FIRST DIVISION

[G.R. No. 136804. February 19, 2003]

MANUFACTURERS
HANOVER
TRUST
CO. and/or
CHEMICAL
BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set
aside the Court of Appeals[1] Decision of August 24, 1998 and Resolution of
December 14, 1998 in CA-G.R. SP No. 42310 [2] affirming the trial courts
denial of petitioners motion for partial summary judgment.
The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero (Guerrero for brevity)
filed a complaint for damages against petitioner Manufacturers Hanover Trust
Co. and/or Chemical Bank (the Bank for brevity) with the Regional Trial Court
of Manila (RTC for brevity). Guerrero sought payment of damages allegedly
for (1) illegally withheld taxes charged against interests on his checking
account with the Bank; (2) a returned check worth US$18,000.00 due to
signature verification problems; and (3) unauthorized conversion of his
account. Guerrero amended his complaint on April 18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that
by stipulation Guerreros account is governed by New York law and this law
does
not
permit
any
of
Guerreros
claims
except
actual
damages. Subsequently, the Bank filed a Motion for Partial Summary
Judgment seeking the dismissal of Guerreros claims for consequential,
nominal, temperate, moral and exemplary damages as well as attorneys fees
on the same ground alleged in its Answer. The Bank contended that the trial
should be limited to the issue of actual damages.Guerrero opposed the
motion.

The affidavit of Alyssa Walden, a New York attorney, supported the Banks
Motion for Partial Summary Judgment. Alyssa Waldens affidavit (Walden
affidavit for brevity) stated that Guerreros New York bank account stipulated
that the governing law is New York law and that this law bars all of Guerreros
claims except actual damages. The Philippine Consular Office in New York
authenticated the Walden affidavit.
The RTC denied the Banks Motion for Partial Summary Judgment and its
motion for reconsideration on March 6, 1996 and July 17, 1996,
respectively. The Bank filed a petition for certiorari and prohibition with the
Court of Appeals assailing the RTC Orders. In its Decision dated August 24,
1998, the Court of Appeals dismissed the petition. On December 14, 1998,
the Court of Appeals denied the Banks motion for reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for
partial summary judgment. The Court of Appeals ruled that the Walden
affidavit does not serve as proof of the New York law and jurisprudence relied
on by the Bank to support its motion. The Court of Appeals considered the
New York law and jurisprudence as public documents defined in Section 19,
Rule 132 of the Rules on Evidence, as follows:
SEC. 19. Classes of Documents. For the purpose of their presentation in
evidence, documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and public
officers, whether of the Philippines, or of a foreign country;
x x x.
The Court of Appeals opined that the following procedure outlined in
Section 24, Rule 132 should be followed in proving foreign law:
SEC. 24. Proof of official record. The record of public documents referred to
in paragraph (a) of Section 19, when admissible for any purpose, may be

evidenced by an official publication thereof or by a copy attested by the

officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate
that such officer has the custody. If the office in which the record is kept is in
a foreign country, the certificate may be made by a secretary of the embassy
or legation, consul general, consul, vice consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the foreign
country in which the record is kept, and authenticated by the seal of his
office.
The Court of Appeals likewise rejected the Banks argument that Section
2, Rule 34 of the old Rules of Court allows the Bank to move with the
supporting Walden affidavit for partial summary judgment in its favor. The
Court of Appeals clarified that the Walden affidavit is not the supporting
affidavit referred to in Section 2, Rule 34 that would prove the lack of
genuine issue between the parties. The Court of Appeals concluded that
even if the Walden affidavit is used for purposes of summary judgment, the
Bank must still comply with the procedure prescribed by the Rules to prove
the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error
in x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TO SUPPORT ITS MOTION
FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;
x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES FOREIGN LAW
AS A FACT, IS HEARSAY AND THEREBY CANNOT SERVE AS PROOF OF THE
NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR
SUMMARY JUDGMENT x x x.[3]
First, the Bank argues that in moving for partial summary judgment, it
was entitled to use the Walden affidavit to prove that the stipulated foreign
law bars the claims for consequential, moral, temperate, nominal and
exemplary damages and attorneys fees. Consequently, outright dismissal by
summary judgment of these claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the
requirements of Rule 35 on summary judgments and those of a trial on the

merits in considering the Walden affidavit as hearsay. The Bank points out
that the Walden affidavit is not hearsay since Rule 35 expressly permits the
use of affidavits.
Lastly, the Bank argues that since Guerrero did not submit any opposing
affidavit to refute the facts contained in the Walden affidavit, he failed to
show the need for a trial on his claims for damages other than actual.
The Courts Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to
Section 2, Rule 34 of the old Rules of Court which reads:
Section 2. Summary judgment for defending party. A party against whom a
claim, counterclaim, or cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting affidavits for a summary
judgment in his favor as to all or any part thereof.
A court may grant a summary judgment to settle expeditiously a case if,
on motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved,
except the amount of damages. In such event, the moving party is entitled to
a judgment as a matter of law.[4]
In a motion for summary judgment, the crucial question is: are the issues
raised in the pleadings genuine, sham or fictitious, as shown by affidavits,
depositions or admissions accompanying the motion?[5]
A genuine issue means an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious or contrived so as
not to constitute a genuine issue for trial.[6]
A perusal of the parties respective pleadings would show that there are
genuine issues of fact that necessitate formal trial. Guerreros complaint
before the RTC contains a statement of the ultimate facts on which he relies
for his claim for damages. He is seeking damages for what he asserts as
illegally withheld taxes charged against interests on his checking account
with the Bank, a returned check worth US$18,000.00 due to signature
verification problems, and unauthorized conversion of his account. In its

Answer, the Bank set up its defense that the agreed foreign law to govern
their contractual relation bars the recovery of damages other than
actual. Apparently, facts are asserted in Guerreros complaint while specific
denials and affirmative defenses are set out in the Banks answer.
True, the court can determine whether there are genuine issues in a case
based merely on the affidavits or counter-affidavits submitted by the parties
to the court. However, as correctly ruled by the Court of Appeals, the Banks
motion for partial summary judgment as supported by the Walden affidavit
does not demonstrate that Guerreros claims are sham, fictitious or
contrived. On the contrary, the Walden affidavit shows that the facts and
material allegations as pleaded by the parties are disputed and there are
substantial triable issues necessitating a formal trial.
There can be no summary judgment where questions of fact are in issue
or where material allegations of the pleadings are in dispute. [7] The resolution
of whether a foreign law allows only the recovery of actual damages is a
question of fact as far as the trial court is concerned since foreign laws do
not prove themselves in our courts.[8] Foreign laws are not a matter of judicial
notice.[9] Like any other fact, they must be alleged and proven. Certainly, the
conflicting allegations as to whether New York law or Philippine law applies to
Guerreros claims present a clear dispute on material allegations which can
be resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a
sovereign authority or tribunal may be proved by (1) an official
publication thereof or (2) a copy attested by the officer having the
legal custody thereof. Such official publication or copy must be
accompanied, if the record is not kept in the Philippines, with a certificate
that the attesting officer has the legal custody thereof. The certificate may
be issued by any of the authorized Philippine embassy or consular officials
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and must be under the official seal of the
attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v.
Court of Appeals[10] which held that:
x x x:

Although it is desirable that foreign law be proved in accordance with the

above rule, however, the Supreme Court held in the case of Willamette Iron
and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of
the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law of
San Francisco, California, who quoted verbatim a section of California Civil
Code and who stated that the same was in force at the time the obligations
were contracted, as sufficient evidence to establish the existence of said
law. Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al., upheld the Tax Court in considering the
pertinent law of California as proved by the respondents witness. In that
case, the counsel for respondent testified that as an active member of the
California Bar since 1951, he is familiar with the revenue and taxation laws of
the State of California. When asked by the lower court to state the pertinent
California law as regards exemption of intangible personal properties, the
witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and
Revenue Code as published in Derrings California Code, a publication of
Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the
cited section was offered in evidence by respondents. Likewise, in several
naturalization cases, it was held by the Court that evidence of the law of a
foreign country on reciprocity regarding the acquisition of citizenship,
although not meeting the prescribed rule of practice, may be allowed and
used as basis for favorable action, if, in the light of all the circumstances, the
Court is satisfied of the authenticity of the written proof offered. Thus, in a
number of decisions, mere authentication of the Chinese Naturalization Law
by the Chinese Consulate General of Manila was held to be competent proof
of that law. (Emphasis supplied)
The Bank, however, cannot rely on Willamette Iron and Steel Works
v. Muzzal or Collector of Internal Revenue v. Fisher to support its
cause. These cases involved attorneys testifying in open court during the
trial in the Philippines and quoting the particular foreign laws sought to be
established. On the other hand, the Walden affidavit was taken abroad ex
parteand the affiant never testified in open court. The Walden affidavit
cannot be considered as proof of New York law on damages not only because
it is self-serving but also because it does not state the specific New York law
on damages. We reproduce portions of the Walden affidavit as follows:

