictional Choice of Law in U.S. Conflicts
Law, 28 Int'l. & Comp. L.Q. 161 (1979).
[56]
Shaffer v. Heitner, 433 U.S. 186, 215; 97 S.Ct. 2569, 2585 (1977), citing Justice Black's Dissenting
Opinion in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct. 1228, 1242 (1958).
[57]
See Regalado, Remedial Law Compendium, Vol. 1, 8th Revised Ed., pp. 7-8.

[58]
U.S. v. De La Santa, 9 Phil. 22, 25-26 (1907).
[59]
Bokingo v. Court of Appeals, G.R. No. 161739, May 4, 2006, 489 SCRA 521, 530; Tomas Claudio
Memorial College, Inc. v. Court of Appeals, 374 Phil. 859, 864 (1999).
[60]
See RULES OF COURT, Rule 16, Sec. 1.
[61]
See In Re: Calloway, 1 Phil. 11, 12 (1901).
[62]
Bokingo v. Court of Appeals, supra note 59, at 531-533; Radio Communications of the Phils. Inc. v.
Court of Appeals, 435 Phil. 62, 68-69 (2002).
[63]
Garcia v. Recio, 418 Phil. 723, 729 (2001); Board of Commissioners (CID) v. Dela Rosa, G.R. Nos.
95122-23, May 31, 1991, 197 SCRA 853, 888.
[64]
<http://web2.westlaw.com/search/default.wl?rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+celebrationis+)&db=DIBLACK&utid=%7bD0AE3BEE-91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription> (visited October
22, 2007).
[65]
<http://web2.westlaw.com/search/default.wl?rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+lex+loci+contractus+)&db=DIBLACK&utid=%7bD0AE3BEE-91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription>(visited October
22, 2007).
[66]
Id.
[67]
Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction, Inc., G.R. No.
140047, July 13, 2004, 434 SCRA 202, 214-215.
[68]
<http://web2.westlaw.com/search/default.wl?rs=WLW7.10&action=Search&fn=_top&sv=Split&
method=TNC&query=CA(+most+significant+relationship+)&db=DIBLACK&utid=%7bD0AE3BEE-91BC-
4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt= WLIGeneralSubscription>
(visited October 22, 2007).
[69]
Saudi Arabian Airlines v. Court of Appeals, 358 Phil. 105, 127 (1998). The contacts which were taken
into account in this case are the following: (a) the place where the injury occurred; (b) the place where
the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation
and place of business of the parties; and (d) the place where the relationship, if any, between the parties
is centered.
[70]
See Auten v. Auten, 308 N.Y 155, 159-160 (1954).
[71]
Supra note 53, at 117-118; supra note 54, at 64-65.
[72]
Laurel v. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, 187 SCRA 797, 810-811.
[73]
International Harvester Company in Russia v. Hamburg-American Line, 42 Phil. 845, 855 (1918).
[74]
Salonga, Private International Law, 1995 ed., p. 44.
[75]
Veitz, Jr. v. Unisys Corporation, 676 F. Supp. 99, 101 (1987), citing Randall v. Arabian Am. Oil. Co., 778
F. 2d 1146 (1985).
[76]
Under this rule, a court, in conflicts cases, may refuse impositions on its jurisdiction where it is not
the most convenient or available forum and the parties are not precluded from seeking remedies
elsewhere (Bank of America NT & SA v. Court of Appeals, supra note 45, at 196). The court may refuse to
entertain a case for any of the following practical reasons: (1) the belief that the matter can be better
tried and decided elsewhere, either because the main aspects of the case transpired in a foreign
jurisdiction or the material witnesses have their residence there; (2) the belief that the non-resident
plaintiff sought the forum, a practice known as forum shopping, merely to secure procedural advantages
or to convey or harass the defendant; (3) the unwillingness to extend local judicial facilities to non-
residents or aliens when the docket may already be overcrowded; (4) the inadequacy of the local judicial
machinery for effectuating the right sought to be maintained; and (5) the difficulty of ascertaining
foreign law (Puyat v. Zabarte, 405 Phil. 413, 432 [2001]).
[77]
Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, June 19, 1997, 274 SCRA 102,
113.
[78]
Bank of America NT & SA v. Court of Appeals, supra note 45, at 196.
[79]
Bank of America NT & SA v. Court of Appeals, supra note 45, at 197.
3. Cadalin vs. POEA , 238 SCRA 721 (1994)

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

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 rest if
circumstances so require and in respect of which an additional sum equivalent to 150% of his normal
wage shall be paid to him. . . .

Art. 81: . . . When conditions of work require the worker to work on any official holiday, he shall be paid
an additional sum equivalent to 150% of his normal wage.

Art. 84: Every worker who has completed one year's continuous service with his employer shall be
entitled to leave on full pay for a period of not less than 21 days for each year increased to a period not
less than 28 days after five continuous years of service.

A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his
service in that year.

Art. 107: A contract of employment made for a period of indefinite duration may be terminated by
either party thereto after giving the other party thirty days' prior notice before such termination, in
writing, in respect of monthly paid workers and fifteen days' notice in respect of other workers. The
party terminating a contract without giving the required notice shall pay to the other party
compensation equivalent to the amount of wages payable to the worker for the period of such notice or
the unexpired portion thereof.

Art. 111: . . . the employer concerned shall pay to such worker, upon termination of employment,
a leaving indemnity for the period of his employment calculated on the basis of fifteen days' wages for
each year of the first three years of service and of one month's wages for each year of service thereafter.
Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to
the period of his service completed within a year.

All the individual complainants-appellants have already been repatriated to the Philippines at the time
of the filing of these cases (R.R. No. 104776, Rollo, pp. 59-65).

IV

The issues raised before and resolved by the NLRC were:

First: — Whether or not complainants are entitled to the benefits provided by Amiri Decree No. 23 of
Bahrain;

(a) Whether or not the complainants who have worked in Bahrain are entitled to the above-mentioned
benefits.

(b) Whether or not Art. 44 of the same Decree (allegedly prescribing a more favorable treatment of alien
employees) bars complainants from enjoying its benefits.

Second: — Assuming that Amiri Decree No. 23 of Bahrain is applicable in these cases, whether or not
complainants' claim for the benefits provided therein have prescribed.

Third: — Whether or not the instant cases qualify as a class suit.

Fourth: — Whether or not the proceedings conducted by the POEA, as well as the decision that is the
subject of these appeals, conformed with the requirements of due process;
(a) Whether or not the respondent-appellant was denied its right to due process;

(b) Whether or not the admission of evidence by the POEA after these cases were submitted for decision
was valid;

(c) Whether or not the POEA acquired jurisdiction over Brown & Root International, Inc.;

(d) Whether or not the judgment awards are supported by substantial evidence;

(e) Whether or not the awards based on the averages and formula presented by the complainants-
appellants are supported by substantial evidence;

(f) Whether or not the POEA awarded sums beyond what the complainants-appellants prayed for; and, if
so, whether or not these awards are valid.

Fifth: — Whether or not the POEA erred in holding respondents AIBC and Brown & Root jointly are
severally liable for the judgment awards despite the alleged finding that the former was the employer of
the complainants;

(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 factoamended
the worker's contracts of employment. Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It was only after June 30, 1983, four
months after the brown builders brought a suit against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).

Hence, premises considered, the applicable law of prescription to this instant case is Article 1144 of the
Civil Code of the Philippines, which provides:

Art. 1144. The following actions may be brought within ten years from the time the cause of action
accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

Thus, herein money claims of the complainants against the respondents shall prescribe in ten years from
August 16, 1976. Inasmuch as all claims were filed within the ten-year prescriptive period, no claim
suffered the infirmity of being prescribed (G.R. No. 104776, Rollo, 89-90).

In overruling the POEA Administrator, and holding that the prescriptive period is three years as provided
in Article 291 of the Labor Code of the Philippines, the NLRC argued as follows:

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

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

The court further noted:

xxx xxx xxx

Applying that test here it appears to us that the libelant is entitled to succeed, for the respondents have
failed to satisfy us that the Panamanian period of limitation in question was specifically aimed against
the particular rights which the libelant seeks to enforce. The Panama Labor Code is a statute having
broad objectives, viz: "The present Code regulates the relations between capital and labor, placing them
on a basis of social justice, so that, without injuring any of the parties, there may be guaranteed for
labor the necessary conditions for a normal life and to capital an equitable return to its investment." In
pursuance of these objectives the Code gives laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain ones which are enumerated in
Article 621. And there is nothing in the record to indicate that the Panamanian legislature gave special
consideration to the impact of Article 623 upon the particular rights sought to be enforced here, as
distinguished from the other rights to which that Article is also applicable. Were we confronted with the
question of whether the limitation period of Article 621 (which carves out particular rights to be
governed by a shorter limitation period) is to be regarded as "substantive" or "procedural" under the
rule of "specifity" we might have a different case; but here on the surface of things we appear to be
dealing with a "broad," and not a "specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).

Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the Philippines,
which was applied by NLRC, refers only to claims "arising from the employer's violation of the
employee's right as provided by the Labor Code." They assert that their claims are based on the violation
of their employment contracts, as amended by the Amiri Decree No. 23 of 1976 and therefore the
claims may be brought within ten years as provided by Article 1144 of the Civil Code of the Philippines
(Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No. 23 of
1976, argue that there is in force in the Philippines a "borrowing law," which is Section 48 of the Code of
Civil Procedure and that where such kind of law exists, it takes precedence over the common-law
conflicts rule (G.R. No. 104776,Rollo, pp. 45-46).

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri
Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not be actionable after the lapse of one year from
the date of the expiry of the contract. (G.R. Nos. 105029-31, Rollo, p. 226).

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as
service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the
laws of the forum. This is true even if the action is based upon a foreign substantive law (Restatement of
the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed
either as procedural or substantive, depending on the characterization given such a law.

Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of
limitations of New York, instead of the Panamanian law, after finding that there was no showing that the
Panamanian law on prescription was intended to be substantive. Being considered merely a procedural
law even in Panama, it has to give way to the law of the forum on prescription of actions.

However, the characterization of a statute into a procedural or substantive law becomes irrelevant
when the country of the forum has a "borrowing statute." Said statute has the practical effect of
treating the foreign statute of limitation as one of substance (Goodrich, Conflict of Laws 152-153
[1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations
to the pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds
of "borrowing statutes," one form provides that an action barred by the laws of the place where it
accrued, will not be enforced in the forum even though the local statute has not run against it (Goodrich
and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:

If by the laws of the state or country where the cause of action arose, the action is barred, it is also
barred in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said
Code repealed only those provisions of the Code of Civil Procedures as to which were inconsistent with
it. There is no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).

In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar
as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy
(Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce
the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question
would contravene the public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:

The state shall promote social justice in all phases of national development. (Sec. 10).

The state affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare (Sec. 18).

In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.

Having determined that the applicable law on prescription is the Philippine law, the next question is
whether the prescriptive period governing the filing of the claims is three years, as provided by the
Labor Code or ten years, as provided by the Civil Code of the Philippines.

The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of the
Philippines, which provides:

The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor Code of the
Philippines, which in pertinent part provides:

Money claims-all money claims arising from employer-employee relations accruing during the effectivity
of this Code shall be filed within three (3) years from the time the cause of action accrued, otherwise
they shall be forever barred.

xxx xxx xxx

The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70 SCRA 244 (1976)
invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21). The
said case involved the correct computation of overtime pay as provided in the collective bargaining
agreements and not the Eight-Hour Labor Law.

As noted by the Court: "That is precisely why petitioners did not make any reference as to the
computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead
insisted that work computation provided in the collective bargaining agreements between the parties be
observed. Since the claim for pay differentials is primarily anchored on the written contracts between
the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."

Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933) provides:
Any action to enforce any cause of action under this Act shall be commenced within three years after
the cause of action accrued otherwise such action shall be forever barred, . . . .

The court further explained:

The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA No. 444 as amended) will apply,
if the claim for differentials for overtime work is solely based on said law, and not on a collective
bargaining agreement or any other contract. In the instant case, the claim for overtime compensation is
not so much because of Commonwealth Act No. 444, as amended but because the claim is demandable
right of the employees, by reason of the above-mentioned collective bargaining agreement.

Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing "actions to enforce
any cause of action under said law." On the other hand, Article 291 of the Labor Code of the Philippines
provides the prescriptive period for filing "money claims arising from employer-employee relations." The
claims in the cases at bench all arose from the employer-employee relations, which is broader in scope
than claims arising from a specific law or from the collective bargaining agreement.

The contention of the POEA Administrator, that the three-year prescriptive period under Article 291 of
the Labor Code of the Philippines applies only to money claims specifically recoverable under said Code,
does not find support in the plain language of the provision. Neither is the contention of the claimants in
G.R. Nos. 104911-14 that said Article refers only to claims "arising from the employer's violation of the
employee's right," as provided by the Labor Code supported by the facial reading of the provision.

VII

G.R. No. 104776

A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that while their
complaints were filed on June 6, 1984 with POEA, the case was decided only on January 30, 1989, a clear
denial of their right to a speedy disposition of the case; and (2) that NLRC and the POEA Administrator
should have declared AIBC and BRII in default (Rollo, pp.
31-35).

Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:

Sec. 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.

It is true that the constitutional right to "a speedy disposition of cases" is not limited to the accused in
criminal proceedings but extends to all parties in all cases, including civil and administrative cases, and in
all proceedings, including judicial and quasi-judicial hearings. Hence, under the Constitution, any party
to a case may demand expeditious action on all officials who are tasked with the administration of
justice.

However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition of cases" is a
relative term. Just like the constitutional guarantee of "speedy trial" accorded to the accused in all
criminal proceedings, "speedy disposition of cases" is a flexible concept. It is consistent with delays and
depends upon the circumstances of each case. What the Constitution prohibits are unreasonable,
arbitrary and oppressive delays which render rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining whether or not the
right to a "speedy disposition of cases" has been violated, thus:

In the determination of whether or not the right to a "speedy trial" has been violated, certain factors
may be considered and balanced against each other. These are length of delay, reason for the delay,
assertion of the right or failure to assert it, and prejudice caused by the delay. The same factors may also
be considered in answering judicial inquiry whether or not a person officially charged with the
administration of justice has violated the speedy disposition of cases.

Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:

It must be here emphasized that the right to a speedy disposition of a case, like the right to speedy trial,
is deemed violated only when the proceeding is attended by vexatious, capricious, and oppressive
delays; or when unjustified postponements of the trial are asked for and secured, or when without
cause or justified motive a long period of time is allowed to elapse without the party having his case
tried.

Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the amended complaint,
claimants had been asking that AIBC and BRII be declared in default for failure to file their answers
within the ten-day period provided in Section 1, Rule III of Book VI of the Rules and Regulations of the
POEA. At that time, there was a pending motion of AIBC and BRII to strike out of the records the
amended complaint and the "Compliance" of claimants to the order of the POEA, requiring them to
submit a bill of particulars.

The cases at bench are not of the run-of-the-mill variety, such that their final disposition in the
administrative level after seven years from their inception, cannot be said to be attended by
unreasonable, arbitrary and oppressive delays as to violate the constitutional rights to a speedy
disposition of the cases of complainants.

The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said complaint had
undergone several amendments, the first being on April 3, 1985.

The claimants were hired on various dates from 1975 to 1983. They were deployed in different areas,
one group in and the other groups outside of, Bahrain. The monetary claims totalling more than US$65
million according to Atty. Del Mundo, included:

1. Unexpired portion of contract;

2. Interest earnings of Travel and Fund;

3. Retirement and Savings Plan benefit;

4. War Zone bonus or premium pay of at least 100% of basic pay;

5. Area Differential pay;

6. Accrued Interest of all the unpaid benefits;

7. Salary differential pay;

8. Wage Differential pay;

9. Refund of SSS premiums not remitted to Social Security System;

10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue (B.I.R.);

11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits consisting of 43 pages
(Annex "Q" of Amended Complaint);

12. Moral and Exemplary Damages;

13. Attorney's fees of at least ten percent of amounts;

14. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and issued by the POEA;
and

15. Penalty for violation of Article 34 (Prohibited practices) not excluding reportorial requirements
thereof (NLRC Resolution, September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).

Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some facts, the
claimants were ordered to comply with the motion of AIBC for a bill of particulars. When claimants filed
their "Compliance and Manifestation," AIBC moved to strike out the complaint from the records for
failure of claimants to submit a proper bill of particulars. While the POEA Administrator denied the
motion to strike out the complaint, he ordered the claimants "to correct the deficiencies" pointed out by
AIBC.

Before an intelligent answer could be filed in response to the complaint, the records of employment of
the more than 1,700 claimants had to be retrieved from various countries in the Middle East. Some of
the records dated as far back as 1975.

The hearings on the merits of the claims before the POEA Administrator were interrupted several times
by the various appeals, first to NLRC and then to the Supreme Court.

Aside from the inclusion of additional claimants, two new cases were filed against AIBC and BRII on
October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA Case No. L-86-05-
460). NLRC, in exasperation, noted that the exact number of claimants had never been completely
established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57). All the three new cases were
consolidated with POEA Case No. L-84-06-555.

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.

Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

ANNEX A

LIST OF CLAIMANTS WHO SIGNED QUITCLAIMS

Bienvenido Cadalin Ardon Ello

Antonio Acupan Josefino R. Enano
Benjamin Alejandre Rolando E. Espiritu
Wilfredo Aligada Patricio L. Garcia Jr.
Robert Batica Felino M. Jocson
Enrico Belen Eduardo S. Kolimlim
Guillermo Cabeza Emmanuel C. Labella
Rodolfo Cagatan Ernesto S. Lising
Francisco De Guzman Edilberto G. Magat
Ignacio De Vera Victoriano L. Matilla
Ernesto De la Cruz Renato V. Morada
Reynaldo Dizon Ildefonso C. Muñoz
Ricardo Ebrada Herbert G. Ng
Antonio Ejercito Reynado Oczon
Eduardo Espiritu Romeo Orial
Ernesto Espiritu Ricardo Paguio
Rodolfo Espiritu Emilio Pakingan
Oligario Francisco Ernesto S. Pangan
Antonio Jocson Albert L. Quinto
Alejandro Olorino Romulo M. Reyes
Efren Lirio Leonilo Tiposo
Noel Martinez Manual P. Villanueva
Francis Mediodia Arnaldo J. Alonzo
Luciano Melendez Pastor M. Aquino
Reymundo Milay Ramon Castro
Jose Pancho Graciano Isla
Modesto Pin Pin Renato Matilla
Gaudencio Retana Ricardo B. Morada
Rodelio Rieta, Jr. Pacifico D. Navarro
Jose Robleza Eugenio A. Remonquillo
Nemeriano San Mateo Felix Barcena
Juanito Santos Eliseo Fajardo
Paquito Solanto Sergio S. Santiago
Conrado Solis, Jr. Antonio R. Rodriquez
Menandro Temprosa Luis Val B. Ronquillo
Maximiano Torres Teodorico C. Del Rosario
Francisco Trias Joselito C. Solante
Delfin Victoria Ricardo C. Dayrit
Gilbert Victoria Antonio P. Hilario
Domingo Villahermosa Edgardo O. Salonga
Rogelio Villanueva Dante C. Aceres
Jose M. Aban Reynaldo S. Acojido
Amorsolo S. Anading Esidro M. Aquino
Alfredo S. Balogo Rosendo M. Aquino
Ramon T. Barboza Rodolfo D. Arevalo
Felix M. Bobier Rexy De Leon Ascuncion
Jose H. Castillo Basilio Buenaventura
Emmanuel H. Castillo Alexander Bustamante
Remar R. Castrojerez Virgilio V. Butiong, Jr.
Romeo O. Cecilio Delfin Caballero
Bayani M. Dayrit Danilo M. Castro
Felizardo S. Delos Santos Franscisco O. Corvera
Nestor N. Estava Edgardo N. Dayacap
Rolando M. Garcia Napoleon S. De Luna
Angel D. Guda Benjamin E. Doza
Henry L. Jacob Renato A. Eduarte
Dante A. Matreo Clyde C. Estuye
Renato S. Melo Buenaventura M. Francisco
Resurrecion D. Nazareno Rogelio D. Guanio
Jaime C. Pollos Arnel L. Jacob
Domingo Pondales Renato S. Lising
Eugenio Ramirez Wilfredo S. Lising
Lucien M. Respall Rogelio S. Lopena
Alvin C. Reyes Bernardito G. Loreja
Rizalina R. Reyes Ignacio E. Muñoz
Quirino Ronquillo Romeo C. Quintos
Avelino M. Roque Willafredo Dayrit Raymundo
Pedro L. Salgatar Virgilio L. Rosario
Rodolfo T. Sultan Joselito Santiago
Benedicto E. Torres Ernesto G. Sta. Maria
Sergio A. Ursolino Gavino U. Tuazon
Rogelio R. Valdez Elito S. Villanueva
Dionisio Bobongo Lamberto Q. Alcantara
Crisenciano Miranda Arturo P. Apilado
Ildefonso C. Molina Turiano V. Concepcion
Gorgonio C. Parala Domingo V. Dela Cruz
Virgilio Ricaza Eduardo R. Enguancho
Palconeri D. Banaag Melanio R. Esteron
Bayani S. Bracamante Santiago N. Galoso
Onofre De Rama Joveniano Hilado
Jose C. Melanes Eduardo Hipolito
Romeo I. Patag Romero M. Javier
Valerio A. Evangelista Valentino S. Jocson
Gilbert E. Ebrada Jose B. Lacson
Juanito P. Villarino Armando M. Magsino
Aristeo M. Bicol Avelino O. Nuqui
Quiterio R. Agudo Delmar F. Pineda
Marianito J. Alcantara Federico T. Quiman
Jose Arevalo Alberto M. Redaza
Ramon A. Arevalo Renosa Ronquillo
Jesus Baya Rodolfo Ronquillo
Guillermo Buenconsejo Antonio T. Valderama
Teresito A. Constantino Ramon Valderama
Eduardo A. Diaz Benigno N. Melendez
Emigdio Abarquez Claudio A. Modesto
Herbert Ayo Solomon Reyes
Mario Bataclan Isaias Talactac
Ricardo Ordonez William G. Taruc
Bernardino Robillos Oscar C. Calderon
Francisco Villaflores Pacifico P. Campano
Angel Villarba Eulalio G. Arguelles
Honesto Jardiniano Ben G. Belir
Juan Y. Olindo Cornelio L. Castillo
Hernani T. Victoriano Valeriano B. Francisco
Ubed B. Ello, Sr. Jaime L. Relosa
Ernesto V. Macaraig Alex Q. Villahermosa
Espiritu A. Munoz, Sr. Vivencio V. Abello, Jr.
Rodrigo E. Ocampo Renato C. Corcuera
Rodolfo V. Ramirez Emiliano B. Dela Cruz, Jr.
Ceferino Batitis Esteban B. Jose, Jr.
Augusto R. Bondoc Ricardo B. Martinez
Jaime C. Catli Bienvenido Vergara
Gerardo B. Limuaco, Jr. Pedro G. Cagatan
Macario S. Magsino Francisco Apolinario
Domingo B. Solano Miguel Abestano
Ricardo De Rama Prudencio Araullo
Arturo V. Araullo
4. Zapanta vs. Local Civil Registrar of Davao 237 SCRA 25

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 55380 September 26, 1994

IN RE: PETITION FOR CORRECTION OF ENTRY IN THE REGISTER OF DEATHS OF THE CIVIL REGISTRY OF
DAVAO CITY, FROM THE NAME "FLAVIANO CASTRO ZAPANTA" TO "FLORENCIO B. ZAPANTA,"
GLICERIA S. ZAPANTA, petitioners,
vs.
THE LOCAL CIVIL REGISTRAR OF THE CITY OF DAVAO AND THE REPUBLIC OF THE
PHILIPPINES,respondents.

Dante C. Sandiego for petitioner.

VITUG, J.:

The case at bench has been certified to us by the Court of Appeals after its assessment that it merely
raises a pure question of law.

The case stemmed from the filing of a "Petition for Correction of Entry in the Register of Deaths of the
Civil Registry of Davao City from the name "Flaviano Castro Zapanta" to "Florencio B. Zapanta," by
Gliceria S. Zapanta before the then Court of First Instance (now Regional Trial Court) of Davao (docketed
Sp. No. 1913).

The narration of the case by the Court of Appeals is hereunder quoted:

The petition alleges that petitioner Gliceria S. Zapanta is the widow of the late "Florencio B. Zapanta;"
that said deceased was born in Sta. Rita, Pampanga, on 24 October 1899, as evidenced by his certificate
of baptism (p. 5, Record on Appeal); that on 5 August 1965, the late Florencio B. Zapanta was admitted
and confined at the San Pedro Hospital, Davao City, and met his untimely demise on 11 August 1965 (p.
6, Record on Appeal); that after the traditional church ceremonies at the Sta. Ana Church, Davao City,
the remains of the deceased was entombed at the municipal cemetery of Davao City on 12 August 1965;
that when petitioner requested the Local Civil Registrar of Davao City for a certified true copy of the
death certificate of her late husband, she discovered, to her dismay and surprise, that the name
indicated in said death certificate was "Flaviano Castro Zapanta," albeit the date of death and all other
circumstances and information reflected therein clearly and conclusively revealed that the person
referred to therein was no other than her late husband, Florencio B. Zapanta (p. 7, Record on Appeal).
Hence, petitioner prays that, after due notice and hearing, an order be issued directing the Local Civil
Registrar of Davao City to correct the death certificate of her deceased husband by changing his name
from "Flaviano Castro Zapanta" to "Florencio B. Zapanta."
After due publication of the notice of hearing, the Assistant City Fiscal of Davao City filed a motion to
dismiss the petition, advancing inter-alia that petitioner seeks to correct not only a clerical error, but
indeed a substantial one. In support of the opposition, heavy reliance has been made in the cases
ofSchultz vs. Republic, L-10055, 13 Sept. 1958; Black vs. Republic, L-10869, 10 Nov. 1958; Ty Kong Tin
vs. Republic, 50 O.G. 1078; Ansaldo vs. Republic, 55 O.G. 6541; Balite vs. Republic, L-17332, 29 Nov.
1961; Tan Su vs. Republic, L-12140, 29 April 1959, where all substantial corrections in the civil registry
were denied because only innocuous or clerical error could be corrected (p. 10, Record on Appeal). Said
motion to dismiss was opposed by petitioner.

In dismissing the petition, in its 31st January 1975 Order, the court a quo rationalized that the correction
of the name "Flaviano Castro Zapanta" to "Florencio B. Zapanta," was not merely clerical but substantial
in nature and that it thereby did not have the power to grant the relief prayed for.

The trial court committed a reversible error.

Article 407 of the Civil Code provides that "(a)cts, events and judicial decrees concerning the civil status
of persons shall be recorded in the Civil Register." The civil status referred to pertains to one's birth,
marriage, death, legal separation, annulment of marriage, judgment declaring the nullity of marriage,
legitimation, adoption, acknowledgement of natural children, naturalization, loss or recovery of
citizenship, civil interdiction, judicial determination of filiation, voluntary emancipation of a minor and
change of name. 1 Any change or correction in a civil registry record is not allowed without a judicial
order. 2

The general perception, following Ty Kong Tin vs. Republic 3 and cases contemporary and closely
subsequent to it, 4was that the judicial proceeding under Art. 412 of the Civil Code, implemented by Rule
108 5 of the Rules of Court, could only justify the correction of innocuous or clerical errors apparent on
the face of the record and capable of being corrected by mere reference to
it, 6 such as misspellings and obvious mistakes. Starting, however, with the case of Republic
vs. Hon. Macli-ing, 7 the Court, through Justice Melencio-Herrera, explained:

It is true that the change from Esteban Sy to Sy Piao would necessarily affect the identity of the father.
In that sense, it can be said to be substantial. However, we find indubitable evidence to support the
correction prayed for. In the Alien Certificate of Registration of the father, his name appears as "Sy
Piao." The same is true in his Immigrant Certificate of Residence. . . . The school records of Oscar Sy both
in high school and
at St. Louis University in Baguio, recorded the name of his father as "Sy Piao" . . . .