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

8. As a matter of New York law, a claim for emotional distress cannot be

recovered for a breach of contract. Geler v. National Westminster Bank
U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes,
Ltd., 150 A.D.2d 860,540 N.Y.S.2d 387, 390 (3d Dept 1989) Martin v. Donald
Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dept 1976). Damage to
reputation is also not recoverable for a contract. Motif Construction Corp. v.
Buffalo Savings Bank, 374 N.Y.S.2d at 869-70.
9. In cases where the issue is the breach of a contract to purchase stock,
New York courts will not take into consideration the performance of the stock
after the breach. Rather, damages will be based on the value of the stock at
the time of the breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558,
559 (4th Dept 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d
1023 (1983).
10. Under New York law, a party can only get consequential damages if they
were the type that would naturally arise from the breach and if they were
brought within the contemplation of parties as the probable result of the
breach at the time of or prior to contracting. Kenford Co., Inc. v. Country of
Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v.
Fargo, 223 N.Y. 32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys fees unless
they are provided by contract or statute. E.g., Geler v. National Westminster
Bank, 770 F. Supp. 210, 213 (S.D.N.Y. 1991);Camatron Sewing Mach, Inc. v.
F.M. Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dept
1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280,
281 (1st Dept 1991).There is no statute that permits attorneys fees in a case
of this type.
12. Exemplary, or punitive damages are not allowed for a breach of contract,
even where the plaintiff claims the defendant acted with malice. Geler v.
National Westminster Bank, 770 F.Supp. 210, 215 (S.D.N.Y. 1991); Catalogue
Service of chester[11]_v. Insurance Co. of North America, 74 A.D.2d 837, 838,
425 N.Y.S.2d 635, 637 (2d Dept 1980); Senior v. Manufacturers Hanover Trust
Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dept 1985).
13. Exemplary or punitive damages may be recovered only where it is
alleged and proven that the wrong supposedly committed by defendant
amounts to a fraud aimed at the public generally and involves a high moral

culpability. Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d
488 (1961).
14. Furthermore, it has been consistently held under New York law that
exemplary damages are not available for a mere breach of contract for in
such a case, as a matter of law, only a private wrong and not a public right is
involved. Thaler v. The North Insurance Company, 63 A.D.2d 921, 406
N.Y.S.2d 66 (1st Dept 1978).[12]
The Walden affidavit states conclusions from the affiants personal
interpretation and opinion of the facts of the case vis a vis the alleged laws
and jurisprudence without citing any law in particular. The citations in the
Walden affidavit of various U.S. court decisions do not constitute proof of the
official records or decisions of the U.S. courts. While the Bank attached
copies of some of the U.S. court decisions cited in the Walden affidavit, these
copies do not comply with Section 24 of Rule 132 on proof of official records
or decisions of foreign courts.
The Banks intention in presenting the Walden affidavit is to prove New
York law and jurisprudence. However, because of the failure to comply with
Section 24 of Rule 132 on how to prove a foreign law and decisions of foreign
courts, the Walden affidavit did not prove the current state of New York law
and jurisprudence. Thus, the Bank has only alleged, but has not proved, what
New York law and jurisprudence are on the matters at issue.
Next, the Bank makes much of Guerreros failure to submit an opposing
affidavit to the Walden affidavit. However, the pertinent provision of Section
3, Rule 35 of the old Rules of Court did not make the submission of an
opposing affidavit mandatory, thus:
SEC. 3. Motion and proceedings thereon. The motion shall be served at least
ten (10) days before the time specified for the hearing. The adverse party
prior to the day of hearing may serve opposing affidavits. After the
hearing, the judgment sought shall be rendered forthwith if the pleadings,
depositions and admissions on file, together with the affidavits, show that,
except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter
of law. (Emphasis supplied)
It is axiomatic that the term may as used in remedial law, is only permissive
and not mandatory.[13]

Guerrero cannot be said to have admitted the averments in the Banks

motion for partial summary judgment and the Walden affidavit just because
he failed to file an opposing affidavit.Guerrero opposed the motion for partial
summary judgment, although he did not present an opposing
affidavit. Guerrero may not have presented an opposing affidavit, as there
was no need for one, because the Walden affidavit did not establish what the
Bank intended to prove. Certainly, Guerrero did not admit, expressly or
impliedly, the veracity of the statements in the Walden affidavit. The Bank
still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit. As the party moving for
summary judgment, the Bank has the burden of clearly demonstrating the
absence of any genuine issue of fact and that any doubt as to the existence
of such issue is resolved against the movant.[14]
Moreover, it would have been redundant and pointless for Guerrero to
submit an opposing affidavit considering that what the Bank seeks to be
opposed is the very subject matter of the complaint. Guerrero need not file
an opposing affidavit to the Walden affidavit because his complaint itself
controverts the matters set forth in the Banks motion and the Walden
affidavit. A party should not be made to deny matters already averred in his
complaint.
There being substantial triable issues between the parties, the courts a
quo correctly denied the Banks motion for partial summary judgment. There
is a need to determine by presentation of evidence in a regular trial if the
Bank is guilty of any wrongdoing and if it is liable for damages under the
applicable laws.
This case has been delayed long enough by the Banks resort to a motion
for partial summary judgment. Ironically, the Bank has successfully defeated
the very purpose for which summary judgments were devised in our rules,
which is, to aid parties in avoiding the expense and loss of time involved in a
trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision
dated August 24, 1998 and the Resolution dated December 14, 1998 of the
Court of Appeals in CA-G.R. SP No. 42310 is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur.

Ynares-Santiago, J., no part.

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, T186272, 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), T16653P(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 T78761, 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 thirdparty 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,
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.
[23]

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 wellentrenched 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 nonsubstantial, 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 39hectare 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.

FIRST DIVISION
[G.R. No. 113191. September 18, 1996]
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE
CASTRO and JOSE C. MAGNAYI, respondents.
DECISION
VITUG, J.:

The questions raised in the petition for certiorari are a few coincidental
matters relative to the diplomatic immunity extended to the Asian
Development Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 0001-0690-93 for his alleged illegal dismissal by ADB and the latter's violation
of the "labor-only" contracting law. Two summonses were served, one sent
directly to the ADB and the other through the Department of Foreign Affairs
("DFA"), both with a copy of the complaint. Forthwith, the ADB and the DFA
notified respondent Labor Arbiter that the ADB, as well as its President and
Officers, were covered by an immunity from legal process except for
borrowings, guaranties or the sale of securities pursuant to Article 50(1) and
Article 55 of the Agreement Establishing the Asian Development Bank (the
"Charter") in relation to Section 5 and Section 44 of the Agreement Between
The Bank And The Government Of The Philippines Regarding The Bank's
Headquarters (the "Headquarters Agreement").
The Labor Arbiter took cognizance of the complaint on the impression
that the ADB had waived its diplomatic immunity from suit. In time, the
Labor Arbiter rendered his decision, dated31 August 1993, that concluded:
"WHEREFORE, above premises considered, judgment is hereby rendered
declaring the complainant as a regular employee of respondent ADB, and the
termination of his services as illegal. Accordingly, respondent Bank is hereby
ordered:
"1. To immediately reinstate the complainant to his former position
effective September 16, 1993;
"2. To pay complainant full backwages from December 1, 1992 to September
15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months);
"3. And to pay complainants other benefits and without loss of seniority
rights and other privileges and benefits due a regular employee of Asian
Development Bank from the time he was terminated on December 31, 1992;
"4. To pay 10% attorney's fees of the total entitlements."[1]
The ADB did not appeal the decision. Instead, on 03 November 1993, the
DFA referred the matter to the National Labor Relations Commission

("NLRC"); in its referral, the DFA sought a "formal vacation of the void
judgment." Replying to the letter, the NLRC Chairman, wrote:
"The undersigned submits that the request for the 'investigation' of Labor
Arbiter Nieves de Castro, by the National Labor Relations Commission, has
been erroneously premised on Art. 218(c) of the Labor Code, as cited in the
letter of Secretary Padilla, considering that the provision deals with 'a
question, matter or controversy within its (the Commission) jurisdiction'
obviously referring to a labor dispute within the ambit of Art. 217 (on
jurisdiction of Labor Arbiters and the Commission over labor cases).
"The procedure, in the adjudication of labor cases, including raising of
defenses, is prescribed by law. The defense of immunity could have been
raised before the Labor Arbiter by a special appearance which, naturally,
may not be considered as a waiver of the very defense being raised. Any
decision thereafter is subject to legal remedies, including appeals to the
appropriate division of the Commission and/or a petition for certiorari with
the Supreme Court, under Rule 65 of the Rules of Court. Except where an
appeal is seasonably and properly made, neither the Commission nor the
undersigned may review, or even question, the propriety of any decision by a
Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen
Commissioners) only to promulgate rules of procedure or to formulate
policies (Art. 213, Labor Code).
"On the other hand, while the undersigned exercises 'administrative
supervision over the Commission and its regional branches and all its
personnel, including the Executive Labor Arbiters and Labor Arbiters'
(penultimate paragraph, Art. 213, Labor Code), he does not have the
competence to investigate or review any decision of a Labor
Arbiter. However, on the purely administrative aspect of the decision-making
process, he may cause that an investigation be made of any misconduct,
malfeasance or misfeasance, upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter
Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is
suggested that an appropriate complaint be lodged with the Office of the
Ombudsman.
"Thank you for your kind attention."[2]

Dissatisfied, the DFA lodged the instant petition for certiorari. In this
Court's resolution of 31 January 1994, respondents were required to
comment. Petitioner was later constrained to make an application for a
restraining order and/or writ of preliminary injunction following the issuance,
on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution,
dated 07 April 1994, the Court issued the temporary restraining order prayed
for.
The Office of the Solicitor General (OSG), in its comment of 26 May 1994,
initially assailed the claim of immunity by the ADB. Subsequently, however, it
submitted a Manifestation (dated 20 June 1994) stating, among other things,
that "after a thorough review of the case and the records," it became
convinced that ADB, indeed, was correct in invoking its immunity from suit
under the Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of or in connection with the exercise of its powers to borrow
money, to guarantee obligations, or to buy and sell or underwrite the sale of
securities.[3]
Under Article 55 thereof All Governors, Directors, alternates, officers and employees of the Bank,
including experts performing missions for the Bank:
(1) shall be immune from legal process with respect of acts performed by
them in their official capacity, except when the Bank waives the immunity.[4]
Like provisions are found in the Headquarters Agreement. Thus, its Section 5
reads:
"The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of, or in connection with, the exercise of its powers to
borrow money, to guarantee obligations, or to buy and sell or underwrite the
sale of securities.[5]

And, with respect to certain officials of the bank, Section 44 of the

agreement states:
Governors, other representatives of Members, Directors, the President, VicePresident and executive officers as may be agreed upon between the
Government and the Bank shall enjoy, during their stay in the Republic of the
Philippines in connection with their official duties with the Bank:
xxxxxxxxx
(b) Immunity from legal process of every kind in respect of words spoken or
written and all acts done by them in their official capacity.[6]
The above stipulations of both the Charter and Headquarters Agreement
should be able, nay well enough, to establish that, except in the specified
cases of borrowing and guarantee operations, as well as the purchase, sale
and underwriting of securities, the ADB enjoys immunity from legal process
of every form. The Banks officers, on their part, enjoy immunity in respect of
all acts performed by them in their official capacity. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine
government which must be respected.
In World Health Organization vs. Aquino,[7] we have declared:
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government x x x it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal law officer of the
government, x x x or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise their
jurisdiction x x x as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that `in such cases the
judicial department of government follows the action of the political branch
and will not embarrass the latter by assuming an antagonistic jurisdiction.'"[8]
To the same effect is the decision in International Catholic Migration
Commission vs. Calleja,[9] which has similarly deemed the Memoranda of the