In the case of Ty Kong Tin vs. Republic, 94 Phil. 321 (1954), as well as subsequent cases predicated
thereon, we forbade only the entering of material corrections in the record of birth by virtue of a
judgment in a summary action. The proceedings below, although filed under Rule 108 of the Rules of
Court, were not summary.

Thereafter, in Republic vs. Valencia, 8 the Court, through Justice Gutierrez, Jr., discussed, rather at
length, the phrase "appropriate proceeding" that could warrant the correction of even non-clerical
errors. There, Leonor Valencia, for and in behalf of her minor children, Bernardo Go and Jessica Go, filed
with the then Court of First Instance of Cebu a petition for the cancellation and correction of the entries
of birth of Bernardo Go and Jessica Go in the Civil Registry of Cebu City. The Solicitor General opposed
the petition, alleging that the petition for correction of entry in the Civil Registry pursuant to Article 412
of the Civil Code, in relation to Rule 108 of the Revised Rules of Court, contemplated a summary
proceeding solely to allow innocuous changes in registry entries. The Court ruled:

It is undoubtedly true that if the subject matter of a petition is not for the correction of clerical errors of
a harmless and innocuous nature, but one involving nationality or citizenship, which is indisputably
substantial as well as controverted, affirmative relief cannot be granted in a proceeding summary in
nature. However, it is also true that a right in law may be enforced and a wrong may be remedied as
long as the appropriate remedy is used. This Court adheres to the principle that even substantial errors
in a civil registry may be corrected and the true facts established provided the parties aggrieved by the
error avail themselves of the appropriate adversary proceeding. As a matter of fact, the opposition of
the Solicitor General dated February 20, 1970 while questioning the use of Article 412 of the Civil Code
in relation to Rule 108 of the Revised Rules of Court admits "that the entries sought to be corrected
should be threshed out in an appropriate proceeding."

What is meant by "appropriate adversary proceeding?" Black's Law Dictionary defines "adversary
proceeding" as follows:

One having opposing parties; contested, as distinguished from an ex parte application, one of which the
party seeking relief has given legal warning to the other party, and afforded the latter an opportunity to
contest it. . . .

xxx xxx xxx

Provided the trial court has conducted proceedings where all relevant facts have been fully and properly
developed, where opposing counsel have been given opportunity to demolish the opposite party's case,
and where the evidence has been thoroughly weighed and considered, the suit or proceeding is
"appropriate."

The pertinent sections of Rule 108 provide: . . .

Thus, the persons who must be made parties to a proceeding concerning the cancellation or correction
of an entry in the civil register
are — (1) the civil registrar, and (2) all persons who have or claim any interest which would be affected
thereby. Upon the filing of the petition, it becomes the duty of the court to — (1) issue an order fixing
the time and place for the hearing of the petition, and (2) cause the order for hearing to be published
once a week for three (3) consecutive weeks in a newspaper of general circulation in the province. The
following are likewise entitled to oppose the petition: — (1) the civil registrar, and (2) any person having
or claiming any interest under the entry whose cancellation or correction is sought.

If all these procedural requirements have been followed, a petition for correction and/or cancellation of
entries in the record of birth even if filed and conducted under Rule 108 of the Revised Rules of Court
can no longer be described as "summary." There can be no doubt that when an opposition to the
petition is filed either by the Civil Registrar or any person having or claiming any interest in the entries
sought to be cancelled and/or corrected and the opposition is actively prosecuted, the proceedings
thereon become adversary proceedings.

xxx xxx xxx

We are of the opinion that the petition filed by the respondent in the lower court by way of a special
proceeding for cancellation and/or correction of entries in the civil register with the requisite notice and
publication and the recorded proceedings that actually took place thereafter could very well be
regarded as that proper suit or appropriate action.

The doctrine was reiterated in Chiao Ben Lim v. Zosa 9 and Republic v. Flojo. 10

Accordingly, the dismissal by the trial court of Gliceria's petition must now be reversed. The records
show that the publication requirement has already been complied with. The next step would thus be for
the court a quo to consider the petition before it to be, in substance, an adversary proceeding and to
allow petitioner and all adverse and interested parties their day in court.

WHEREFORE, the questioned Order of the then Court of First Instance (now Regional Trial Court) of
Davao is hereby SET ASIDE and Special Proceedings No. 1913 is ordered reinstated. No costs.

SO ORDERED.

Feliciano, Romero and Melo, JJ., concur.

Bidin, J., is on leave.

#Footnotes

1 Art. 410, Civil Code.

2 Article 412, Civil Code.

3 94 Phil. 321.

4 See Republic vs. Bartolome, 138 SCRA 442; De Castro vs. Republic, 134 SCRA 12.

5 Cancellation or Correction of Entries in the Civil Registry.

6 Barretto vs. Local Civil Registrar of Manila, 74 SCRA 257.

7 135 SCRA 367.

8 141 SCRA 462.

9 146 SCRA 366.

10 152 SCRA 550.

5. Bellis vs. Bellis 20 SCRA 358

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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,
Congressdeleted the phrase, "notwithstanding the provisions of this and the next preceding article"
when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing
without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It
must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself
which must be applied in testate and intestate succession. As further indication of this legislative intent,
Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be
governed by the national law of the decedent.

It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it
has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national
law. Specific provisions must prevail over general ones.

Appellants would also point out that the decedent executed two wills — one to govern his Texas estate
and the other his Philippine estate — arguing from this that he intended Philippine law to govern his
Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine
will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision
in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law
and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those
matters that Article 10 — now 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.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Footnotes
1
He later filed a motion praying that as a legal heir he be included in this case as one of the oppositors-
appellants; to file or adopt the opposition of his sisters to the project of partition; to submit his brief
after paying his proportionate share in the expenses incurred in the printing of the record on appeal; or
to allow him to adopt the briefs filed by his sisters — but this Court resolved to deny the motion.
2
San Antonio, Texas was his legal residence.
3
Lim vs. Collector, 36 Phil. 472; In re Testate Estate of Suntay, 95 Phil. 500.
6. Government vs. Frank 13 Phil. 236

EN BANC

[G. R. No. 2935. March 23, 1909.]

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee, vs. GEORGE I. FRANK,Defendant-

Appellant.

DECISION

JOHNSON, J.:

Judgment was rendered in the lower court on the 5th day of September, 1905. the Defendantappealed.
On the 12th day of October, 1905, the Appellant filed his printed bill of exceptions with the clerk of the
Supreme Court. On the 5th day of December, 1905, the Appellant filed his brief with the clerk of the
Supreme Court. On the 19th day of January, 1906, the Attorney-General filed his brief in said cause.
Nothing further was done in said cause until on about the 30th day of January, 1909, when the
respective parties were requested by this court to prosecute the appeal under penalty of having the
same dismissed for failure so to do; whereupon the Appellant, by petition, had the cause placed upon
the calendar and the same was heard on the 2d day of February, 1909.

The facts from the record appear to be as follows: chanrobles virtualawlibrary

First. That on or about the 17th day of April, 1903, in the city of Chicago, in the State of Illinois, in the
United States, the Defendant, through a representative of the Insular Government of the Philippine
Islands, entered into a contract for a period of two years with the Plaintiff, by which theDefendant was
to receive a salary of 1,200 dollars per year as a stenographer in the service of the said Plaintiff, and in
addition thereto was to be paid in advance the expenses incurred in traveling from the said city of
Chicago to Manila, and one-half salary during said period of travel.

Second. Said contract contained a provision that in case of a violation of its terms on the part of
the Defendant, he should become liable to the Plaintiff for the amount expended by the Government by
way of expenses incurred in traveling from Chicago to Manila and the one-half salary paid during such
period.

Third. The Defendant entered upon the performance of his contract upon the 30th day of April, 1903,
and was paid half-salary from the date until June 4, 1903, the date of his arrival in the Philippine Islands.

Fourth. That on the 11th day of February, 1904, the Defendant left the service of the Plaintiff and
refused to make a further compliance with the terms of the contract.

Fifth. On the 3d day of December, 1904, the Plaintiff commenced an action in the Court of First Instance
of the city of Manila to recover from the Defendant the sum of 269. 23 dollars, which amount
the Plaintiff claimed had been paid to the Defendant as expenses incurred in traveling from Chicago to
Manila, and as half-salary for the period consumed in travel.

Sixth. It was expressly agreed between the parties to said contract that Laws No. 80 and No. 224 should
constitute a part of said contract.
To the complaint of the Plaintiff the Defendant filed a general denial and a special defense, alleging in
his special defense that the Government of the Philippine Islands had amended Laws No. 80 and No. 224
and had thereby materially altered the said contract, and also that he was a minor at the time the
contract was entered into and was therefore not responsible under the law.

To the special defense of the Defendant the Plaintiff filed a demurrer, which demurrer the court
sustained.

Upon the issue thus presented, and after hearing the evidence adduced during the trial of the cause, the
lower court rendered a judgment against the Defendant and in favor of the Plaintiff for the sum of 265.
90 dollars. The lower court found that at the time the Defendant quit the service of the Plaintiff there
was due him from the said Plaintiff the sum of 3. 33 dollars, leaving a balance due the Plaintiff in the
sum of 265. 90 dollars. From this judgment the Defendant appealed and made the following
assignments of error: chanrobles virtualawlibrary

1. The court erred in sustaining Plaintiff’s demurrer to Defendant’s special defenses.

2. The court erred in rendering judgment against the Defendant on the facts.

With reference to the above assignments of error, it may be said that the mere fact that the legislative
department of the Government of the Philippine Islands had amended said Acts No. 80 and No. 224 by
Acts No. 643 and No. 1040 did not have the effect of changing the terms of the contract made between
the Plaintiff and the Defendant. The legislative department of the Government is expressly prohibited by
section 5 of the Act of Congress of 1902 from altering or changing the terms of a contract. The right
which the Defendant had acquired by virtue of Acts No. 80 and No. 224 had not been changed in any
respect by the fact that said laws had been amended. These acts, constituting the terms of the contract,
still constituted a part of said contract and were enforceable in favor of the Defendant.

The Defendant alleged in his special defense that he was a minor and therefore the contract could not
be enforced against him. The record discloses that, at the time the contract was entered into in the
State of Illinois, he was an adult under the laws of that State and had full authority to contract.
The Plaintiff [the Defendant] claims that, by reason of the fact that, under that laws of the Philippine
Islands at the time the contract was made, made persons in said Islands did not reach their majority
until they had attained the age of 23 years, he was not liable under said contract, contending that the
laws of the Philippine Islands governed. It is not disputed — upon the contrary the fact is admitted —
that at the time and place of the making of the contract in question the Defendant had full capacity to
make the same. No rule is better settled in law than that matters bearing upon the execution,
interpretation and validity of a contract are determined b the law of the place where the contract is
made. (Scudder vs. Union National Bank, 91 U. S., 406.) cralaw Matters connected with its performance
are regulated by the law prevailing at the place of performance. Matters respecting a remedy, such as
the bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the law of the
place where the suit is brought. (Idem.) cralaw

The Defendant’s claim that he was an adult when he left Chicago but was a minor when he arrived at
Manila; that he was an adult a the time he made the contract but was a minor at the time
thePlaintiff attempted to enforce the contract, more than a year later, is not tenable.

Our conclusions with reference to the first above assignment of error are, therefore.
First. That the amendments to Acts No. 80 and No. 224 in no way affected the terms of the contract in
question; and

Second. The Plaintiff [Defendant] being fully qualified to enter into the contract at the place and time
the contract was made, he cannot plead infancy as a defense at the place where the contract is being
enforced.

We believe that the above conclusions also dispose of the second assignment of error.

For the reasons above stated, the judgment of the lower court is affirmed, with costs.

Arellano, C.J., Torres, Mapa, Carson and Willard, JJ., concur.

7. Cadalin vs. POEA 238 SCRA 721

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

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 rest if
circumstances so require and in respect of which an additional sum equivalent to 150% of his normal
wage shall be paid to him. . . .

Art. 81: . . . When conditions of work require the worker to work on any official holiday, he shall be paid
an additional sum equivalent to 150% of his normal wage.

Art. 84: Every worker who has completed one year's continuous service with his employer shall be
entitled to leave on full pay for a period of not less than 21 days for each year increased to a period not
less than 28 days after five continuous years of service.

A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his
service in that year.

Art. 107: A contract of employment made for a period of indefinite duration may be terminated by
either party thereto after giving the other party thirty days' prior notice before such termination, in
writing, in respect of monthly paid workers and fifteen days' notice in respect of other workers. The
party terminating a contract without giving the required notice shall pay to the other party
compensation equivalent to the amount of wages payable to the worker for the period of such notice or
the unexpired portion thereof.

Art. 111: . . . the employer concerned shall pay to such worker, upon termination of employment,
a leaving indemnity for the period of his employment calculated on the basis of fifteen days' wages for
each year of the first three years of service and of one month's wages for each year of service thereafter.
Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to
the period of his service completed within a year.

All the individual complainants-appellants have already been repatriated to the Philippines at the time
of the filing of these cases (R.R. No. 104776, Rollo, pp. 59-65).

IV

The issues raised before and resolved by the NLRC were:

First: — Whether or not complainants are entitled to the benefits provided by Amiri Decree No. 23 of
Bahrain;

(a) Whether or not the complainants who have worked in Bahrain are entitled to the above-mentioned
benefits.

(b) Whether or not Art. 44 of the same Decree (allegedly prescribing a more favorable treatment of alien
employees) bars complainants from enjoying its benefits.

Second: — Assuming that Amiri Decree No. 23 of Bahrain is applicable in these cases, whether or not
complainants' claim for the benefits provided therein have prescribed.

Third: — Whether or not the instant cases qualify as a class suit.

Fourth: — Whether or not the proceedings conducted by the POEA, as well as the decision that is the
subject of these appeals, conformed with the requirements of due process;
(a) Whether or not the respondent-appellant was denied its right to due process;

(b) Whether or not the admission of evidence by the POEA after these cases were submitted for decision
was valid;

(c) Whether or not the POEA acquired jurisdiction over Brown & Root International, Inc.;

(d) Whether or not the judgment awards are supported by substantial evidence;

(e) Whether or not the awards based on the averages and formula presented by the complainants-
appellants are supported by substantial evidence;

(f) Whether or not the POEA awarded sums beyond what the complainants-appellants prayed for; and, if
so, whether or not these awards are valid.

Fifth: — Whether or not the POEA erred in holding respondents AIBC and Brown & Root jointly are
severally liable for the judgment awards despite the alleged finding that the former was the employer of
the complainants;

(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 factoamended
the worker's contracts of employment. Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It was only after June 30, 1983, four
months after the brown builders brought a suit against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).

Hence, premises considered, the applicable law of prescription to this instant case is Article 1144 of the
Civil Code of the Philippines, which provides:

Art. 1144. The following actions may be brought within ten years from the time the cause of action
accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

Thus, herein money claims of the complainants against the respondents shall prescribe in ten years from
August 16, 1976. Inasmuch as all claims were filed within the ten-year prescriptive period, no claim
suffered the infirmity of being prescribed (G.R. No. 104776, Rollo, 89-90).

In overruling the POEA Administrator, and holding that the prescriptive period is three years as provided
in Article 291 of the Labor Code of the Philippines, the NLRC argued as follows:

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

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

The court further noted:

xxx xxx xxx

Applying that test here it appears to us that the libelant is entitled to succeed, for the respondents have
failed to satisfy us that the Panamanian period of limitation in question was specifically aimed against
the particular rights which the libelant seeks to enforce. The Panama Labor Code is a statute having
broad objectives, viz: "The present Code regulates the relations between capital and labor, placing them
on a basis of social justice, so that, without injuring any of the parties, there may be guaranteed for
labor the necessary conditions for a normal life and to capital an equitable return to its investment." In
pursuance of these objectives the Code gives laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain ones which are enumerated in
Article 621. And there is nothing in the record to indicate that the Panamanian legislature gave special
consideration to the impact of Article 623 upon the particular rights sought to be enforced here, as
distinguished from the other rights to which that Article is also applicable. Were we confronted with the
question of whether the limitation period of Article 621 (which carves out particular rights to be
governed by a shorter limitation period) is to be regarded as "substantive" or "procedural" under the
rule of "specifity" we might have a different case; but here on the surface of things we appear to be
dealing with a "broad," and not a "specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).

Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the Philippines,
which was applied by NLRC, refers only to claims "arising from the employer's violation of the
employee's right as provided by the Labor Code." They assert that their claims are based on the violation
of their employment contracts, as amended by the Amiri Decree No. 23 of 1976 and therefore the
claims may be brought within ten years as provided by Article 1144 of the Civil Code of the Philippines
(Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No. 23 of
1976, argue that there is in force in the Philippines a "borrowing law," which is Section 48 of the Code of
Civil Procedure and that where such kind of law exists, it takes precedence over the common-law
conflicts rule (G.R. No. 104776,Rollo, pp. 45-46).

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri
Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not be actionable after the lapse of one year from
the date of the expiry of the contract. (G.R. Nos. 105029-31, Rollo, p. 226).

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as
service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the
laws of the forum. This is true even if the action is based upon a foreign substantive law (Restatement of
the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed
either as procedural or substantive, depending on the characterization given such a law.

Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of
limitations of New York, instead of the Panamanian law, after finding that there was no showing that the
Panamanian law on prescription was intended to be substantive. Being considered merely a procedural
law even in Panama, it has to give way to the law of the forum on prescription of actions.

However, the characterization of a statute into a procedural or substantive law becomes irrelevant
when the country of the forum has a "borrowing statute." Said statute has the practical effect of
treating the foreign statute of limitation as one of substance (Goodrich, Conflict of Laws 152-153
[1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations
to the pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds
of "borrowing statutes," one form provides that an action barred by the laws of the place where it
accrued, will not be enforced in the forum even though the local statute has not run against it (Goodrich
and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:

If by the laws of the state or country where the cause of action arose, the action is barred, it is also
barred in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said
Code repealed only those provisions of the Code of Civil Procedures as to which were inconsistent with
it. There is no provision in the Civil Code of the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).

In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar
as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy
(Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce
the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question
would contravene the public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:

The state shall promote social justice in all phases of national development. (Sec. 10).

The state affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare (Sec. 18).

In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:

Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.

Having determined that the applicable law on prescription is the Philippine law, the next question is
whether the prescriptive period governing the filing of the claims is three years, as provided by the
Labor Code or ten years, as provided by the Civil Code of the Philippines.

The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of the
Philippines, which provides:

The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor Code of the
Philippines, which in pertinent part provides:

Money claims-all money claims arising from employer-employee relations accruing during the effectivity
of this Code shall be filed within three (3) years from the time the cause of action accrued, otherwise
they shall be forever barred.

xxx xxx xxx

The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70 SCRA 244 (1976)
invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21). The
said case involved the correct computation of overtime pay as provided in the collective bargaining
agreements and not the Eight-Hour Labor Law.

As noted by the Court: "That is precisely why petitioners did not make any reference as to the
computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead
insisted that work computation provided in the collective bargaining agreements between the parties be
observed. Since the claim for pay differentials is primarily anchored on the written contracts between
the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."

Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933) provides:
Any action to enforce any cause of action under this Act shall be commenced within three years after
the cause of action accrued otherwise such action shall be forever barred, . . . .

The court further explained:

The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA No. 444 as amended) will apply,
if the claim for differentials for overtime work is solely based on said law, and not on a collective
bargaining agreement or any other contract. In the instant case, the claim for overtime compensation is
not so much because of Commonwealth Act No. 444, as amended but because the claim is demandable
right of the employees, by reason of the above-mentioned collective bargaining agreement.

Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing "actions to enforce
any cause of action under said law." On the other hand, Article 291 of the Labor Code of the Philippines
provides the prescriptive period for filing "money claims arising from employer-employee relations." The
claims in the cases at bench all arose from the employer-employee relations, which is broader in scope
than claims arising from a specific law or from the collective bargaining agreement.

The contention of the POEA Administrator, that the three-year prescriptive period under Article 291 of
the Labor Code of the Philippines applies only to money claims specifically recoverable under said Code,
does not find support in the plain language of the provision. Neither is the contention of the claimants in
G.R. Nos. 104911-14 that said Article refers only to claims "arising from the employer's violation of the
employee's right," as provided by the Labor Code supported by the facial reading of the provision.

VII

G.R. No. 104776

A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that while their
complaints were filed on June 6, 1984 with POEA, the case was decided only on January 30, 1989, a clear
denial of their right to a speedy disposition of the case; and (2) that NLRC and the POEA Administrator
should have declared AIBC and BRII in default (Rollo, pp.
31-35).

Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:

Sec. 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.

It is true that the constitutional right to "a speedy disposition of cases" is not limited to the accused in
criminal proceedings but extends to all parties in all cases, including civil and administrative cases, and in
all proceedings, including judicial and quasi-judicial hearings. Hence, under the Constitution, any party
to a case may demand expeditious action on all officials who are tasked with the administration of
justice.

However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition of cases" is a
relative term. Just like the constitutional guarantee of "speedy trial" accorded to the accused in all
criminal proceedings, "speedy disposition of cases" is a flexible concept. It is consistent with delays and
depends upon the circumstances of each case. What the Constitution prohibits are unreasonable,
arbitrary and oppressive delays which render rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining whether or not the
right to a "speedy disposition of cases" has been violated, thus:

In the determination of whether or not the right to a "speedy trial" has been violated, certain factors
may be considered and balanced against each other. These are length of delay, reason for the delay,
assertion of the right or failure to assert it, and prejudice caused by the delay. The same factors may also
be considered in answering judicial inquiry whether or not a person officially charged with the
administration of justice has violated the speedy disposition of cases.

Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:

It must be here emphasized that the right to a speedy disposition of a case, like the right to speedy trial,
is deemed violated only when the proceeding is attended by vexatious, capricious, and oppressive
delays; or when unjustified postponements of the trial are asked for and secured, or when without
cause or justified motive a long period of time is allowed to elapse without the party having his case
tried.

Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the amended complaint,
claimants had been asking that AIBC and BRII be declared in default for failure to file their answers
within the ten-day period provided in Section 1, Rule III of Book VI of the Rules and Regulations of the
POEA. At that time, there was a pending motion of AIBC and BRII to strike out of the records the
amended complaint and the "Compliance" of claimants to the order of the POEA, requiring them to
submit a bill of particulars.

The cases at bench are not of the run-of-the-mill variety, such that their final disposition in the
administrative level after seven years from their inception, cannot be said to be attended by
unreasonable, arbitrary and oppressive delays as to violate the constitutional rights to a speedy
disposition of the cases of complainants.

The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said complaint had
undergone several amendments, the first being on April 3, 1985.

The claimants were hired on various dates from 1975 to 1983. They were deployed in different areas,
one group in and the other groups outside of, Bahrain. The monetary claims totalling more than US$65
million according to Atty. Del Mundo, included:

1. Unexpired portion of contract;

2. Interest earnings of Travel and Fund;

3. Retirement and Savings Plan benefit;

4. War Zone bonus or premium pay of at least 100% of basic pay;

5. Area Differential pay;

6. Accrued Interest of all the unpaid benefits;

7. Salary differential pay;

8. Wage Differential pay;

9. Refund of SSS premiums not remitted to Social Security System;

10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue (B.I.R.);

11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits consisting of 43 pages
(Annex "Q" of Amended Complaint);

12. Moral and Exemplary Damages;

13. Attorney's fees of at least ten percent of amounts;

14. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and issued by the POEA;
and

15. Penalty for violation of Article 34 (Prohibited practices) not excluding reportorial requirements
thereof (NLRC Resolution, September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).

Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some facts, the
claimants were ordered to comply with the motion of AIBC for a bill of particulars. When claimants filed
their "Compliance and Manifestation," AIBC moved to strike out the complaint from the records for
failure of claimants to submit a proper bill of particulars. While the POEA Administrator denied the
motion to strike out the complaint, he ordered the claimants "to correct the deficiencies" pointed out by
AIBC.

Before an intelligent answer could be filed in response to the complaint, the records of employment of
the more than 1,700 claimants had to be retrieved from various countries in the Middle East. Some of
the records dated as far back as 1975.

The hearings on the merits of the claims before the POEA Administrator were interrupted several times
by the various appeals, first to NLRC and then to the Supreme Court.

Aside from the inclusion of additional claimants, two new cases were filed against AIBC and BRII on
October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA Case No. L-86-05-
460). NLRC, in exasperation, noted that the exact number of claimants had never been completely
established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57). All the three new cases were
consolidated with POEA Case No. L-84-06-555.

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.

Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

ANNEX A

LIST OF CLAIMANTS WHO SIGNED QUITCLAIMS

Bienvenido Cadalin Ardon Ello

Antonio Acupan Josefino R. Enano
Benjamin Alejandre Rolando E. Espiritu
Wilfredo Aligada Patricio L. Garcia Jr.
Robert Batica Felino M. Jocson
Enrico Belen Eduardo S. Kolimlim
Guillermo Cabeza Emmanuel C. Labella
Rodolfo Cagatan Ernesto S. Lising
Francisco De Guzman Edilberto G. Magat
Ignacio De Vera Victoriano L. Matilla
Ernesto De la Cruz Renato V. Morada
Reynaldo Dizon Ildefonso C. Muñoz
Ricardo Ebrada Herbert G. Ng
Antonio Ejercito Reynado Oczon
Eduardo Espiritu Romeo Orial
Ernesto Espiritu Ricardo Paguio
Rodolfo Espiritu Emilio Pakingan
Oligario Francisco Ernesto S. Pangan
Antonio Jocson Albert L. Quinto
Alejandro Olorino Romulo M. Reyes
Efren Lirio Leonilo Tiposo
Noel Martinez Manual P. Villanueva
Francis Mediodia Arnaldo J. Alonzo
Luciano Melendez Pastor M. Aquino
Reymundo Milay Ramon Castro
Jose Pancho Graciano Isla
Modesto Pin Pin Renato Matilla
Gaudencio Retana Ricardo B. Morada
Rodelio Rieta, Jr. Pacifico D. Navarro
Jose Robleza Eugenio A. Remonquillo
Nemeriano San Mateo Felix Barcena
Juanito Santos Eliseo Fajardo
Paquito Solanto Sergio S. Santiago
Conrado Solis, Jr. Antonio R. Rodriquez
Menandro Temprosa Luis Val B. Ronquillo
Maximiano Torres Teodorico C. Del Rosario
Francisco Trias Joselito C. Solante
Delfin Victoria Ricardo C. Dayrit
Gilbert Victoria Antonio P. Hilario
Domingo Villahermosa Edgardo O. Salonga
Rogelio Villanueva Dante C. Aceres
Jose M. Aban Reynaldo S. Acojido
Amorsolo S. Anading Esidro M. Aquino
Alfredo S. Balogo Rosendo M. Aquino
Ramon T. Barboza Rodolfo D. Arevalo
Felix M. Bobier Rexy De Leon Ascuncion
Jose H. Castillo Basilio Buenaventura
Emmanuel H. Castillo Alexander Bustamante
Remar R. Castrojerez Virgilio V. Butiong, Jr.
Romeo O. Cecilio Delfin Caballero
Bayani M. Dayrit Danilo M. Castro
Felizardo S. Delos Santos Franscisco O. Corvera
Nestor N. Estava Edgardo N. Dayacap
Rolando M. Garcia Napoleon S. De Luna
Angel D. Guda Benjamin E. Doza
Henry L. Jacob Renato A. Eduarte
Dante A. Matreo Clyde C. Estuye
Renato S. Melo Buenaventura M. Francisco
Resurrecion D. Nazareno Rogelio D. Guanio
Jaime C. Pollos Arnel L. Jacob
Domingo Pondales Renato S. Lising
Eugenio Ramirez Wilfredo S. Lising
Lucien M. Respall Rogelio S. Lopena
Alvin C. Reyes Bernardito G. Loreja
Rizalina R. Reyes Ignacio E. Muñoz
Quirino Ronquillo Romeo C. Quintos
Avelino M. Roque Willafredo Dayrit Raymundo
Pedro L. Salgatar Virgilio L. Rosario
Rodolfo T. Sultan Joselito Santiago
Benedicto E. Torres Ernesto G. Sta. Maria
Sergio A. Ursolino Gavino U. Tuazon
Rogelio R. Valdez Elito S. Villanueva
Dionisio Bobongo Lamberto Q. Alcantara
Crisenciano Miranda Arturo P. Apilado
Ildefonso C. Molina Turiano V. Concepcion
Gorgonio C. Parala Domingo V. Dela Cruz
Virgilio Ricaza Eduardo R. Enguancho
Palconeri D. Banaag Melanio R. Esteron
Bayani S. Bracamante Santiago N. Galoso
Onofre De Rama Joveniano Hilado
Jose C. Melanes Eduardo Hipolito
Romeo I. Patag Romero M. Javier
Valerio A. Evangelista Valentino S. Jocson
Gilbert E. Ebrada Jose B. Lacson
Juanito P. Villarino Armando M. Magsino
Aristeo M. Bicol Avelino O. Nuqui
Quiterio R. Agudo Delmar F. Pineda
Marianito J. Alcantara Federico T. Quiman
Jose Arevalo Alberto M. Redaza
Ramon A. Arevalo Renosa Ronquillo
Jesus Baya Rodolfo Ronquillo
Guillermo Buenconsejo Antonio T. Valderama
Teresito A. Constantino Ramon Valderama
Eduardo A. Diaz Benigno N. Melendez
Emigdio Abarquez Claudio A. Modesto
Herbert Ayo Solomon Reyes
Mario Bataclan Isaias Talactac
Ricardo Ordonez William G. Taruc
Bernardino Robillos Oscar C. Calderon
Francisco Villaflores Pacifico P. Campano
Angel Villarba Eulalio G. Arguelles
Honesto Jardiniano Ben G. Belir
Juan Y. Olindo Cornelio L. Castillo
Hernani T. Victoriano Valeriano B. Francisco
Ubed B. Ello, Sr. Jaime L. Relosa
Ernesto V. Macaraig Alex Q. Villahermosa
Espiritu A. Munoz, Sr. Vivencio V. Abello, Jr.
Rodrigo E. Ocampo Renato C. Corcuera
Rodolfo V. Ramirez Emiliano B. Dela Cruz, Jr.
Ceferino Batitis Esteban B. Jose, Jr.
Augusto R. Bondoc Ricardo B. Martinez
Jaime C. Catli Bienvenido Vergara
Gerardo B. Limuaco, Jr. Pedro G. Cagatan
Macario S. Magsino Francisco Apolinario
Domingo B. Solano Miguel Abestano
Ricardo De Rama Prudencio Araullo
Arturo V. Araullo
8. Hongkong and Shanghai Banking Corp. vs. Sherman 176 SCRA 331