Legal Adviser of the Department of Foreign Affairs to be "a categorical

recognition by the Executive Branch of Government that ICMC x x x enjoy(s)
immunities accorded to international organizations" and which determination
must be held "conclusive upon the Courts in order not to embarrass a
political department of Government. In the instant case, the filing of the
petition by the DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition of ADB's immunity.
Being an international organization that has been extended a diplomatic
status, the ADB is independent of the municipal law. [10] In Southeast Asian
Fisheries Development Center vs. Acosta, [11] the Court has cited with
approval the opinion[12] of the then Minister of Justice; thus "One of the basic immunities of an international organization is immunity
from local jurisdiction, i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country where it is found. (See Jenks,
Id., pp. 37-44). The obvious reason for this is that the subjection of such an
organization to the authority of the local courts would afford a convenient
medium thru which the host government may interfere in their operations or
even influence or control its policies and decisions of the organization;
besides, such subjection to local jurisdiction would impair the capacity of
such body to discharge its responsibilities impartially on behalf of its
member-states."[13]
Contrary to private respondent's assertion, the claim of immunity is not
here being raised for the first time; it has been invoked before the forum of
origin through communications sent by petitioner and the ADB to the Labor
Arbiter, as well as before the NLRC following the rendition of the questioned
judgment by the Labor Arbiter, but evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal
Affairs, has advised the NLRC:
"Respectfully returned to the Honorable Domingo B. Mabazza, Labor
Arbitration Associate, National Labor Relations Commission, National Capital
Judicial Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St.,
Ermita, Manila, the attached Notice of Hearing addressed to the Asian
Development Bank, in connection with the aforestated case, for the reason
stated in the Department's 1st Indorsement dated 23 March 1993, copy
attached, which is self-explanatory.

"In view of the fact that the Asian Development Bank (ADB) invokes its
immunity which is sustained by the Department of Foreign Affairs, a
continuous hearing of this case erodes the credibility of the Philippine
government before the international community, let alone the negative
implication of such a suit on the official relationship of the Philippine
government with the ADB.
"For the Secretary of Foreign Affairs
(Sgd.)
"SIME D. HIDALGO
Assistant Secretary"[14]
The Office of the President, likewise, has issued on 18 May 1993 a letter to
the Secretary of Labor, viz:
"Dear Secretary Confesor,
"I am writing to draw your attention to a case filed by a certain Jose C.
Magnayi against the Asian Development Bank and its President, Kimimasa
Tarumizu, before the National Labor Relations Commission, National Capital
Region Arbitration Board (NLRC NCR Case No. 00-01690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de
Castro, addressed a Notice of Resolution/Order to the Bank which brought it
to the attention of the Department of Foreign Affairs on the ground that the
service of such notice was in violation of the RP-ADB Headquarters
Agreement which provided, inter-alia, for the immunity of the Bank, its
President and officers from every form of legal process, except only, in cases
of borrowings, guarantees or the sale of securities.
"The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V.
de Castro of this fact by letter dated March 22, copied to you.
"Despite this, the labor arbiter in question persisted to send summons, the
latest dated May 4, herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities. In
WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic

immunities of foreign officials recognized by the Philippine government. Such

decision by the Supreme Court forms part of the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that
ignorance of the law is a ground for dismissal.
"Very truly yours,
(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB"[15]
Private respondent argues that, by entering into service contracts with
different private companies, ADB has descended to the level of an ordinary
party to a commercial transaction giving rise to a waiver of its immunity from
suit. In the case of Holy See vs. Hon. Rosario, Jr.,[16] the Court has held:
There are two conflicting concepts of sovereign immunity, each widely held
and firmly established. According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a respondent in the Courts of
another sovereign. According to the newer or restrictive theory, the
immunity of the sovereign is recognized only with regard to public acts or
acts jure imperii of a state, but not with regard to private act or acts jure
gestionis.
xxxxxxxxx
Certainly, the mere entering into a contract by a foreign state with a private
party cannot be the ultimate test. Such an act can only be the start of the
inquiry. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged
regularly in a business or trade, the particular act or transaction must then
be tested by its nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.[17]
The service contracts referred to by private respondent have not been
intended by the ADB for profit or gain but are official acts over which a
waiver of immunity would not attach.

With regard to the issue of whether or not the DFA has the legal standing
to file the present petition, and whether or not petitioner has regarded the
basic rule that certiorari can be availed of only when there is no appeal nor
plain, speedy and adequate remedy in the ordinary course of law, we hold
both in the affirmative.
The DFA's function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic immunities,
a determination which, when challenged, entitles it to seek relief from the
court so as not to seriously impair the conduct of the country's foreign
relations. The DFA must be allowed to plead its case whenever necessary or
advisable to enable it to help keep the credibility of the Philippine
government before the international community. When international
agreements are concluded, the parties thereto are deemed to have likewise
accepted the responsibility of seeing to it that their agreements are duly
regarded. In our country, this task falls principally on the DFA as being the
highest executive department with the competence and authority to so act in
this aspect of the international arena.[18] In Holy See vs. Hon. Rosario, Jr.,
[19]
this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes to
plead sovereign or diplomatic immunity in a foreign court, it requests the
Foreign Office of the state where it is sued to convey to the court that said
defendant is entitled to immunity.
"In the United States, the procedure followed is the process of 'suggestion,'
where the foreign state or the international organization sued in an American
court requests the Secretary of State to make a determination as to whether
it is entitled to immunity. If the Secretary of State finds that the defendant is
immune from suit, he, in turn, asks the Attorney General to submit to the
court a 'suggestion' that the defendant is entitled to immunity. In England, a
similar procedure is followed, only the Foreign Office issues a certification to
that effect instead of submitting a 'suggestion' (O'Connell, I International Law
130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities
and Obligations, 50 Yale Law Journal 1088 [1941]).
"In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of its
claim of sovereign or diplomatic immunity. But how the Philippine Foreign
Office conveys its endorsement to the courts varies. In International Catholic

Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of
Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be
sued because it enjoyed diplomatic immunity. In World Health Organization
vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial
court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S.
Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval
Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge. The
Solicitor General embodied the 'suggestion' in a manifestation and
memorandum as amicus curiae.
"In the case at bench, the Department of Foreign Affairs, through the Office
of Legal Affairs moved with this Court to be allowed to intervene on the side
of petitioner. The Court allowed the said Department to file its memorandum
in support of petitioner's claim of sovereign immunity.
"In some cases, the defense of sovereign immunity was submitted directly to
the local courts by the respondents through their private counsels (Raquiza
vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command,
80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644
[1990] and companion cases). In cases where the foreign states bypass the
Foreign Office, the courts can inquire into the facts and make their own
determination as to the nature of the acts and transactions involved."[20]
Relative to the propriety of the extraordinary remedy of certiorari, the
Court has, under special circumstances, so allowed and entertained such a
petition when (a) the questioned order or decision is issued in excess of or
without jurisdiction,[21] or (b) where the order or decision is a patent nullity,
[22]
which, verily, are the circumstances that can be said to obtain in the
present case. When an adjudicator is devoid of jurisdiction on a matter
before him, his action that assumes otherwise would be a clear nullity.
WHEREFORE, the petition for certiorari is GRANTED, and the decision of
the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND
VOID. The temporary restraining order issued by this Court on 07 April 1994
is hereby made permanent. No costs.
SO ORDERED.
Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur.

Padilla, (Chairman), J., no part.

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. L11483-84 an acknowledged natural child of the deceased Edward E.
Christensen. The legal grounds of opposition are (a) that the distribution
should be governed by the laws of the Philippines, and (b) that said order of
distribution is contrary thereto insofar as it denies to Helen Christensen, one
of two acknowledged natural children, one-half of the estate in full
ownership. In amplification of the above grounds it was alleged that the law
that should govern the estate of the deceased Christensen should not be the
internal law of California alone, but the entire law thereof because several
foreign elements are involved, that the forum is the Philippines and even if
the case were decided in California, Section 946 of the California Civil Code,
which requires that the domicile of the decedent should apply, should be
applicable. It was also alleged that Maria Helen Christensen having been
declared an acknowledged natural child of the decedent, she is deemed for
all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the
United States and of the State of California at the time of his death, the
successional rights and intrinsic validity of the provisions in his will are to be
governed by the law of California, in accordance with which a testator has
the right to dispose of his property in the way he desires, because the right
of absolute dominion over his property is sacred and inviolable (In re
McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman,
117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor
Maria Helen Christensen, through counsel, filed various motions for
reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE
SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF
EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER
JUST SHARE IN THE INHERITANCE.
II

THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO

RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE
INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE
DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF
DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE
PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE
LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE
ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United
States and of the State of California at the time of his death. But there is also
no question that at the time of his death he was domiciled in the Philippines,
as witness the following facts admitted by the executor himself in appellee's
brief:
In the proceedings for admission of the will to probate, the facts of
record show that the deceased Edward E. Christensen was born on
November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in the
Philippines, as an appointed school teacher, was on July 1, 1901, on
board the U.S. Army Transport "Sheridan" with Port of Embarkation as
the City of San Francisco, in the State of California, U.S.A. He stayed in
the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time
he resided in, and was teaching school in Sacramento, California.

Mr. Christensen's next arrival in the Philippines was in July of the year
1913. However, in 1928, he again departed the Philippines for the
United States and came back here the following year, 1929. Some nine
years later, in 1938, he again returned to his own country, and came
back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation
of facts be admitted and approved by this Honorable Court, without
prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the
Japanese Military Forces in the Philippines during World War II. Upon
liberation, in April 1945, he left for the United States but returned to
the Philippines in December, 1945. Appellees Collective Exhibits "6",
CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs.
"MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California
shortly after the making of his last will and testament (now in question
herein) which he executed at his lawyers' offices in Manila on March 5,
1951. He died at the St. Luke's Hospital in the City of Manila on April
30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the
Philippines, we are persuaded by the fact that he was born in New York,
migrated to California and resided there for nine years, and since he came to
the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have
owned or acquired a home or properties in that state, which would indicate
that he would ultimately abandon the Philippines and make home in the
State of California.
Sec. 16. Residence is a term used with many shades of meaning from
mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)
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-oflaws 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.