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 72494 August 11, 1989

HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,

vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT, respondents.

Quiason, Makalintal, Barot & Torres for petitioner.

Alejandro, Aranzaso & Associates for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court
of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated February
28,1985 denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato
Reloj.

A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and
Shanghai Banking Corporation (hereinafter referred to as petitioner BANK) against private respondents
Jack Robert Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before the Regional Trial
Court of Quezon City, Branch 84.

It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as
COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore
branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00
(which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over
petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security
for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid
overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of
whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p.
53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and
severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated
overdraft facility.

The Joint and Several Guarantee provides, inter alia, that:

This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore. We
hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this
guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation
from private respondents, conformably with the provisions of the Joint and Several Guarantee.
Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-mentioned
complaint.

On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was
opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order
dated February 28, 1985 (pp, 64-65, Rollo), which read as follows:

In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the complaint
on two grounds, namely:

1. That the court has no jurisdiction over the subject matter of the complaint; and

2. That the court has no jurisdiction over the persons of the defendants.

In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the motion. "On the
first ground, defendants claim that by virtue of the provision in the Guarantee (the actionable
document) which reads —

This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore. We
hereby agree that the courts in Singapore shall have jurisdiction over all disputes arising under this
guarantee,

the Court has no jurisdiction over the subject matter of the case. The Court finds and concludes
otherwise. There is nothing in the Guarantee which says that the courts of Singapore shall have
jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been established
in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred by the will,
submission or consent of the parties.

On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen nor a resident of
the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is acquired by
service of summons and copy of the complaint on them. There has been a valid service of summons on
both defendants and in fact the same is admitted when said defendants filed a 'Motion for Extension of
Time to File Responsive Pleading on December 5, 1984.

WHEREFORE, the Motion to Dismiss is hereby DENIED.

SO ORDERED.

A motion for reconsideration of the said order was filed by private respondents which was, however,
denied (p. 66, Rollo).

Private respondents then filed before the respondent Intermediate Appellate Court (now Court of
Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order (pp.
39-48, Rollo). On August 2, 1985, the respondent Court rendered a decision (p. 37, Rollo), the dispositive
portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is hereby GRANTED. The respondent
Court is enjoined from taking further cognizance of the case and to dismiss the same for filing with the
proper court of Singapore which is the proper forum. No costs.

SO ORDERED.

The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.

The main issue is whether or not Philippine courts have jurisdiction over the suit.

The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to wit:

(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of Singapore. We
hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this
guarantee. ... (p. 53-A, Rollo)

In rendering the decision in favor of private respondents, the Court of Appeals made, the following
observations (pp. 35-36, Rollo):

There are significant aspects of the case to which our attention is invited. The loan was obtained by
Eastern Book Service PTE, Ltd., a company incorporated in Singapore. The loan was granted by
theSingapore Branch of Hongkong and Shanghai Banking Corporation. The Joint and Several Guarantee
was also concluded in Singapore. The loan was in Singaporean dollars and the repayment thereof also in
the same currency. The transaction, to say the least, took place in Singporean setting in which the law of
that country is the measure by which that relationship of the parties will be governed.

xxx xxx xxx

Contrary to the position taken by respondents, the guarantee agreement compliance that any litigation
will be before the courts of Singapore and that the rights and obligations of the parties shall be
construed and determined in accordance with the laws of the Republic of Singapore. A closer
examination of paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is based,
employs in clear and unmistakeable (sic) terms the word 'shall' which under statutory construction is
mandatory.

Thus it was ruled that:

... the word 'shall' is imperative, operating to impose a duty which may be enforced (Dizon vs.
Encarnacion, 9 SCRA 714).lâwphî1.ñèt

There is nothing more imperative and restrictive than what the agreement categorically commands that
'all rights, obligations, and liabilities arising hereunder shall be construed and determined under and
may be enforced in accordance with the laws of the Republic of Singapore.'

While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several
Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the
stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising
under this guarantee" be liberally construed. One basic principle underlies all rules of jurisdiction in
International Law: a State does not have jurisdiction in the absence of some reasonable basis for
exercising it, whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the
jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair
play and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-out by
petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of
life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant.
However, in this case, private respondents are Philippine residents (a fact which was not disputed by
them) who would rather face a complaint against them before a foreign court and in the process incur
considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve
the case. Private respondents' stance is hardly comprehensible, unless their ultimate intent is to evade,
or at least delay, the payment of a just obligation.

The defense of private respondents that the complaint should have been filed in Singapore is based
merely on technicality. They did not even claim, much less prove, that the filing of the action here will
cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that
petitioner BANK filed the action here just to harass private respondents.

In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was
ruled:

... An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued in the Courts
of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant. The plain
meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which
would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read
into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two
transactions in question only or exclusively in Manila. For, that agreement did not change or transfer
venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which
they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in
Section 2(b) of Rule 4. Renuntiatio non praesumitur.

This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R. No.
57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation, jurisdiction
shall be vested in the Court of Davao City." We held:

Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a stipulation as to
venue does not preclude the filing of suits in the residence of plaintiff or defendant under Section 2 (b),
Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by the parties.

Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of
Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to
divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a
State to exercise authority over persons and things within its boundaries subject to certain exceptions.
Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic
representatives of other States, and foreign military units stationed in or marching through State
territory with the permission of the latter's authorities. This authority, which finds its source in the
concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent
to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over
all kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-
38).lâwphî1.ñèt

As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue
has been waived. However, We agree with the ruling of the respondent Court that:

While in the main, the motion to dismiss fails to categorically use with exactitude the words 'improper
venue' it can be perceived from the general thrust and context of the motion that what is meant is
improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the same word
employed in the guarantee agreement but conveys the concept of venue. Brushing aside all
technicalities, it would appear that jurisdiction was used loosely as to be synonymous with venue. It is in
this spirit that this Court must view the motion to dismiss. ... (p. 35, Rollo).

At any rate, this issue is now of no moment because We hold that venue here was properly laid for the
same reasons discussed above.

The respondent Court likewise ruled that (pp. 36-37, Rollo):

... In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by law to
exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case by applying
the principle of forum non conveniens. ...

However, whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniensdepends largely upon the facts of the particular case and is addressed to the sound discretion
of the trial court (J. Salonga, Private International Law, 1981, p. 49).lâwphî1.ñèt Thus, the respondent
Court should not have relied on such principle.

Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and
that consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract,
substantial bases exist for petitioner Bank's choice of forum, as discussed earlier.

Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine
branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart the
proceedings below inasmuch as well-known is the rule that a defendant cannot plead any defense that
has not been interposed in the court below.

ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the
Regional Trial Court is REINSTATED, with costs against private respondents. This decision is immediately
executory.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griñ;o-Aquino, JJ., concur.

9. Aznar vs. Garcia 7 SCRA 95

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-16749 January 31, 1963

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.

ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-
appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.

M. R. Sotelo for executor and heir-appellees.

Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.

LABRADOR, J.:

This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr.,
presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949, approving among
things the final accounts of the executor, directing the executor to reimburse Maria Lucy Christensen
the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and declaring Maria Lucy
Christensen entitled to the residue of the property to be enjoyed during her lifetime, and in case of
death without issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in
accordance with the provisions of the will of the testator Edward E. Christensen. The will was executed
in Manila on March 5, 1951 and contains the following provisions:

3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs. Bernard
Daney), who was born in the Philippines about twenty-eight years ago, and who is now residing at No.
665 Rodger Young Village, Los Angeles, California, U.S.A.

4. I further declare that I now have no living ascendants, and no descendants except my above named
daughter, MARIA LUCY CHRISTENSEN DANEY.

xxx xxx xxx

7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo Garcia, about
eighteen years of age and who, notwithstanding the fact that she was baptized Christensen, is not in any
way related to me, nor has she been at any time adopted by me, and who, from all information I have
now resides in Egpit, Digos, Davao, Philippines, the sum of THREE THOUSAND SIX HUNDRED PESOS
(P3,600.00), Philippine Currency the same to be deposited in trust for the said Maria Helen Christensen
with the Davao Branch of the Philippine National Bank, and paid to her at the rate of One Hundred
Pesos (P100.00), Philippine Currency per month until the principal thereof as well as any interest which
may have accrued thereon, is exhausted..

xxx xxx xxx

12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY
CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No. 665 Rodger Young Village,
Los Angeles, California, U.S.A., all the income from the rest, remainder, and residue of my property and
estate, real, personal and/or mixed, of whatsoever kind or character, and wheresoever situated, of
which I may be possessed at my death and which may have come to me from any source whatsoever,
during her lifetime: ....

It is in accordance with the above-quoted provisions that the executor in his final account and project of
partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed that the residue
of the estate be transferred to his daughter, Maria Lucy Christensen.

Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar as it
deprives her (Helen) of her legitime as an acknowledged natural child, she having been declared by Us in
G.R. Nos. L-11483-84 an acknowledged natural child of the deceased Edward E. Christensen. The legal
grounds of opposition are (a) that the distribution should be governed by the laws of the Philippines,
and (b) that said order of distribution is contrary thereto insofar as it denies to Helen Christensen, one of
two acknowledged natural children, one-half of the estate in full ownership. In amplification of the
above grounds it was alleged that the law that should govern the estate of the deceased Christensen
should not be the internal law of California alone, but the entire law thereof because several foreign
elements are involved, that the forum is the Philippines and even if the case were decided in California,
Section 946 of the California Civil Code, which requires that the domicile of the decedent should apply,
should be applicable. It was also alleged that Maria Helen Christensen having been declared an
acknowledged natural child of the decedent, she is deemed for all purposes legitimate from the time of
her birth.

The court below ruled that as Edward E. Christensen was a citizen of the United States and of the State
of California at the time of his death, the successional rights and intrinsic validity of the provisions in his
will are to be governed by the law of California, in accordance with which a testator has the right to
dispose of his property in the way he desires, because the right of absolute dominion over his property
is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman,
117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen Christensen,
through counsel, filed various motions for reconsideration, but these were denied. Hence, this appeal.

The most important assignments of error are as follows:

THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME COURT THAT
HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN
DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.

II

THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE EXISTENCE OF
SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL
LAW.

III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.

IV

THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED BY
THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.

THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN CHRISTENSEN
GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.

There is no question that Edward E. Christensen was a citizen of the United States and of the State of
California at the time of his death. But there is also no question that at the time of his death he was
domiciled in the Philippines, as witness the following facts admitted by the executor himself in
appellee's brief:

In the proceedings for admission of the will to probate, the facts of record show that the deceased
Edward E. Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in
the Philippines, as an appointed school teacher, was on July 1, 1901, on board the U.S. Army Transport
"Sheridan" with Port of Embarkation as the City of San Francisco, in the State of California, U.S.A. He
stayed in the Philippines until 1904.

In December, 1904, Mr. Christensen returned to the United States and stayed there for the following
nine years until 1913, during which time he resided in, and was teaching school in Sacramento,
California.

Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928, he again
departed the Philippines for the United States and came back here the following year, 1929. Some nine
years later, in 1938, he again returned to his own country, and came back to the Philippines the
following year, 1939.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove
their case not covered by this stipulation of facts. 1äwphï1.ñët

Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the
Philippines during World War II. Upon liberation, in April 1945, he left for the United States but returned
to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as
Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21,
1953.)

In April, 1951, Edward E. Christensen returned once more to California shortly after the making of his
last will and testament (now in question herein) which he executed at his lawyers' offices in Manila on
March 5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded by
the fact that he was born in New York, migrated to California and resided there for nine years, and since
he came to the Philippines in 1913 he returned to California very rarely and only for short visits (perhaps
to relatives), and considering that he appears never to have owned or acquired a home or properties in
that state, which would indicate that he would ultimately abandon the Philippines and make home in
the State of California.