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. L11483-84 an acknowledged natural child of the deceased Edward E.
Christensen. The legal grounds of opposition are (a) that the distribution
should be governed by the laws of the Philippines, and (b) that said order of
distribution is contrary thereto insofar as it denies to Helen Christensen, one
of two acknowledged natural children, one-half of the estate in full
ownership. In amplification of the above grounds it was alleged that the law
that should govern the estate of the deceased Christensen should not be the
internal law of California alone, but the entire law thereof because several
foreign elements are involved, that the forum is the Philippines and even if
the case were decided in California, Section 946 of the California Civil Code,

which requires that the domicile of the decedent should apply, should be
applicable. It was also alleged that Maria Helen Christensen having been
declared an acknowledged natural child of the decedent, she is deemed for
all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the
United States and of the State of California at the time of his death, the
successional rights and intrinsic validity of the provisions in his will are to be
governed by the law of California, in accordance with which a testator has
the right to dispose of his property in the way he desires, because the right
of absolute dominion over his property is sacred and inviolable (In re
McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman,
117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor
Maria Helen Christensen, through counsel, filed various motions for
reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE
SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF
EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER
JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO
RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE
INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE
DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV

THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF

DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE
PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE
LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE
ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United
States and of the State of California at the time of his death. But there is also
no question that at the time of his death he was domiciled in the Philippines,
as witness the following facts admitted by the executor himself in appellee's
brief:
In the proceedings for admission of the will to probate, the facts of
record show that the deceased Edward E. Christensen was born on
November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in the
Philippines, as an appointed school teacher, was on July 1, 1901, on
board the U.S. Army Transport "Sheridan" with Port of Embarkation as
the City of San Francisco, in the State of California, U.S.A. He stayed in
the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time
he resided in, and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year
1913. However, in 1928, he again departed the Philippines for the
United States and came back here the following year, 1929. Some nine
years later, in 1938, he again returned to his own country, and came
back to the Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation
of facts be admitted and approved by this Honorable Court, without
prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the
Japanese Military Forces in the Philippines during World War II. Upon

liberation, in April 1945, he left for the United States but returned to
the Philippines in December, 1945. Appellees Collective Exhibits "6",
CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs.
"MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California
shortly after the making of his last will and testament (now in question
herein) which he executed at his lawyers' offices in Manila on March 5,
1951. He died at the St. Luke's Hospital in the City of Manila on April
30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the
Philippines, we are persuaded by the fact that he was born in New York,
migrated to California and resided there for nine years, and since he came to
the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have
owned or acquired a home or properties in that state, which would indicate
that he would ultimately abandon the Philippines and make home in the
State of California.
Sec. 16. Residence is a term used with many shades of meaning from
mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical
presence. (Goodrich on Conflict of Laws, p. 29)
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-oflaws 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.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-2363

September 23, 1948

GREGORIO ARANETA, INC., FRANCISCO JAVIER DE PITARQUE Y ELIO, ISABEL

MARIA DE YNCHAUSTI DE PITARQUE Y DE YNCHAUSTI, petitioners,
vs.
SOTERO RODAS, Judge of First Instance of Manila, COMPANIA GENERAL DE
TABACOS DE FILIPINAS and CENTRAL AZUCARERA DE TARLAC, respondents.
Araneta and Araneta and Jesus G. Barrera for petitioners.
FERIA, J.:
This is a motion for reconsideration of the resolution of this Court dismissing the special
civil action of certiorariand mandamus filed by the petitioners against the respondents,

which asked that order of the respondent judge denying the petitioner's motion to
compel the other respondents to answer certain interrogatories submitted by the former
to the latter be set aside, and that the respondent be ordered to issue an order
compelling the respondent corporation to answer said interrogatories.
According to section 1, Rule 67, certiorari lies when the respondent court or judge has
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion.
There is no doubt or question that the respondent judge or court had and did not exceed
the court's jurisdiction, but it is alleged that said judge has acted with grave abuse of
discretion in denying the petition of the petitioners.
It is obvious that discretion is the power exercised by courts to determine questions
arising in the trial of a cause to which no rule of law is applicable, but which from their
nature and circumstances of the case, are controlled by the personal judgment of the
court, or the judgment of the court uncontrolled by fixed rules of law (See Bouvier's Law
Dictionary, Third Division, Vol. I, p. 884). When the law does not provide a rule or norm
for the court to follow in deciding a question submitted to it, but leaves it to the court to
determine it in one way or another at his discretion, the judge is not absolutely free to
act at his pleasure or will or arbitrarily. He must decide the question, not in accordance
with law for there is none, but in conformity with justice, reason and equity, in view of the
circumstances of the case. Otherwise the court or judge would abuse his discretion.
(See Hodges vs. Barrios and Redfern, L-1904, 1 promulgated April 16, 1948, 45 Off.
Gaz. [Supp. to No. 9], 372, concurred in by the dissenter from the resolution sought to
be reconsidered in the present case.).
Therefore, the question to be determined in the present case is whether or not there is a
rule of law which controls or guides the respondent judge in deciding whether an
interrogatory should be allowed or not.
It is well settled, and admitted in paragraphs 11 and 14 of the petition for the certiorari,
that the scope of discovery by means of written interrogatories under Rule 20 literally
copied from Rule 33 of the Federal Rules of Civil Procedure, like the scope of discovery
by the deposition, is governed by section 2, Rule 18 of the Rules of Court, which was
taken from Rule 26, of said Federal Rules of which was taken from Rule 26 of said
Federal Rules of Civil Procedure promulgated by the Supreme Court of the United
States. Under the provisions of said section 2, Rule 18 "the deponent may be examined
regarding any matter involved in the pending action, whether relating to the claim or
defense of the examining party, or to the claim or defense of the examining party, or to
the claim or defense of any other party". (Dixon vs. Philfer, D. C. S.C. 1939, 30 F. Supp.,
627; Coca Cola Co. vs. Dixi Cola Laboratories, D. C. Mass. 1939, 29 F. Supp. 423;
Lanova Corporation vs. National Supply Co., D. C. Pac., 1939, 29 F. Supp., 119; Aner
vs. Hershey Cremexy Co., D. C. Pac., 1939, 29 F. Supp., 119; Aner vs. Hershey
Cremexy Co. D. C. Va. 1940, 1 F. R. D., 286.).
Since the scope of depositions and written interrogatories is limited to matters which are
not privileged and relevant to the subject matter involved in a pending action, and the

determination of whether or not an interrogatory is privileged or material is not left to the

discretion of the court or judge, for there is a law applicable which serves as norm or
guide for the court or judge to follow, the respondent judge could not commit a grave
abuse of discretion which it did not have in deciding whether or not the interrogatories in
question are immaterial to the subject matter involved in the pending action, and
therefore they can not be allowed. If the respondent judge has acted contrary to law in
deciding that the written interrogatories propounded by the petitioners to the other
respondents are immaterial, he would have committed an error of law which this court
can not correct in the present case; but not a grave abuse of discretion.
In our resolution of July 27, 1948, we dismissed the partition
for certiorari and mandamus on the ground that appeal at the proper time is the proper
remedy; and relying on the dissenting opinion of one member of this Court, that "appeal
cannot be the proper remedy for petitioners' complaint," all the arguments in the
petitioners' motion for reconsideration tend to show that appeal is not the speedy and
adequate remedy, because it would entail unnecessary delay and waste of time.
The resolution, in sitting that appeal at the proper time is the proper remedy, did not
mean to say that certiorarimay lie, that is, that respondent judge has acted without or in
excess of his jurisdiction, or with grave abuse of discretion, but there is appeal or appeal
is the proper remedy. The order complained of is interlocutory and hence not forthwith
appealable; it may only be assigned as erroneous if appeal is taken from the final
judgment. The scope of the subjects which a person interrogated is called to testify
orally in actual trial (Landry vs. O'hara Vessels, supra); and in the same way that neither
appeal nor certiorari lies against a ruling of the court which reject an immaterial question
during the trial, so no such remedies may be resorted to against a court's order that
does not allow a written interrogatory which is not material.
What the resolution means to say, and we now expressly so hold is that certiorari does
not lie at all for the reasons above stated, and the proper remedy is to rise the question
of admissibility of such interrogatories on appeal from the final judgment of the
respondent court or judge. It is obvious that the question whether certiorarior appeal is
the proper and adequate remedy may only come up when the court has acted without
or in excess of jurisdiction and the act complained of is appealable.
In view of all the foregoing, motion for reconsideration is denied. So ordered.
Moran, C. J., Paras, Pablo, Briones, and Tuason, JJ., concur.

Separate Opinions
PERFECTO, J., dissenting:

On July 27, 1948, we voted to give due course to the petition, stating as follows:
Contrary to the contention in the majority resolution, appeal cannot be the proper
remedy for petitioner's complaint. The proceeding of interrogatories provided by
Rule 20 has to be undertaken before the final trial of a case. The rule has been
drafted as one of the means to avoid the possibility of cases being fought through
a strategy of surprises their interrogatories answered under Rule 20, it is unjust
and contrary to law to compel them to proceed with the final trial of the case
without said interrogatories being answered first. If the lower court erred and
violated the rule in refusing to have petitioner's interrogatories answered, appeal
will be inadequate to remedy the situation, as the case will be decided by the
lower court without the petitioner's being given the opportunity of making use of
the answers that the other party may give. Reversal on appeal of the denial with
entail retrial in the lower court and the unnecessary delay which the law abhors.
There is no reason why we should reverse the stand thus taken. The majority
resolution, denying the motion for reconsideration, is a belated answer to our above
opinion. The answer is unconvincing.
We vote to grant the motion for reconsideration and to give due course to the petition.
Bengzon, J., concur.

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 5456, 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).lwph1.t
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. 3738).lwph1.t
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).lwph1.t 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 Gri;o-Aquino, JJ., concur.

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.

[15]

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

On June 23, 1994, Morada filed an Amended Complaint [17] wherein AlBalawi 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

Reconsideration).

filed

her

Opposition[22] (To

Defendants

Motion

for

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

II.
Leave of court before filing a supplemental pleading is not a jurisdictional
requirement. Besides, the matter as to absence of leave of court is now moot
and academic when this Honorable Court required the respondents to
comment on 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.
xxxxxxxxx
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,
and the Comment thereon, we note that she aptly predicated her cause of
action on Articles 19 and 21 of the New Civil Code.
[44]

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:
xxxxxxxxx
(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)

xxxxxxxxx
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.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-2529

December 31, 1949

J. A. SISON, petitioner,
vs.
THE BOARD OF ACCOUNTANCY and ROBERT ORR FERGUZON, respondents.
Quijano, Rosete and Tizon for petitioner.
Perkins, Ponce Enrile, Contreras and Gomez for respondent.
Claro M. Recto as amicus curiae.

TORRES, J.:

In his petition for certiorari against the Board of Accountancy and Robert Orr Ferguson,
J. A. Sison prays that this Court render judgment "ordering the respondent Board of
Accountancy to revoke the certificate issued to Robert Orr Ferguson, a British subject
admitted without examination because there does not exist any reciprocity between the
Philippines and the United Kingdom regarding the practice of accountancy."
Upon perusal of the pleadings and for a clear understanding of the issue raised by
petitioner the following facts, which we believe are not disputed, shall be stated:
Pursuant to the provisions of Act No. 342, several persons, British subjects, and the
possessors of certificates as chartered accountants issued by various incorporated
private accountant's societies in England and other parts of the British Empire, were,
without examination, granted by the respondents Board of Accountancy, certificates as
public accountants to practice their profession in this jurisdiction. The respondent
Robert Orr Ferguson was granted certificate No. 713-W on January 14, 1939 pursuant
to resolution No. 24 of the Board of Accountancy, series of 1938.
Subsequently, the Board of Accountancy, upon the examination of the case of those
British accountants without examination, came to the conclusion that , there being no
law which regulates the practice of accountancy in England, and that the practice of
accountancy in England, and that the practice of accountancy in said country being
limited only to the members of incorporated private accountant's societies, the
certificates issued by the Institutes of chartered accountants and other similar societies
in England and Wales cannot be considered on a par with the public accountant's
certificates issued by the Philippine Board of Accountancy, which is government entity.
In view thereof, the respondent Board of Accountancy "resolved to suspend, . . . the
validity of the C.P.A. certificates of the above-mentioned candidates pending the final
revocation thereof should they fail to prove to the satisfaction of the Board within sixty
days' notice that : (a) Filipinos are allowed to take the professional accountant
examination given by the British government, if any, and (b) Filipino certified public
accountants can, upon application, be registered as chartered accountants or granted
similar degrees by the British Government." (Annex B.)lawphi1.net
Such action of the Board of Accountancy was based on an opinion rendered by the
Secretary of Justice, on October 1, 1946 (Annex A), to the Chartered Accountants in
England and Wales does not meet the requirement of section 41 of Rule 123 of the
Rules of Court and that the negative statement therein, as quoted above, does not
establish the existence of reciprocity, which induced the board to hold that the
registration, without examination, of those British subjects as certified public
accountants, is in accordance with the provision of section 122 of Act No. 3105 as
amended by Commonwealth Act No. 342.

However, the Secretary of justice, answering a query from the Secretary of Finance, in
an opinion rendered on February 10, 1947 "on the legality of the suspension or
revocation " of the certificates issued to those British subjects as contemplated in
resolution No. 5, series of 1946 of the Board of Accountancy, was of the opinion that
"the board may not suspend or revoke the certificates previously granted to the ten
British accountants herein involved, including respondent Robert Orr Ferguson,
because such action is in contravention of section 13 of Act No. 3105 as amended
which explicitly provides that the suspension or revocation of the certificate issued
under the said Act may be done by the board for unprofessional conduct of the holder
or other sufficient cause. The Secretary of Justice further said that he believes that "the
change in administrative interpretation with respect to the existence of reciprocity
between the Philippines and Great Britain as to the practice of accountancy," does not
constitute sufficient cause for the suspension or revocation of the certificates in question
within the meaning of said provision. The opinion of the Secretary of Justice further said
that if those certificates were issued to those British persons on the assumption that
there is "reciprocity between Great Britain and the Philippines as to the practice of
certified public accountancy in the Philippines" a change of administrative interpretation
is not favored (42 Am. Jur., 412).While in the instant case the public policy with respect
to the practice of foreign accountants in this country remains unchanged, the action
intended by the Board of Accountancy, to suspend or revoke the certificates already
issued to such persons must be based on some other grounds, such ignorance,
incapacity, deception or fraud on the part of the holder of the certificates.
In the light of the above, the petitioner brought this action mainly on the ground that
there is no reciprocity "between the Philippines and the United Kingdom" as regards the
practice of the profession of certified public accountant, because the certificate
submitted by the respondent. Robert Orr Ferguson "is not a public or financial record,
and does not meet the requirements of section 41, rule 21 [123] of the Rules of the
Court." And that the furthermore, the negative statement that "there is nothing in the
laws of the United Kingdom to restrict the right of the Filipino certified public accountant
to practice as professional accountant therein, " does not established the existence of
reciprocity.
Section 12 of Act No. 3105, as amended, reads:
Section 12. Any person who has been engaged in the professional accountancy
work in the Philippine Islands for a period of five years or more prior to the date
of his application, and who holds certificates as certified public accountant, or as
chartered accountant, or other similar certificates or degrees in the country of
nationality, shall be entitled to registration as certified public accountant and to
receive a certificate of registration as such certified public accountant from the

Board, Provided such country or state does not restrict the right of the Filipino
certified public accountants to practice therein or grants reciprocal rights to
Filipino certified public accountants to practice therein or grants reciprocal rights
to Filipinos, and provided that the application for their registration shall be filed
with the Board not later than December 31,1938.
From the text of the above-quoted section 12 of the Accountancy Law, it is inferred that
the registration as certified public accountant and the issuance of the corresponding
certificate as such certified public accountant, to a person who for five years has been
engaged in professional accountancy work in the Philippines and is a holder of a
certificate as certified public accountant, or as a chartered accountant, or other similar
degrees in the country of his origin, is predicated on the fact that the country of origin of
such foreign applicant (a) "does not restrict the right of the Filipino certified public
accountant to practice therein," (b) "grants reciprocal rights to the Filipinos," and (c) the
application for registration "be filed with the Board not later than December 31, 1938."
In the case at bar, while the profession of certified public accountant is not controlled or
regulated by the Government of Great Britain, the country of origin of respondent Robert
Orr Ferguson, according to the record, said respondent had been admitted in this
country to the practice of his profession as certified public accountant on the strength of
his membership of the Institute of Accountants and Actuaries in Glasgow (England),
incorporated by the Royal Charter of 1855. The question of his entitlement to admission
to the practice of his profession in this jurisdiction, does not , therefore, come under
reciprocity, as this principle is known in International Law, but it is included in the
meaning of comity, as expressed in the alternative condition of the proviso of the abovequoted section 12 which says: such country or state does not restrict the right of Filipino
certified public accountants to practice therein.
Mutuality, reciprocity, and comity as bases or elements. International Law is
founded largely upon mutuality, reciprocity, and the principle of comity of nations.
Comity, in this connection, is neither a matter of absolute obligation on the one
hand, nor of mere courtesy and good will on the other; it is the recognition which
one nation allows within its territory to the acts of foreign governments and
tribunals, having due regard both to the international duty and convenience and
the rights of its own citizens or of other persons who are under the protection of
its laws. The fact of reciprocity does not necessarily influence the application of
the doctrine of comity, although it may do so and has been given consideration in
some instances. (30 Am. Jur., 178; Hilton vs. Guyot, 159 U. S., 113, 40 Law. ed.,
95; 16 S. Ct., 139.)

In Hilton vs. Guyot (supra), the highest court of the United States said that comity "is the
recognition which one nation allows within its territory to the legislative, executive, or
judicial acts of another nation, having due regard both to International duty and
convenience, and to the rights of its own citizens or of other persons who are under the
protection of its laws. " Again, in Bank of Augusta vs. Earle, 38 U.S., 13 Pet. 519, 589,
Chief Justice Taney, speaking for the court while Mr. Justice Story well-known author
of the treatise on Conflict of Laws was a member of it, and largely adopting his
words, said:
. . . It is needless to enumerate here the instances in which by the general
practice of civilized countries, the laws of the one will, by the comity of nations,
be recognized and executed in another, where the rights of individuals are
concerned . . . The comity thus extended to other nations is no impeachment of
sovereignty. It is the voluntary act of the nation by which it is offered, and is
inadmissible when contrary to its policy, or prejudicial to its interest. But it
contributes so largely to promote justice between individuals, and to produce a
friendly intercourse between the sovereignties to which they belong, that courts,
but the comity of the nation, which is administered and ascertained in the same
way, and guided by the same reasoning, by which all other principles of
municipal law are ascertained and guided.
The record shows that the British Minister accredited to the Philippine Republic in two
notes concerning this question, addressed to the President of the Philippines in his
capacity as Head of the Department of Foreign Affairs, said:
. . . there is no governmental control of the accounting profession in the United
Kingdom and any resident of the United Kingdom, of whatever nationality, may
engage in the profession of accounting without formality; and . . . that the high
standards of the accounting profession in the United Kingdom are maintained by
a number of private societies whose membership is restricted to persons who
have passed a different professional examination but impose no restriction
whatsoever on membership with respect of nationality. (Night of November 5,
1946.)
Again , the British Minister, in his note of April 15, 1947, further said:
Your Excellency will recall that doubt had been expressed by the Philippine
authorities concerned as to whether qualified public accountants would be
allowed to practice income tax accounting in the United Kingdom. Accordingly, I
requested a ruling on this point, and I am happy to inform Your Excellency that I
have been authorized by His Majesty Principal Secretary of State for Foreign

Affairs to state, for the information of the Government of the Philippines, that
qualified Philippine citizen are allowed to practice the profession of accountancy
including income tax accounting, in the United Kingdom.
We are bound to take notice of the fact that fact that the Philippine and the United
Kingdom, are bound by a treaty of friendship and commerce, and each nation is
represented in the other by corresponding diplomatic envoy. There is no reason
whatsoever to doubt the statement and assurance made by the diplomatic
representative of the British Government in the Philippines, regarding the practice of the
accountancy profession in the United Kingdom and the fact that Filipino certified public
accountant will be admitted to practice their profession in the United Kingdom should
they choose to do so.
Under such circumstances, and without necessarily construing that such attitude of the
British Government in the premises, as represented by the British Minister, amounts to
reciprocity, we may at least state that it comes within the realm of comity, as
contemplated in our law.
It appearing that the record fails to show that the suspension of this respondent is . . .
based on any of the cause provided by the Accountancy Law, we find no reason why
Robert Orr Ferguson, who had previously been registered as certified public
accountants and issued the corresponding certificate public accountant in the Philippine
Islands, should be suspended from the practice of his profession in these Islands. The
petition is denied, with cost.
Moran, C.J., Paras, Pablo, Bengzon, Padilla, Tuason, Montemayor and Reyes, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-26379