Sec. 16. Residence is a term used with many shades of meaning from mere temporary presence to the
most permanent abode. Generally, however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)

As to his citizenship, however, We find that the citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines, for the
latter was a territory of the United States (not a state) until 1946 and the deceased appears to have
considered himself as a citizen of California by the fact that when he executed his will in 1951 he
declared that he was a citizen of that State; so that he appears never to have intended to abandon his
California citizenship by acquiring another. This conclusion is in accordance with the following principle
expounded by Goodrich in his Conflict of Laws.

The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of
permanent abode. But domicile, as has been shown, has acquired a technical meaning. Thus one may be
domiciled in a place where he has never been. And he may reside in a place where he has no domicile.
The man with two homes, between which he divides his time, certainly resides in each one, while living
in it. But if he went on business which would require his presence for several weeks or months, he might
properly be said to have sufficient connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular business in hand, not giving up his
former "home," he could not be a domiciled New Yorker. Acquisition of a domicile of choice requires the
exercise of intention as well as physical presence. "Residence simply requires bodily presence of an
inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to
make it one's domicile." Residence, however, is a term used with many shades of meaning, from the
merest temporary presence to the most permanent abode, and it is not safe to insist that any one use et
the only proper one. (Goodrich, p. 29)

The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil Code
of the Philippines, which is as follows:

ART. 16. Real property as well as personal property is subject to the law of the country where it is
situated.

However, intestate and testamentary successions, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may be
the nature of the property and regardless of the country where said property may be found.

The application of this article in the case at bar requires the determination of the meaning of the
term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United States,
each state of the Union having its own private law applicable to its citizens only and in force only within
the state. The "national law" indicated in Article 16 of the Civil Code above quoted can not, therefore,
possibly mean or apply to any general American law. So it can refer to no other than the private law of
the State of California.

The next question is: What is the law in California governing the disposition of personal property? The
decision of the court below, sustains the contention of the executor-appellee that under the California
Probate Code, a testator may dispose of his property by will in the form and manner he desires, citing
the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant invokes the provisions
of Article 946 of the Civil Code of California, which is as follows:

If there is no law to the contrary, in the place where personal property is situated, it is deemed to follow
the person of its owner, and is governed by the law of his domicile.

The existence of this provision is alleged in appellant's opposition and is not denied. We have checked it
in the California Civil Code and it is there. Appellee, on the other hand, relies on the case cited in the
decision and testified to by a witness. (Only the case of Kaufman is correctly cited.) It is argued on
executor's behalf that as the deceased Christensen was a citizen of the State of California, the internal
law thereof, which is that given in the abovecited case, should govern the determination of the validity
of the testamentary provisions of Christensen's will, such law being in force in the State of California of
which Christensen was a citizen. Appellant, on the other hand, insists that Article 946 should be
applicable, and in accordance therewith and following the doctrine of therenvoi, the question of the
validity of the testamentary provision in question should be referred back to the law of the decedent's
domicile, which is the Philippines.

The theory of doctrine of renvoi has been defined by various authors, thus:

The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a jural
matter to a foreign law for decision, is the reference to the purely internal rules of law of the foreign
system; i.e., to the totality of the foreign law minus its Conflict of Laws rules?"

On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that is, applied
the Conflict of Laws rule of Illinois which referred the matter back to Michigan law. But once having
determined the the Conflict of Laws principle is the rule looked to, it is difficult to see why the reference
back should not have been to Michigan Conflict of Laws. This would have resulted in the "endless chain
of references" which has so often been criticized be legal writers. The opponents of the renvoi would
have looked merely to the internal law of Illinois, thus rejecting the renvoi or the reference back. Yet
there seems no compelling logical reason why the original reference should be the internal law rather
than to the Conflict of Laws rule. It is true that such a solution avoids going on a merry-go-round, but
those who have accepted the renvoitheory avoid this inextricabilis circulas by getting off at the second
reference and at that point applying internal law. Perhaps the opponents of the renvoi are a bit more
consistent for they look always to internal law as the rule of reference.

Strangely enough, both the advocates for and the objectors to the renvoi plead that greater uniformity
will result from adoption of their respective views. And still more strange is the fact that the only way to
achieve uniformity in this choice-of-law problem is if in the dispute the two states whose laws form the
legal basis of the litigation disagree as to whether the renvoi should be accepted. If both reject, or both
accept the doctrine, the result of the litigation will vary with the choice of the forum. In the case stated
above, had the Michigan court rejected the renvoi, judgment would have been against the woman; if the
suit had been brought in the Illinois courts, and they too rejected the renvoi, judgment would be for the
woman. The same result would happen, though the courts would switch with respect to which would
hold liability, if both courts accepted the renvoi.

The Restatement accepts the renvoi theory in two instances: where the title to land is in question, and
where the validity of a decree of divorce is challenged. In these cases the Conflict of Laws rule of the
situs of the land, or the domicile of the parties in the divorce case, is applied by the forum, but any
further reference goes only to the internal law. Thus, a person's title to land, recognized by the situs, will
be recognized by every court; and every divorce, valid by the domicile of the parties, will be valid
everywhere. (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)

X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in

Massachusetts, England, and France. The question arises as to how this property is to be distributed
among X's next of kin.

Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of laws as to
intestate succession to movables calls for an application of the law of the deceased's last domicile. Since
by hypothesis X's last domicile was France, the natural thing for the Massachusetts court to do would be
to turn to French statute of distributions, or whatever corresponds thereto in French law, and decree a
distribution accordingly. An examination of French law, however, would show that if a French court
were called upon to determine how this property should be distributed, it would refer the distribution
to the national law of the deceased, thus applying the Massachusetts statute of distributions. So on the
surface of things the Massachusetts court has open to it alternative course of action: (a) either to apply
the French law is to intestate succession, or (b) to resolve itself into a French court and apply the
Massachusetts statute of distributions, on the assumption that this is what a French court would do. If it
accepts the so-called renvoidoctrine, it will follow the latter course, thus applying its own law.

This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum refers
to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter back again to the law of the
forum. This is renvoi in the narrower sense. The German term for this judicial process is
'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)

After a decision has been arrived at that a foreign law is to be resorted to as governing a particular case,
the further question may arise: Are the rules as to the conflict of laws contained in such foreign law also
to be resorted to? This is a question which, while it has been considered by the courts in but a few
instances, has been the subject of frequent discussion by textwriters and essayists; and the doctrine
involved has been descriptively designated by them as the "Renvoyer" to send back, or the
"Ruchversweisung", or the "Weiterverweisung", since an affirmative answer to the question postulated
and the operation of the adoption of the foreign law in toto would in many cases result in returning the
main controversy to be decided according to the law of the forum. ... (16 C.J.S. 872.)

Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the doctrine
of renvoiis that the court of the forum, in determining the question before it, must take into account the
whole law of the other jurisdiction, but also its rules as to conflict of laws, and then apply the law to the
actual question which the rules of the other jurisdiction prescribe. This may be the law of the forum. The
doctrine of therenvoi has generally been repudiated by the American authorities. (2 Am. Jur. 296)

The scope of the theory of renvoi has also been defined and the reasons for its application in a country
explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The
pertinent parts of the article are quoted herein below:

The recognition of the renvoi theory implies that the rules of the conflict of laws are to be understood as
incorporating not only the ordinary or internal law of the foreign state or country, but its rules of the
conflict of laws as well. According to this theory 'the law of a country' means the whole of its law.

xxx xxx xxx

Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel, in 1900,
in the form of the following theses:

(1) Every court shall observe the law of its country as regards the application of foreign laws.

(2) Provided that no express provision to the contrary exists, the court shall respect:

(a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as regards their
personal statute, and desires that said personal statute shall be determined by the law of the domicile,
or even by the law of the place where the act in question occurred.

(b) The decision of two or more foreign systems of law, provided it be certain that one of them is
necessarily competent, which agree in attributing the determination of a question to the same system of
law.

xxx xxx xxx

If, for example, the English law directs its judge to distribute the personal estate of an Englishman who
has died domiciled in Belgium in accordance with the law of his domicile, he must first inquire whether
the law of Belgium would distribute personal property upon death in accordance with the law of
domicile, and if he finds that the Belgian law would make the distribution in accordance with the law of
nationality — that is the English law — he must accept this reference back to his own law.

We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in In
re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of California
are to be enforced jointly, each in its own intended and appropriate sphere, the principle cited In re
Kaufman should apply to citizens living in the State, but Article 946 should apply to such of its citizens as
are not domiciled in California but in other jurisdictions. The rule laid down of resorting to the law of the
domicile in the determination of matters with foreign element involved is in accord with the general
principle of American law that the domiciliary law should govern in most matters or rights which follow
the person of the owner.

When a man dies leaving personal property in one or more states, and leaves a will directing the manner
of distribution of the property, the law of the state where he was domiciled at the time of his death will
be looked to in deciding legal questions about the will, almost as completely as the law of situs is
consulted in questions about the devise of land. It is logical that, since the domiciliary rules control
devolution of the personal estate in case of intestate succession, the same rules should determine the
validity of an attempted testamentary dispostion of the property. Here, also, it is not that the
domiciliary has effect beyond the borders of the domiciliary state. The rules of the domicile are
recognized as controlling by the Conflict of Laws rules at the situs property, and the reason for the
recognition as in the case of intestate succession, is the general convenience of the doctrine. The New
York court has said on the point: 'The general principle that a dispostiton of a personal property, valid at
the domicile of the owner, is valid anywhere, is one of the universal application. It had its origin in that
international comity which was one of the first fruits of civilization, and it this age, when business
intercourse and the process of accumulating property take but little notice of boundary lines, the
practical wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec.
164, pp. 442-443.)

Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national
law is the internal law of California. But as above explained the laws of California have prescribed two
sets of laws for its citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal law prescribed for its
citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we
must enforce the law of California as in comity we are bound to go, as so declared in Article 16 of our
Civil Code, then we must enforce the law of California in accordance with the express mandate thereof
and as above explained, i.e., apply the internal law for residents therein, and its conflict-of-laws rule for
those domiciled abroad.

It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where the
property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code of the
Philippines and that the law to the contrary in the Philippines is the provision in said Article 16 that
the national law of the deceased should govern. This contention can not be sustained. As explained in
the various authorities cited above the national law mentioned in Article 16 of our Civil Code is the law
on conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the reference or return
of the question to the law of the testator's domicile. The conflict of laws rule in California, Article 946,
Civil Code, precisely refers back the case, when a decedent is not domiciled in California, to the law of
his domicile, the Philippines in the case at bar. The court of the domicile can not and should not refer
the case back to California; such action would leave the issue incapable of determination because the
case will then be like a football, tossed back and forth between the two states, between the country of
which the decedent was a citizen and the country of his domicile. The Philippine court must apply its
own law as directed in the conflict of laws rule of the state of the decedent, if the question has to be
decided, especially as the application of the internal law of California provides no legitime for children
while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children
legally acknowledged forced heirs of the parent recognizing them.

The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs.
Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59
Phil. 293.) cited by appellees to support the decision can not possibly apply in the case at bar, for two
important reasons, i.e., the subject in each case does not appear to be a citizen of a state in the United
States but with domicile in the Philippines, and it does not appear in each case that there exists in the
state of which the subject is a citizen, a law similar to or identical with Art. 946 of the California Civil
Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the
Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the
appellant, should be governed by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code
of California, not by the internal law of California..

WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower court
with instructions that the partition be made as the Philippine law on succession provides. Judgment
reversed, with costs against appellees.

Padilla, Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
10. Bank of America vs. American Realty Corp. 321 SCRA 659

SECOND DIVISION

[G.R. No. 133876. December 29, 1999]

BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN REALTY CORPORATION and COURT OF
APPEALS, respondents.

DECISION

BUENA, J.:

Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted over a
third party mortgagors property situated in the Philippines by filing an action for the collection of the
principal loan before foreign courts?

Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the Rules of Court
are the decision[1] of public respondent Court of Appeals in CA G.R. CV No. 51094, promulgated on 30
September 1997 and its resolution,[2] dated 22 May 1998, denying petitioners motion for
reconsideration.

Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing institution duly
licensed to do business in the Philippines, organized and existing under and by virtue of the laws of the
State of California, United States of America while private respondent American Realty Corporation
(ARC) is a domestic corporation.

Bank of America International Limited (BAIL), on the other hand, is a limited liability company organized
and existing under the laws of England.

As borne by the records, BANTSA and BAIL on several occasions granted three major multi-million
United States (US) Dollar loans to the following corporate borrowers: (1) Liberian Transport Navigation,
S.A.; (2) El Challenger S.A. and (3) Eshley Compania Naviera S.A. (hereinafter collectively referred to as
borrowers), all of which are existing under and by virtue of the laws of the Republic of Panama and are
foreign affiliates of private respondent.[3]

Due to the default in the payment of the loan amortizations, BANTSA and the corporate borrowers
signed and entered into restructuring agreements. As additional security for the restructured loans,
private respondent ARC as third party mortgagor executed two real estate mortgages, [4] dated 17
February 1983 and 20 July 1984, over its parcels of land including improvements thereon, located at
Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are covered by Transfer Certificate of Title
Nos. T-78759, T-78760, T-78761, T-78762 and T-78763.

Eventually, the corporate borrowers defaulted in the payment of the restructured loans prompting
petitioner BANTSA to file civil actions [5] before foreign courts for the collection of the principal loan, to
wit:

a) In England, in its High Court of Justice, Queens Bench Division, Commercial Court (1992-Folio No.
2098) against Liberian Transport Navigation S.A., Eshley Compania Naviera S.A., El Challenger S.A.,
Espriona Shipping Company S.A., Eddie Navigation Corp., S.A., Eduardo Katipunan Litonjua and Aurelio
Katipunan Litonjua on June 17, 1992.

b) In England, in its High Court of Justice, Queens Bench Division, Commercial Court (1992-Folio No.
2245) against El Challenger S.A., Espriona Shipping Company S.A., Eduardo Katipuan Litonjua & Aurelio
Katipunan Litonjua on July 2, 1992;

c) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992) against Eshley
Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company S.A. Pacific Navigators
Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co., Inc., Aurelio
Katipunan Litonjua, Jr. and Eduardo Katipunan Litonjua on November 19, 1992; and

d) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4040 of 1992) against Eshley
Compania Naviera S.A., El Challenger S.A., Espriona Shipping Company, S.A., Pacific Navigators
Corporation, Eddie Navigation Corporation S.A., Litonjua Chartering (Edyship) Co., Jr. and Eduardo
Katipunan Litonjua on November 21, 1992.