December 27, 1969

WILLIAM C. REAGAN, ETC., petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo
R. Rosete, Solicitor Lolita O. Gal-lang and Special Attorney Gamaliel H. Mantolino for
respondent.
FERNANDO, J.:
A question novel in character, the answer to which has far-reaching implications, is
raised by petitioner William C. Reagan, at one time a civilian employee of an American
corporation providing technical assistance to the United States Air Force in the
Philippines. He would dispute the payment of the income tax assessed on him by
respondent Commissioner of Internal Revenue on an amount realized by him on a sale
of his automobile to a member of the United States Marine Corps, the transaction
having taken place at the Clark Field Air Base at Pampanga. It is his contention,
seriously and earnestly expressed, that in legal contemplation the sale was made
outside Philippine territory and therefore beyond our jurisdictional power to tax.
Such a plea, far-fetched and implausible, on its face betraying no kinship with reality, he
would justify by invoking, mistakenly as will hereafter be more fully shown an
observation to that effect in a 1951 opinion, 1 petitioner ignoring that such utterance was
made purely as a flourish of rhetoric and by way of emphasizing the decision reached,
that the trading firm as purchaser of army goods must respond for the sales taxes due
from an importer, as the American armed forces being exempt could not be taxed as
such under the National Internal Revenue Code. 2 Such an assumption, inspired by the
commendable aim to render unavailing any attempt at tax evasion on the part of such
vendee, found expression anew in a 1962 decision, 3 coupled with the reminder
however, to render the truth unmistakable, that "the areas covered by the United States
Military Bases are not foreign territories both in the political and geographical sense."
As thus clarified, it is manifest that such a view amounts at most to a legal fiction and is
moreover obiter. It certainly cannot control the resolution of the specific question that
confronts us. We declare our stand in an unequivocal manner. The sale having taken
place on what indisputably is Philippine territory, petitioner's liability for the income tax
due as a result thereof was unavoidable. As the Court of Tax Appeals reached a similar
conclusion, we sustain its decision now before us on appeal.

In the decision appealed from, the Court of Tax Appeals, after stating the nature of the
case, started the recital of facts thus: "It appears that petitioner, a citizen of the United
States and an employee of Bendix Radio, Division of Bendix Aviation Corporation,
which provides technical assistance to the United States Air Force, was assigned at
Clark Air Base, Philippines, on or about July 7, 1959 ... . Nine (9) months thereafter and
before his tour of duty expired, petitioner imported on April 22, 1960 a tax-free 1960
Cadillac car with accessories valued at $6,443.83, including freight, insurance and other
charges."4 Then came the following: "On July 11, 1960, more than two (2) months after
the 1960 Cadillac car was imported into the Philippines, petitioner requested the Base
Commander, Clark Air Base, for a permit to sell the car, which was granted provided
that the sale was made to a member of the United States Armed Forces or a citizen of
the United States employed in the U.S. military bases in the Philippines. On the same
date, July 11, 1960, petitioner sold his car for $6,600.00 to a certain Willie Johnson, Jr.
(Private first class), United States Marine Corps, Sangley Point, Cavite, Philippines, as
shown by a Bill of Sale . . . executed at Clark Air Base. On the same date, Pfc. Willie
(William) Johnson, Jr. sold the car to Fred Meneses for P32,000.00 as evidenced by a
deed of sale executed in Manila."5
As a result of the transaction thus made, respondent Commissioner of Internal
Revenue, after deducting the landed cost of the car as well as the personal exemption
to which petitioner was entitled, fixed as his net taxable income arising from such
transaction the amount of P17,912.34, rendering him liable for income tax in the sum of
P2,979.00. After paying the sum, he sought a refund from respondent claiming that he
was exempt, but pending action on his request for refund, he filed the case with the
Court of Tax Appeals seeking recovery of the sum of P2,979.00 plus the legal rate of
interest.
As noted in the appealed decision: "The only issue submitted for our resolution is
whether or not the said income tax of P2,979.00 was legally collected by respondent for
petitioner."6 After discussing the legal issues raised, primarily the contention that the
Clark Air Base "in legal contemplation, is a base outside the Philippines" the sale
therefore having taken place on "foreign soil", the Court of Tax Appeals found nothing
objectionable in the assessment and thereafter the payment of P2,979.00 as income tax
and denied the refund on the same. Hence, this appeal predicated on a legal theory we
cannot accept. Petitioner cannot make out a case for reversal.
1. Resort to fundamentals is unavoidable to place things in their proper perspective,
petitioner apparently feeling justified in his refusal to defer to basic postulates of
constitutional and international law, induced no doubt by the weight he would accord to
the observation made by this Court in the two opinions earlier referred to. To repeat,

scant comfort, if at all is to be derived from such an obiter dictum, one which is likewise
far from reflecting the fact as it is.
Nothing is better settled than that the Philippines being independent and sovereign, its
authority may be exercised over its entire domain. There is no portion thereof that is
beyond its power. Within its limits, its decrees are supreme, its commands paramount.
Its laws govern therein, and everyone to whom it applies must submit to its terms. That
is the extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has
to be exclusive. If it were not thus, there is a diminution of its sovereignty.
It is to be admitted that any state may, by its consent, express or implied, submit to a
restriction of its sovereign rights. There may thus be a curtailment of what otherwise is a
power plenary in character. That is the concept of sovereignty as auto-limitation, which,
in the succinct language of Jellinek, "is the property of a state-force due to which it has
the exclusive capacity of legal self-determination and self-restriction." 7 A state then, if it
chooses to, may refrain from the exercise of what otherwise is illimitable competence.
Its laws may as to some persons found within its territory no longer control. Nor does
the matter end there. It is not precluded from allowing another power to participate in
the exercise of jurisdictional right over certain portions of its territory. If it does so, it by
no means follows that such areas become impressed with an alien character. They
retain their status as native soil. They are still subject to its authority. Its jurisdiction may
be diminished, but it does not disappear. So it is with the bases under lease to the
American armed forces by virtue of the military bases agreement of 1947. They are not
and cannot be foreign territory.
Decisions coming from petitioner's native land, penned by jurists of repute, speak to that
effect with impressive unanimity. We start with the citation from Chief Justice Marshall,
announced in the leading case of Schooner Exchange v. M'Faddon,8 an 1812 decision:
"The jurisdiction of the nation within its own territory is necessarily exclusive and
absolute. It is susceptible of no limitation not imposed by itself. Any restriction upon it,
deriving validity from an external source, would imply a diminution of its sovereignty to
the extent of the restriction, and an investment of that sovereignty to the same extent in
that power which could impose such restriction." After which came this paragraph: "All
exceptions, therefore, to the full and complete power of a nation within its own
territories, must be traced up to the consent of the nation itself. They can flow from no
other legitimate source."
Chief Justice Taney, in an 1857 decision,9 affirmed the fundamental principle of
everyone within the territorial domain of a state being subject to its commands: "For
undoubtedly every person who is found within the limits of a government, whether the

temporary purposes or as a resident, is bound by its laws." It is no exaggeration then for

Justice Brewer to stress that the United States government "is one having jurisdiction
over every foot of soil within its territory, and acting directly upon each [individual found
therein]; . . ."10
Not too long ago, there was a reiteration of such a view, this time from the pen of
Justice Van Devanter. Thus: "It now is settled in the United States and recognized
elsewhere that the territory subject to its jurisdiction includes the land areas under its
dominion and control the ports, harbors, bays, and other in closed arms of the sea along
its coast, and a marginal belt of the sea extending from the coast line outward a marine
league, or 3 geographic miles."11 He could cite moreover, in addition to many American
decisions, such eminent treatise-writers as Kent, Moore, Hyde, Wilson, Westlake,
Wheaton and Oppenheim.
As a matter of fact, the eminent commentator Hyde in his three-volume work on
International Law, as interpreted and applied by the United States, made clear that not
even the embassy premises of a foreign power are to be considered outside the
territorial domain of the host state. Thus: "The ground occupied by an embassy is not in
fact the territory of the foreign State to which the premises belong through possession
or ownership. The lawfulness or unlawfulness of acts there committed is determined by
the territorial sovereign. If an attache commits an offense within the precincts of an
embassy, his immunity from prosecution is not because he has not violated the local
law, but rather for the reason that the individual is exempt from prosecution. If a person
not so exempt, or whose immunity is waived, similarly commits a crime therein, the
territorial sovereign, if it secures custody of the offender, may subject him to
prosecution, even though its criminal code normally does not contemplate the
punishment of one who commits an offense outside of the national domain. It is not
believed, therefore, that an ambassador himself possesses the right to exercise
jurisdiction, contrary to the will of the State of his sojourn, even within his embassy with
respect to acts there committed. Nor is there apparent at the present time any tendency
on the part of States to acquiesce in his exercise of it." 12
2. In the light of the above, the first and crucial error imputed to the Court of Tax Appeals
to the effect that it should have held that the Clark Air Force is foreign soil or territory for
purposes of income tax legislation is clearly without support in law. As thus correctly
viewed, petitioner's hope for the reversal of the decision completely fades away. There
is nothing in the Military Bases Agreement that lends support to such an assertion. It
has not become foreign soil or territory. This country's jurisdictional rights therein,
certainly not excluding the power to tax, have been preserved. As to certain tax matters,
an appropriate exemption was provided for.