In the civil suits instituted before the foreign courts, private respondent ARC, being a third party
mortgagor, was not impleaded as party-defendant.

On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial Sheriff of Bulacan,
Philippines, an application for extrajudicial foreclosure[6] of real estate mortgage.

On 22 January 1993, after due publication and notice, the mortgaged real properties were sold at public
auction in an extrajudicial foreclosure sale, with Integrated Credit and Corporation Services Co. (ICCS) as
the highest bidder for the sum of Twenty Four Million Pesos (P24,000,000.00). [7]

On 12 February 1993, private respondent filed before the Pasig Regional Trial Court, Branch 159, an
action for damages[8] against the petitioner, for the latters act of foreclosing extrajudicially the real
estate mortgages despite the pendency of civil suits before foreign courts for the collection of the
principal loan.

In its answer[9] petitioner alleged that the rule prohibiting the mortgagee from foreclosing the mortgage
after an ordinary suit for collection has been filed, is not applicable in the present case, claiming that:

a) The plaintiff, being a mere third party mortgagor and not a party to the principal restructuring
agreements, was never made a party defendant in the civil cases filed in Hongkong and England;

b) There is actually no civil suit for sum of money filed in the Philippines since the civil actions were filed
in Hongkong and England. As such, any decisions (sic) which may be rendered in the abovementioned
courts are not (sic) enforceable in the Philippines unless a separate action to enforce the foreign
judgments is first filed in the Philippines, pursuant to Rule 39, Section 50 of the Revised Rules of Court.

c) Under English Law, which is the governing law under the principal agreements, the mortgagee does
not lose its security interest by filing civil actions for sums of money.

On 14 December 1993, private respondent filed a motion for suspension [10] of the redemption period on
the ground that it cannot exercise said right of redemption without at the same time waiving or
contradicting its contentions in the case that the foreclosure of the mortgage on its properties is legally
improper and therefore invalid.
In an order[11] dated 28 January 1994, the trial court granted the private respondents motion for
suspension after which a copy of said order was duly received by the Register of Deeds of Meycauayan,
Bulacan.

On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale,
consolidated its ownership over the real properties, resulting to the issuance of Transfer Certificate of
Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in its name.

On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real properties to
Stateland Investment Corporation for the amount of Thirty Nine Million Pesos
(P39,000,000.00).[12]Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-187782(m), T-
187783(m), T-16653P(m) and T-16652P(m) were issued in the latters name.

After trial, the lower court rendered a decision[13] in favor of private respondent ARC dated 12 May
1993, the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the filing in foreign courts by the defendant of
collection suits against the principal debtors operated as a waiver of the security of the
mortgages.Consequently, the plaintiffs rights as owner and possessor of the properties then covered by
Transfer Certificates of Title Nos. T-78759, T-78762, T-78763, T-78760 and T-78761, all of the Register of
Deeds of Meycauayan, Bulacan, Philippines, were violated when the defendant caused the extrajudicial
foreclosure of the mortgages constituted thereon.

Accordingly, the defendant is hereby ordered to pay the plaintiff the following sums, all with legal
interest thereon from the date of the filing of the complaint up to the date of actual payment:

1) Actual or compensatory damages in the amount of Ninety Nine Million Pesos (P99,000,000.00);

2) Exemplary damages in the amount of Five Million Pesos (P5,000,000.00); and

3) Costs of suit.

SO ORDERED.

On appeal, the Court of Appeals affirmed the assailed decision of the lower court prompting petitioner
to file a motion for reconsideration which the appellate court denied.

Hence, the instant petition for review[14] on certiorari where herein petitioner BANTSA ascribes to the
Court of Appeals the following assignment of errors:

1. The Honorable Court of Appeals disregarded the doctrines laid down by this Hon. Supreme Court in
the cases of Caltex Philippines, Inc. vs. Intermediate Appellate Court docketed as G.R. No. 74730
promulgated on August 25, 1989 and Philippine Commercial International Bank vs. IAC, 196 SCRA 29
(1991 case), although said cases were duly cited, extensively discussed and specifically mentioned, as
one of the issues in the assignment of errors found on page 5 of the decision dated September 30, 1997.

2. The Hon. Court of Appeals acted with grave abuse of discretion when it awarded the private
respondent actual and exemplary damages totalling P171,600,000.00, as of July 12, 1998 although such
huge amount was not asked nor prayed for in private respondents complaint, is contrary to law and is
totally unsupported by evidence (sic).
In fine, this Court is called upon to resolve two main issues:

1. Whether or not the petitioners act of filing a collection suit against the principal debtors for the
recovery of the loan before foreign courts constituted a waiver of the remedy of foreclosure.

2. Whether or not the award by the lower court of actual and exemplary damages in favor of private
respondent ARC, as third-party mortgagor, is proper.

The petition is bereft of merit.

First, as to the issue of availability of remedies, petitioner submits that a waiver of the remedy of
foreclosure requires the concurrence of two requisites: an ordinary civil action for collection should be
filed and subsequently a final judgment be correspondingly rendered therein.

According to petitioner, the mere filing of a personal action to collect the principal loan does not suffice;
a final judgment must be secured and obtained in the personal action so that waiver of the remedy of
foreclosure may be appreciated. To put it differently, absent any of the two requisites, the mortgagee-
creditor is deemed not to have waived the remedy of foreclosure.

We do not agree.

Certainly, this Court finds petitioners arguments untenable and upholds the jurisprudence laid down
in Bachrach[15] and similar cases adjudicated thereafter, thus:

In the absence of express statutory provisions, a mortgage creditor may institute against the mortgage
debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he
may pursue either of the two remedies, but not both. By such election, his cause of action can by no
means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a
personal action will leave open to him all the properties of the debtor for attachment and execution,
even including the mortgaged property itself. And, if he waives such personal action and pursues his
remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right
to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the
mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his
remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of
one or the other remedy are purely accidental and are all under his right of election. On the other hand,
a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously
or successively another action against the mortgaged property, would result not only in multiplicity of
suits so offensive to justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio
vs. San Agustin, 25 Phil., 404), but also in subjecting the defendant to the vexation of being sued in the
place of his residence or of the residence of the plaintiff, and then again in the place where the property
lies.

In Danao vs. Court of Appeals,[16] this Court, reiterating jurisprudence enunciated in Manila Trading and
Supply Co. vs. Co Kim[17]and Movido vs. RFC,[18] invariably held:

x x x The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead,
an ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the
properties of the debtor, including the subject matter of the mortgage x x x, subject to the qualification
that if he fails in the remedy by him elected, he cannot pursue further the remedy he has
waived.(Underscoring Ours)

Anent real properties in particular, the Court has laid down the rule that a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose the
mortgage.[19]

In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not
cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, a
remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the complaint in
an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil
Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor
upon filing of the petition not with any court of justice but with the Office of the Sheriff of the province
where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended by Act No.
4118.

In the case at bench, private respondent ARC constituted real estate mortgages over its properties as
security for the debt of the principal debtors. By doing so, private respondent subjected itself to the
liabilities of a third party mortgagor. Under the law, third persons who are not parties to a loan may
secure the latter by pledging or mortgaging their own property.[20]

Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which makes a third
person who secures the fulfillment of anothers obligation by mortgaging his own property, to be
solidarily bound with the principal obligor. The signatory to the principal contractloanremains to be
primarily bound. It is only upon default of the latter that the creditor may have recourse on the
mortgagors by foreclosing the mortgaged properties in lieu of an action for the recovery of the amount
of the loan.[21]

In the instant case, petitioners contention that the requisites of filing the action for collection and
rendition of final judgment therein should concur, is untenable.

Thus, in Cerna vs. Court of Appeals,[22] we agreed with the petitioner in said case, that the filing of a
collection suit barred the foreclosure of the mortgage:

A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage
constituted over the personal property as security for the debt or value of the promissory note when he
seeks to recover in the said collection suit.

x x x When the mortgagee elects to file a suit for collection, not foreclosure, thereby abandoning the
chattel mortgage as basis for relief, he clearly manifests his lack of desire and interest to go after the
mortgaged property as security for the promissory note x x x.

Contrary to petitioners arguments, we therefore reiterate the rule, for clarity and emphasis, that the
mere act of filing of an ordinary action for collection operates as a waiver of the mortgage-creditors
remedy to foreclose the mortgage. By the mere filing of the ordinary action for collection against the
principal debtors, the petitioner in the present case is deemed to have elected a remedy, as a result of
which a waiver of the other necessarily must arise. Corollarily, no final judgment in the collection suit is
required for the rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court,[23] a case relied upon by petitioner,
supposedly to buttress its contention, this Court had occasion to rule that the mere act of filing a
collection suit for the recovery of a debt secured by a mortgage constitutes waiver of the other remedy
of foreclosure.

In the case at bar, petitioner BANTSA only has one cause of action which is non-payment of the
debt. Nevertheless, alternative remedies are available for its enjoyment and exercise. Petitioner then
may opt to exercise only one of two remedies so as not to violate the rule against splitting a cause of
action.

As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc. vs. Icarangal.[24]

For non-payment of a note secured by mortgage, the creditor has a single cause of action against the
debtor. This single cause of action consists in the recovery of the credit with execution of the security. In
other words, the creditor in his action may make two demands, the payment of the debt and the
foreclosure of his mortgage. But both demands arise from the same cause, the non-payment of the
debt, and for that reason, they constitute a single cause of action. Though the debt and the mortgage
constitute separate agreements, the latter is subsidiary to the former, and both refer to one and the
same obligation.Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rules above stated, cannot split up his single cause of action by
filing a complaint for payment of the debt, and thereafter another complaint for foreclosure of the
mortgage. If he does so, the filing of the first complaint will bar the subsequent complaint. By allowing
the creditor to file two separate complaints simultaneously or successively, one to recover his credit and
another to foreclose his mortgage, we will, in effect, be authorizing him plural redress for a single
breach of contract at so much cost to the courts and with so much vexation and oppression to the
debtor.

Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine enunciated in
Caltex, wherein this High Court relaxed the application of the general rules to wit:

In the present case, however, we shall not follow this rule to the letter but declare that it is the
collection suit which was waived and/or abandoned. This ruling is more in harmony with the principles
underlying our judicial system. It is of no moment that the collection suit was filed ahead, what is
determinative is the fact that the foreclosure proceedings ended even before the decision in the
collection suit was rendered. x x x

Notably, though, petitioner took the Caltex ruling out of context. We must stress that the Caltex case
was never intended to overrule the well-entrenched doctrine enunciated in Bachrach, which to our mind
still finds applicability in cases of this sort. To reiterate, Bachrach is still good law.

We then quote the decision[25]of the trial court, in the present case, thus:

The aforequoted ruling in Caltex is the exception rather than the rule, dictated by the peculiar
circumstances obtaining therein. In the said case, the Supreme Court chastised Caltex for making x x x a
mockery of our judicial system when it initially filed a collection suit then, during the pendency thereof,
foreclosed extrajudicially the mortgaged property which secured the indebtedness, and still pursued the
collection suit to the end. Thus, to prevent a mockery of our judicial system, the collection suit had to be
nullified because the foreclosure proceedings have already been pursued to their end and can no longer
be undone.

xxxxxxxxx

In the case at bar, it has not been shown whether the defendant pursued to the end or are still pursuing
the collection suits filed in foreign courts. There is no occasion, therefore, for this court to apply the
exception laid down by the Supreme Court in Caltex, by nullifying the collection suits. Quite obviously,
too, the aforesaid collection suits are beyond the reach of this Court. Thus the only way the court may
prevent the spector of a creditor having plural redress for a single breach of contract is by holding, as
the Court hereby holds, that the defendant has waived the right to foreclose the mortgages constituted
by the plaintiff on its properties originally covered by Transfer Certificates of Title Nos. T-78759, T-
78762, T-78760 and T-78761. (RTC Decision pp., 10-11)

In this light, the actuations of Caltex are deserving of severe criticism, to say the least. [26]

Moreover, petitioner attempts to mislead this Court by citing the case of PCIB vs. IAC.[27] Again,
petitioner tried to fit a square peg in a round hole. It must be stressed that far from overturning the
doctrine laid down in Bachrach, this Court in PCIB buttressed its firm stand on this issue by declaring:

While the law allows a mortgage creditor to either institute a personal action for the debt or a real
action to foreclosure the mortgage, he cannot pursue both remedies simultaneously or successively as
was done by PCIB in this case.

xxxxxxxxx

Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the 1.3 million promissory note
secured by real estate mortgages and subsequently filed a petition for extrajudicial foreclosure, it
violates the rule against splitting a cause of action.

Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing four civil
suits before foreign courts, necessarily abandoned the remedy to foreclose the real estate mortgages
constituted over the properties of third-party mortgagor and herein private respondent ARC. Moreover,
by filing the four civil actions and by eventually foreclosing extrajudicially the mortgages, petitioner in
effect transgressed the rules against splitting a cause of action well-enshrined in jurisprudence and our
statute books.

In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure after the collection suit
was filed, considering that the creditor should not be afforded plural redress for a single breach of
contract. For cause of action should not be confused with the remedy created for its enforcement. [28]

Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy chosen in
addressing the creditors cause. Hence, a suit brought before a foreign court having competence and
jurisdiction to entertain the action is deemed, for this purpose, to be within the contemplation of the
remedy available to the mortgagee-creditor. This pronouncement would best serve the interest of
justice and fair play and further discourage the noxious practice of splitting up a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to petitioner is the governing law
with regard to the principal agreements, the mortgagee does not lose its security interest by simply
filing civil actions for sums of money.[29]

We rule in the negative.

This argument shows desperation on the part of petitioner to rivet its crumbling cause. In the case at
bench, Philippine law shall apply notwithstanding the evidence presented by petitioner to prove the
English law on the matter.

In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction that there is
no judicial notice of any foreign law. A foreign law must be properly pleaded and proved as a
fact.[30] Thus, if the foreign law involved is not properly pleaded and proved, our courts will presume that
the foreign law is the same as our local or domestic or internal law. [31] This is what we refer to as the
doctrine of processual presumption.

In the instant case, assuming arguendo that the English Law on the matter were properly pleaded and
proved in accordance with Section 24, Rule 132 of the Rules of Court and the jurisprudence laid down
in Yao Kee, et al. vs. Sy-Gonzales,[32] said foreign law would still not find applicability.

Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order shall not be applied. [33]

Additionally, prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determinations or conventions agreed upon in a foreign country. [34]

The public policy sought to be protected in the instant case is the principle imbedded in our jurisdiction
proscribing the splitting up of a single cause of action.

Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent -

If two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the others.

Moreover, foreign law should not be applied when its application would work undeniable injustice to
the citizens or residents of the forum. To give justice is the most important function of law; hence, a law,
or judgment or contract that is obviously unjust negates the fundamental principles of Conflict of
Laws.[35]

Clearly then, English Law is not applicable.

As to the second pivotal issue, we hold that the private respondent is entitled to the award of actual or
compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially foreclosing the real
estate mortgages constituted a clear violation of the rights of herein private respondent ARC, as third-
party mortgagor.

Actual or compensatory damages are those recoverable because of pecuniary loss in business, trade,
property, profession, job or occupation and the same must be proved, otherwise if the proof is flimsy
and non-substantial, no damages will be given.[36] Indeed, the question of the value of property is always
a difficult one to settle as valuation of real property is an imprecise process since real estate has no
inherent value readily ascertainable by an appraiser or by the court.[37] The opinions of men vary so
much concerning the real value of property that the best the courts can do is hear all of the witnesses
which the respective parties desire to present, and then, by carefully weighing that testimony, arrive at
a conclusion which is just and equitable.[38]

In the instant case, petitioner assails the Court of Appeals for relying heavily on the valuation made by
Philippine Appraisal Company. In effect, BANTSA questions the act of the appellate court in giving due
weight to the appraisal report composed of twenty three pages, signed by Mr. Lauro Marquez and
submitted as evidence by private respondent. The appraisal report, as the records would readily show,
was corroborated by the testimony of Mr. Reynaldo Flores, witness for private respondent.

On this matter, the trial court observed:

The record herein reveals that plaintiff-appellee formally offered as evidence the appraisal report dated
March 29, 1993 (Exhibit J, Records, p. 409), consisting of twenty three (23) pages which set out in detail
the valuation of the property to determine its fair market value (TSN, April 22, 1994, p. 4), in the amount
of P99,986,592.00 (TSN, ibid., p. 5), together with the corroborative testimony of one Mr. Reynaldo F.
Flores, an appraiser and director of Philippine Appraisal Company, Inc. (TSN, ibid., p. 3). The latters
testimony was subjected to extensive cross-examination by counsel for defendant-appellant (TSN, April
22, 1994, pp. 6-22).[39]

In the matter of credibility of witnesses, the Court reiterates the familiar and well-entrenched rule that
the factual findings of the trial court should be respected. [40] The time-tested jurisprudence is that the
findings and conclusions of the trial court on the credibility of witnesses enjoy a badge of respect for the
reason that trial courts have the advantage of observing the demeanor of witnesses as they testify.[41]

This Court will not alter the findings of the trial court on the credibility of witnesses, principally because
they are in a better position to assess the same than the appellate court.[42] Besides, trial courts are in a
better position to examine real evidence as well as observe the demeanor of witnesses. [43]

Similarly, the appreciation of evidence and the assessment of the credibility of witnesses rest primarily
with the trial court.[44] In the case at bar, we see no reason that would justify this Court to disturb the
factual findings of the trial court, as affirmed by the Court of Appeals, with regard to the award of actual
damages.

In arriving at the amount of actual damages, the trial court justified the award by presenting the
following ratiocination in its assailed decision [45], to wit:

Indeed, the Court has its own mind in the matter of valuation. The size of the subject real properties are
(sic) set forth in their individual titles, and the Court itself has seen the character and nature of said
properties during the ocular inspection it conducted. Based principally on the foregoing, the Court
makes the following observations:

1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del Monte, Bulacan, which is
(sic) not distant from Metro Manila the biggest urban center in the Philippines and are easily accessible
through well-paved roads;
2. The properties are suitable for development into a subdivision for low cost housing, as admitted by
defendants own appraiser (TSN, May 30, 1994, p. 31);

3. The pigpens which used to exist in the property have already been demolished. Houses of strong
materials are found in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing
community. It has even been shown that the house of the Barangay Chairman is located adjacent to the
property in question (Exh. 27), and the only remaining piggery (named Cherry Farm) in the vicinity is
about 2 kilometers away from the western boundary of the property in question (TSN, November 19, p.
3);

4. It will not be hard to find interested buyers of the property, as indubitably shown by the fact that on
March 18, 1994, ICCS (the buyer during the foreclosure sale) sold the consolidated real estate properties
to Stateland Investment Corporation, in whose favor new titles were issued, i.e., TCT Nos. T-
187781(m); T-187782(m), T-187783(m); T-16653P(m) and T-166521(m) by the Register of Deeds of
Meycauayan (sic), Bulacan;

5. The fact that ICCS was able to sell the subject properties to Stateland Investment Corporation for
Thirty Nine Million (P39,000,000.00) Pesos, which is more than triple defendants appraisal (Exh. 2)
clearly shows that the Court cannot rely on defendants aforesaid estimate (Decision, Records, p. 603).

It is a fundamental legal aphorism that the conclusions of the trial judge on the credibility of witnesses
command great respect and consideration especially when the conclusions are supported by the
evidence on record.[46] Applying the foregoing principle, we therefore hold that the trial court
committed no palpable error in giving credence to the testimony of Reynaldo Flores, who according to
the records, is a licensed real estate broker, appraiser and director of Philippine Appraisal Company, Inc.
since 1990.[47] As the records show, Flores had been with the company for 26 years at the time of his
testimony.

Of equal importance is the fact that the trial court did not confine itself to the appraisal report dated 29
March 1993, and the testimony given by Mr. Reynaldo Flores, in determining the fair market value of
the real property. Above all these, the record would likewise show that the trial judge in order to
appraise himself of the characteristics and condition of the property, conducted an ocular inspection
where the opposing parties appeared and were duly represented.

Based on these considerations and the evidence submitted, we affirm the ruling of the trial court as
regards the valuation of the property

x x x a valuation of Ninety Nine Million Pesos (P99,000,000.00) for the 39-hectare properties (sic)
translates to just about Two Hundred Fifty Four Pesos (P254.00) per square meter. This appears to be, as
the court so holds, a better approximation of the fair market value of the subject properties. This is the
amount which should be restituted by the defendant to the plaintiff by way of
actual or compensatorydamages x x x.[48]

Further, petitioner ascribes error to the lower court for awarding an amount allegedly not asked nor
prayed for in private respondents complaint.
Notwithstanding the fact that the award of actual and compensatory damages by the lower court
exceeded that prayed for in the complaint, the same is nonetheless valid, subject to certain
qualifications.

On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:

SEC. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the
pleadings are tried with the express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgement; but failure to amend does not affect the result
of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with
liberality if the presentation of the merits of the action and the ends of substantial justice will be
subserved thereby. The court may grant a continuance to enable the amendment to be made.

The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de Agricultures de Talisay-
Silay, Inc.[49] citing Northern Cement Corporation vs. Intermediate Appellate Court [50] is enlightening:

There have been instances where the Court has held that even without the necessary amendment, the
amount proved at the trial may be validly awarded, as in Tuazon v. Bolanos (95 Phil. 106), where we said
that if the facts shown entitled plaintiff to relief other than that asked for, no amendment to the
complaint was necessary, especially where defendant had himself raised the point on which recovery
was based.The appellate court could treat the pleading as amended to conform to the evidence
although the pleadings were actually not amended. Amendment is also unnecessary when only clerical
error or non substantial matters are involved, as we held in Bank of the Philippine Islands vs. Laguna (48
Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed that the rule on amendment need not be
applied rigidly, particularly where no surprise or prejudice is caused the objecting party. And in the
recent case of National Power Corporation vs. Court of Appeals (113 SCRA 556), we held that where
there is a variance in the defendants pleadings and the evidence adduced by it at the trial, the Court
may treat the pleading as amended to conform with the evidence.

It is the view of the Court that pursuant to the above-mentioned rule and in light of the decisions cited,
the trial court should not be precluded from awarding an amount higher than that claimed in the
pleading notwithstanding the absence of the required amendment. But it is upon the condition that the
evidence of such higher amount has been presented properly, with full opportunity on the part of the
opposing parties to support their respective contentions and to refute each others evidence.

The failure of a party to amend a pleading to conform to the evidence adduced during trial does not
preclude an adjudication by the court on the basis of such evidence which may embody new issues not
raised in the pleadings, or serve as a basis for a higher award of damages. Although the pleading may
not have been amended to conform to the evidence submitted during trial, judgment may nonetheless
be rendered, not simply on the basis of the issues alleged but also on the basis of issues discussed and
the assertions of fact proved in the course of trial. The court may treat the pleading as if it had been
amended to conform to the evidence, although it had not been actually so amended. Former Chief
Justice Moran put the matter in this way:
`When evidence is presented by one party, with the expressed or implied consent of the adverse party,
as to issues not alleged in the pleadings, judgment may be rendered validly as regards those issues,
which shall be considered as if they have been raised in the pleadings. There is implied consent to the
evidence thus presented when the adverse party fails to object thereto.

Clearly, a court may rule and render judgment on the basis of the evidence before it even though the
relevant pleading had not been previously amended, so long as no surprise or prejudice is thereby
caused to the adverse party. Put a little differently, so long as the basis requirements of fair play had
been met, as where litigants were given full opportunity to support their respective contentions and to
object to or refute each others evidence, the court may validly treat the pleadings as if they had been
amended to conform to the evidence and proceed to adjudicate on the basis of all the evidence before
it.

In the instant case, inasmuch as the petitioner was afforded the opportunity to refute and object to the
evidence, both documentary and testimonial, formally offered by private respondent, the rudiments of
fair play are deemed satisfied. In fact, the testimony of Reynaldo Flores was put under scrutiny during
the course of the cross-examination. Under these circumstances, the court acted within the bounds of
its jurisdiction and committed no reversible error in awarding actual damages the amount of which is
higher than that prayed for. Verily, the lower courts actuations are sanctioned by the Rules and
supported by jurisprudence.

Similarly, we affirm the grant of exemplary damages although the amount of Five Million Pesos
(P5,000,000.00) awarded, being excessive, is subject to reduction. Exemplary or corrective damages are
imposed, by way of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.[51] Considering its purpose, it must be fair and reasonable in every
case and should not be awarded to unjustly enrich a prevailing party. [52] In our view, an award of
P50,000.00 as exemplary damages in the present case qualifies the test of reasonableness.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The decision of the
Court of Appeals is hereby AFFIRMED with MODIFICATION of the amount awarded as exemplary
damages. Accordingly, petitioner is hereby ordered to pay private respondent the sum of
P99,000,000.00 as actual or compensatory damages; P50,000.00 as exemplary damage and the costs of
suit.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.

[1]
CA Decision in CA-G.R. CV No. 51094, penned by Justice Ricardo P. Galvez and concurred in by Justice
Fidel V. Purisima and Justice B.A. Adefuin-De la Cruz; Rollo, pp. 38-58.
[2]
CA Resolution in CA G.R. CV No. 51094, dated 22 May 1998; Rollo, p. 60.
[3]
Rollo, p. 38.
[4]
Ibid., p. 39.
[5]
Ibid.
[6]
Ibid., p. 40.
[7]
Ibid.
[8]
Ibid.
[9]
Ibid.
[10]
Rollo, p. 41.
[11]
Ibid.
[12]
Ibid.
[13]
Rollo,, pp. 41-42.
[14]
Rollo, pp. 10-36.
[15]
Bachrach Motor Co., Inc. vs. Esteban Icarangal, 68 Phil. 287.
[16]
154 SCRA 446.
[17]
71 Phil. 448.
[18]
105 Phil. 886.
[19]
Danao vs. Court of Appeals 154 SCRA 446.
[20]
Article 2085, Civil Code; Lustan vs. Court of Appeals, 266 SCRA 663.
[21]
Cerna vs. Court of Appeals 220 SCRA 517.
[22]
Ibid.
[23]
176 SCRA 741.
[24]
68 Phil. 287.
[25]
Rollo, p.94.
[26]
Caltex Philippines, Inc. vs. Intermediate Appellate Court, 176 SCRA 741.
[27]
196 SCRA 29.
[28]
Bachrach Motor vs. Icarangal, 68 Phil. 287.
[29]
Rollo, p.16.7
[30]
Adong vs. Cheong Seng Gee, 43 Phil. 43; Sy Joc Lieng vs. Syquia, 16 Phil. 137.
[31]
Lim vs. Collector, 36 Phil. 472.
[32]
167 SCRA 736.
[33]
Philippine Conflict of Laws, Eighth Edition, 1996, Paras, page 46.
[34]
Article 17, par. 3, Civil Code.
[35]
Philippine Conflict of Laws, Eight Edition, 1996, Paras, p. 60.
[36]
Perfecto vs. Gonzales, 128 SCRA 640, as cited in Danao vs. Court of Appeals, 154 SCRA 447.
[37]
City of Manila vs. Corrales, 32 Phil. 85, 96.
[38]
22 Am. Jur. 2d 193.
[39]
Rollo, p. 103.
[40]
People vs. Morales, 241 SCRA 267.
[41]
People vs. Gamiao, 240 SCRA 254.
[42]
People vs. Cascalla, 240 SCRA 482.
[43]
Lee Eng Hong vs. Court of Appeals, 241 SCRA 392.
[44]
Ibid.
[45]
Rollo, pp. 46-47.
[46]
People vs. Asoy, 251 SCRA 682.
[47]
TSN, April 22, 1994, p. 6.
[48]
Decision, Records, ibid.
[49]
247 SCRA 361, 377-378.
[50]
158 SCRA 408.
[51]
Article 2229, Civil Code.
[52]
Philtranco Service Exporters, Inc. vs. Court of Appeals, 273 SCRA 562.