Petitioner could not have been unaware that to maintain the contrary would be to defy
reality and would be an affront to the law. While his first assigned error is thus worded,
he would seek to impart plausibility to his claim by the ostensible invocation of the
exemption clause in the Agreement by virtue of which a "national of the United States
serving in or employed in the Philippines in connection with the construction,
maintenance, operation or defense of the bases and residing in the Philippines only by
reason of such employment" is not to be taxed on his income unless "derived from
Philippine source or sources other than the United States sources." 13 The reliance, to
repeat, is more apparent than real for as noted at the outset of this opinion, petitioner
places more faith not on the language of the provision on exemption but on a sentiment
given expression in a 1951 opinion of this Court, which would be made to yield such an
unwarranted interpretation at war with the controlling constitutional and international law
principles. At any rate, even if such a contention were more adequately pressed and
insisted upon, it is on its face devoid of merit as the source clearly was Philippine.
In Saura Import and Export Co. v. Meer,14 the case above referred to, this Court affirmed
a decision rendered about seven months previously,15 holding liable as an importer,
within the contemplation of the National Internal Revenue Code provision, the trading
firm that purchased army goods from a United States government agency in the
Philippines. It is easily understandable why. If it were not thus, tax evasion would have
been facilitated. The United States forces that brought in such equipment later disposed
of as surplus, when no longer needed for military purposes, was beyond the reach of
our tax statutes.
Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting
extensively from the earlier opinion. He could have stopped there. He chose not to do
so. The transaction having occurred in 1946, not so long after the liberation of the
Philippines, he proceeded to discuss the role of the American military contingent in the
Philippines as a belligerent occupant. In the course of such a dissertion, drawing on his
well-known gift for rhetoric and cognizant that he was making an as if statement, he did
say: "While in army bases or installations within the Philippines those goods were in
contemplation of law on foreign soil."
It is thus evident that the first, and thereafter the controlling, decision as to the liability
for sales taxes as an importer by the purchaser, could have been reached without any
need for such expression as that given utterance by Justice Tuason. Its value then as
an authoritative doctrine cannot be as much as petitioner would mistakenly attach to it.
It was clearly obiter not being necessary for the resolution of the issue before this
Court.16It was an opinion "uttered by the way." 17 It could not then be controlling on the
question before us now, the liability of the petitioner for income tax which, as announced
at the opening of this opinion, is squarely raised for the first time. 18

On this point, Chief Justice Marshall could again be listened to with profit. Thus: "It is a
maxim, not to be disregarded, that general expressions, in every opinion, are to be
taken in connection with the case in which those expressions are used. If they go
beyond the case, they may be respected, but ought not to control the judgment in a
subsequent suit when the very point is presented for decision." 19
Nor did the fact that such utterance of Justice Tuason was cited in Co Po v. Collector of
Internal Revenue,20 a 1962 decision relied upon by petitioner, put a different complexion
on the matter. Again, it was by way of pure embellishment, there being no need to
repeat it, to reach the conclusion that it was the purchaser of army goods, this time from
military bases, that must respond for the advance sales taxes as importer. Again, the
purpose that animated the reiteration of such a view was clearly to emphasize that
through the employment of such a fiction, tax evasion is precluded. What is more, how
far divorced from the truth was such statement was emphasized by Justice Barrera,
who penned the Co Po opinion, thus: "It is true that the areas covered by the United
States Military Bases are not foreign territories both in the political and geographical
sense."21
Justice Tuason moreover made explicit that rather than corresponding with reality, what
was said by him was in the way of a legal fiction. Note his stress on "in contemplation of
law." To lend further support to a conclusion already announced, being at that a
confirmation of what had been arrived at in the earlier case, distinguished by its sound
appreciation of the issue then before this Court and to preclude any tax evasion, an
observation certainly not to be taken literally was thus given utterance.
This is not to say that it should have been ignored altogether afterwards. It could be
utilized again, as it undoubtedly was, especially so for the purpose intended, namely to
stigmatize as without support in law any attempt on the part of a taxpayer to escape an
obligation incumbent upon him. So it was quoted with that end in view in the Co Po
case. It certainly does not justify any effort to render futile the collection of a tax legally
due, as here. That was farthest from the thought of Justice Tuason.
What is more, the statement on its face is, to repeat, a legal fiction. This is not to
discount the uses of a fictio jurisin the science of the law. It was Cardozo who pointed
out its value as a device "to advance the ends of justice" although at times it could be
"clumsy" and even "offensive".22 Certainly, then, while far from objectionable as thus
enunciated, this observation of Justice Tuason could be misused or misconstrued in a
clumsy manner to reach an offensive result. To repeat, properly used, a legal fiction
could be relied upon by the law, as Frankfurter noted, in the pursuit of legitimate
ends.23 Petitioner then would be well-advised to take to heart such counsel of care and
circumspection before invoking not a legal fiction that would avoid a mockery of the law

by avoiding tax evasion but what clearly is a misinterpretation thereof, leading to results
that would have shocked its originator.
The conclusion is thus irresistible that the crucial error assigned, the only one that calls
for discussion to the effect that for income tax purposes the Clark Air Force Base is
outside Philippine territory, is utterly without merit. So we have said earlier.
3. To impute then to the statement of Justice Tuason the meaning that petitioner would
fasten on it is, to paraphrase Frankfurter, to be guilty of succumbing to the vice of
literalness. To so conclude is, whether by design or inadvertence, to misread it. It
certainly is not susceptible of the mischievous consequences now sought to be fastened
on it by petitioner.
That it would be fraught with such peril to the enforcement of our tax statutes on the
military bases under lease to the American armed forces could not have been within the
contemplation of Justice Tuason. To so attribute such a bizarre consequence is to be
guilty of a grave disservice to the memory of a great jurist. For his real and genuine
sentiment on the matter in consonance with the imperative mandate of controlling
constitutional and international law concepts was categorically set forth by him, not as
an obiter but as the rationale of the decision, in People v. Acierto24 thus: "By the [Military
Bases] Agreement, it should be noted, the Philippine Government merely consents that
the United States exercise jurisdiction in certain cases. The consent was given purely
as a matter of comity, courtesy, or expediency over the bases as part of the Philippine
territory or divested itself completely of jurisdiction over offenses committed therein."
Nor did he stop there. He did stress further the full extent of our territorial jurisdiction in
words that do not admit of doubt. Thus: "This provision is not and can not on principle or
authority be construed as a limitation upon the rights of the Philippine Government. If
anything, it is an emphatic recognition and reaffirmation of Philippine sovereignty over
the bases and of the truth that all jurisdictional rights granted to the United States and
not exercised by the latter are reserved by the Philippines for itself." 25
It is in the same spirit that we approach the specific question confronting us in this
litigation. We hold, as announced at the outset, that petitioner was liable for the income
tax arising from a sale of his automobile in the Clark Field Air Base, which clearly is and
cannot otherwise be other than, within our territorial jurisdiction to tax.
4. With the mist thus lifted from the situation as it truly presents itself, there is nothing
that stands in the way of an affirmance of the Court of Tax Appeals decision. No useful
purpose would be served by discussing the other assigned errors, petitioner himself
being fully aware that if the Clark Air Force Base is to be considered, as it ought to be

and as it is, Philippine soil or territory, his claim for exemption from the income tax due
was distinguished only by its futility.
There is further satisfaction in finding ourselves unable to indulge petitioner in his plea
for reversal. We thus manifest fealty to a pronouncement made time and time again that
the law does not look with favor on tax exemptions and that he who would seek to be
thus privileged must justify it by words too plain to be mistaken and too categorical to be
misinterpreted.26 Petitioner had not done so. Petitioner cannot do so.
WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying the
refund of P2,979.00 as the income tax paid by petitioner is affirmed. With costs against
petitioner.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Teehankee,
JJ., concur.
Reyes, J.B.L., J., concurs in the result.
Barredo, J., took no part.

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. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO,
JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO
L. CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO
CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE
CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS,

HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN,

ANTONIO C. CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE,
AUGUSTO COLOMA, TURIANO CONCEPCION, TERESITO
CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA,
APOLINAR CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR.,
LEONARDO CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO,
FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR., CELEDONIO
CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA
CRUZ, AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B.
DELA CRUZ, ROBERTO P. CRUZ, TEODORO S. CRUZ, ZOSIMO DELA
CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN
DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO
DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID,
FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP,
JOSELITO T. DELOSO, CELERINO DE GUZMAN, ROMULO DE GUZMAN,
LIBERATO DE GUZMAN, JOSE DE LEON, JOSELITO L. DE LUMBAN,
NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL
ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS
REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR
DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC,
ROLANDO DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO,
ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA,
DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE,
GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO
ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS
EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA,
ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU,
EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU,
JULIAN ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN,
MELANIO R. ESTRO, ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE
ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA, WILFREDO P.
FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M.
FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C.
FLORES, BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO,
ROLANDO FRANCISCO, VALERIANO FRANCISCO, RODOLFO GABAWAN,
ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO N. GALOSO,
GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES
GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L.
GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA, PONCIANO
G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G.

GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO

GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H.
GONZALES, ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR., ALEXIS
GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ,
IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H.
HABANA, RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO
D. HILADO, JUSTO HILAPO, ROSTITO HINAHON, FELICISIMO
HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO, MANUEL L.
ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G.
ISLA, ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN,
MAXIMIANO HONRADES, GENEROSO IGNACIO, FELIPE ILAGAN,
EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER, ROMEO M.
JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ,
DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON, FELINO
M. JOCSON, PEDRO N. JOCSON, VALENTINO S. JOCSON, PEDRO B.
JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE,
GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY,
EMMANUEL C. LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON,
MARIO J. LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M.
LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN, EMILIANO
LATOJA, WENCESLAO LAUREL, ALFREDO LAXAMANA, DANIEL R.
LAZARO, ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE
LEMOS, JR., PEDRO G. DE LEON, MANOLITO C. LILOC, GERARDO
LIMUACO, ERNESTO S. LISING, RENATO LISING, WILFREDO S. LISING,
CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO
M. LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ,
VIRGILIO M. LOPEZ, BERNARDITO G. LOREJA, DOMINGO B. LORICO,
DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M. LUALHATI,
EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI, SEBASTIAN
LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE
LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO
MACALINO, RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V.
MACARAIG, RODOLFO V. MACARAIG, BENJAMIN MACATANGAY,
HERMOGENES MACATANGAY, RODEL MACATANGAY, ROMULO
MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P. MADRID,
EDELBERTO G. MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT,
ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO
MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M. MAGPANTAY,
ARMANDO M. MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY,
VICTOR V. MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO,

RICARDO MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI,

MANUEL MANALILI, ANGELO MANALO, AGUILES L. MANALO,
LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM,
DANIEL MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO,
RICARDO N. MAPA, RAMON MAPILE, ROBERTO C. MARANA, NEMESIO
MARASIGAN, WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY
F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A.
MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO
MATABERDE, RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO
MEDEL, LOLITO M. MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE,
REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO MENDOZA, JR.,
CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO,
ERNANI DELA MERCED, RICARDO MERCENA, NEMESIO METRELLO,
RODEL MEMIJE, GASPAR MINIMO, BENJAMIN MIRANDA, FELIXBERTO
D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO
MONTON, RENATO MORADA, RICARDO MORADA, RODOLFO MORADA,
ROLANDO M. MORALES, FEDERICO M. MORENO, VICTORINO A.
MORTEL, JR., ESPIRITU A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO
MUNOZ, ROGELIO MUNOZ, ERNESTO NAPALAN, MARCELO A.
NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO
D. NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE
NEGRITE, ALFREDO NEPUMUCENO, HERBERT G. NG, FLORENCIO
NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA,
DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E. OCAMPO,
ANTONIO B. OCCIANO, REYNALDO P. OCSON, BENJAMIN ODESA,
ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V.
ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ, WILFREDO
OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO
L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO
T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA, QUINCIANO
PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO
PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO
PASIMIO, JR., JOSE V. PASION, ANGELITO M. PENA, DIONISIO
PENDRAS, HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO
PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E.
PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO,
FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA,
ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE,
DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO
PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O.

PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L.

QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO, RICARDO C. DE
RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO A.
RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.
RAMIREZ, ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS,
WILLARFREDO RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F.
RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO,
ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME
RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA, REDENTOR
C. REY, ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO R. REYES,
GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES, ROMULO M.
REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M. RICO,
EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES,
RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO,
ANTONIO R. RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO
RODRIGUEZ, ALMONTE ROMEO, ELIAS RONQUILLO, ELISE
RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO,
RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO
DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO,
VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA,
ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M. SANCHA,
ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO,
JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS,
EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S.
SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M.
SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G.
SILVA, EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B.
SIMBAHON, DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO
SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS,
ISAGANI M. SOLIS, EDUARDO L. SOTTO, ERNESTO G. STA. MARIA,
VICENTE G. STELLA, FELIMON SUPANG, PETER TANGUINOO,
MAXIMINO TALIBSAO, FELICISMO P. TALUSIK, FERMIN TARUC, JR.,
LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL
TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V.
TORRES, LEONARDO DE TORRES, GAVINO U. TUAZON, AUGUSTO B.
TUNGUIA, FRANCISCO UMALI, SIMPLICIO UNIDA, WILFREDO V.
UNTALAN, ANTONIO VALDERAMA, RAMON VALDERAMA, NILO
VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ, NESTOR
DE VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO
VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO, ALFREDO

VICTORIANO, TEOFILO P. VIDALLO, SABINO N. VIERNEZ, JESUS J.

VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO
VILLAGERA, ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO
VILLANUEVA, LEONARDO M. VILLANUEVA, MANUEL R. VILLANUEVA,
NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO,
RAFAEL VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO
YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA,respondents.
Gerardo A. Del Mundo and Associates for petitioners.
Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for
BRII/AIBC.
Florante M. De Castro for private respondents in 105029-32.

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

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

POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive
period under the Labor Code of the Philippines instead of the tenyear prescriptive period under the Civil Code of the Philippines;
and (ii) denied the
"three-hour daily average" formula in the computation of
petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC,
denying the motion for reconsideration of its Resolution dated
September 2, 1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders
Corporation, et. al., v. National Labor Relations Commission, et. al." was filed
under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in
POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants;
and
(2) to reverse the Resolution dated March 21, 1992 of NLRC
insofar as it denied the motions for reconsideration of AIBC and
BRII (Rollo, pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the
decision of POEA in four labor cases: (1) awarded monetary benefits only to
149 claimants and (2) directed Labor Arbiter Fatima J. Franco to conduct
hearings and to receive evidence on the claims dismissed by the POEA for
lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division
while G.R. Nos. 104911-14 were raffled to the Second Division. In the
Resolution dated July 26, 1993, the Second Division referred G.R. Nos.
104911-14 to the Third Division (G.R. Nos. 104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the
motion filed in G.R. Nos. 104911-14 for the consolidation of said cases with

G.R. Nos. 104776 and 105029-32, which were assigned to the First Division
(G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos. 105029-30, Rollo, pp.
369-377, 426-432). In the Resolution dated October 27, 1993, the First
Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R. No.
104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p.
1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B.
Evangelista, in their own behalf and on behalf of 728 other overseas contract
workers (OCWs) instituted a class suit by filing an "Amended Complaint" with
the Philippine Overseas Employment Administration (POEA) for money claims
arising from their recruitment by AIBC and employment by BRII (POEA Case
No. L-84-06-555). The claimants were represented by Atty. Gerardo del
Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is
engaged in construction; while AIBC is a domestic corporation licensed as a
service contractor to recruit, mobilize and deploy Filipino workers for
overseas employment on behalf of its foreign principals.
The amended complaint principally sought the payment of the unexpired
portion of the employment contracts, which was terminated prematurely,
and secondarily, the payment of the interest of the earnings of the Travel and
Reserved Fund, interest on all the unpaid benefits; area wage and salary
differential pay; fringe benefits; refund of SSS and premium not remitted to
the SSS; refund of withholding tax not remitted to the BIR; penalties for
committing prohibited practices; as well as the suspension of the license of
AIBC and the accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint
and was given, together with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered
the claimants to file a bill of particulars within ten days from receipt of the
order and the movants to file their answers within ten days from receipt of
the bill of particulars. The POEA Administrator also scheduled a pre-trial
conference on July 25, 1984.

On July 13, 1984, the claimants submitted their "Compliance and

Manifestation." On July 23, 1984, AIBC filed a "Motion to Strike Out of the
Records", the "Complaint" and the "Compliance and Manifestation." On July
25, 1984, the claimants filed their "Rejoinder and Comments," averring,
among other matters, the failure of AIBC and BRII to file their answers and to
attend the pre-trial conference on July 25, 1984. The claimants alleged that
AIBC and BRII had waived their right to present evidence and had defaulted
by failing to file their answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out
of the Records" filed by AIBC but required the claimants to correct the
deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with
the Order of October 2, 1984 and filed an "Urgent Manifestation," praying
that the POEA Administrator direct the parties to submit simultaneously their
position papers, after which the case should be deemed submitted for
decision. On the same day, Atty. Florante de Castro filed another complaint
for the same money claims and benefits in behalf of several claimants, some
of whom were also claimants in POEA Case No. L-84-06-555 (POEA Case No.
85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order
dated October 2, 1984 and an "Urgent Manifestation," praying that the POEA
direct the parties to submit simultaneously their position papers after which
the case would be deemed submitted for decision. On the same day, AIBC
asked for time to file its comment on the "Compliance" and "Urgent
Manifestation" of claimants. On November 6, 1984, it filed a second motion
for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its motion
for extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for
extension of time and asked that AIBC and BRII be declared in default for
failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among
other reliefs, that claimants should be ordered to amend their complaint.

On December 27, 1984, the POEA Administrator issued an order directing

AIBC and BRII to file their answers within ten days from receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal
of the said order of the POEA Administrator. Claimants opposed the appeal,
claiming that it was dilatory and praying that AIBC and BRII be declared in
default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or
Position Paper" dated March 24, 1985, adding new demands: namely, the
payment of overtime pay, extra night work pay, annual leave differential
pay, leave indemnity pay, retirement and savings benefits and their share of
forfeitures (G.R. No. 104776, Rollo, pp. 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-8406-555. 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. 120122).
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. 650713; 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. 629652);
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. 18151829);
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. 10502932, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano
and six co-claimants dated August 25, 1994 (G.R. Nos. 10502932; 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 abovementioned 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 complainantsappellants 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, 5155).
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 threeyear 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) 8665-460 should have been dismissed on the ground that the claimants in said
case were also claimants in POEA Case No. (L) 84-06-555. Instead of

dismissing POEA Case No. (L) 86-65-460, the POEA just resolved the
corresponding claims in POEA Case No. (L) 84-06-555. In other words, the
POEA did not pass upon the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the
following grounds:
(1) that they were deprived by NLRC and the POEA of their right
to a speedy disposition of their cases as guaranteed by Section
16, Article III of the 1987 Constitution. The POEA Administrator
allowed private respondents to file their answers in two years (on
June 19, 1987) after the filing of the original complaint (on April
2, 1985) and NLRC, in total disregard of its own rules, affirmed
the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared
AIBC and BRII in default and should have rendered summary
judgment on the basis of the pleadings and evidence submitted
by claimants;
(3) the NLRC and POEA Administrator erred in not holding that
the labor cases filed by AIBC and BRII cannot be considered a
class suit;
(4) that the prescriptive period for the filing of the claims is ten
years; and
(5) that NLRC and the POEA Administrator should have dismissed
POEA Case No. L-86-05-460, the case filed by Atty. Florante de
Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition
of the labor cases, considering the great difficulty of getting all
the records of the more than 1,500 claimants, the piece-meal

filing of the complaints and the addition of hundreds of new

claimants by petitioners;
(2) that considering the number of complaints and claimants, it
was impossible to prepare the answers within the ten-day period
provided in the NLRC Rules, that when the motion to declare
AIBC in default was filed on July 19, 1987, said party had already
filed its answer, and that considering the staggering amount of
the claims (more than US$50,000,000.00) and the complicated
issues raised by the parties, the ten-day rule to answer was not
fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject matter of
the controversy which was the applicability of the Amiri
Decree No. 23. Likewise, the nature of the claims varied, some
being based on salaries pertaining to the unexpired portion of
the contracts while others being for pure money claims. Each
claimant demanded separate claims peculiar only to himself and
depending upon the particular circumstances obtaining in his
case;
(4) that the prescriptive period for filing the claims is that
prescribed by Article 291 of the Labor Code of the Philippines
(three years) and not the one prescribed by Article 1144 of the
Civil Code of the Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA
Case No. L-86-05-460 should be dismissed, this being a private
quarrel between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the
joint manifestations and motions of AIBC and BRII dated September 2 and
11, 1992, claiming that all the claimants who entered into the compromise
agreements subject of said manifestations and motions were his clients and
that Atty. Florante M. de Castro had no right to represent them in said
agreements. He also claimed that the claimants were paid less than the
award given them by NLRC; that Atty. De Castro collected additional
attorney's fees on top of the 25% which he was entitled to receive; and that

the consent of the claimants to the compromise agreements and quitclaims

were procured by fraud (G.R. No. 104776, Rollo, pp. 838-810). In the
Resolution dated November 23, 1992, the Court denied the motion to strike
out the Joint Manifestations and Motions dated September 2 and 11, 1992
(G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce
Attorney's Lien," alleging that the claimants who entered into compromise
agreements with AIBC and BRII with the assistance of Atty. De Castro, had all
signed a retainer agreement with his law firm (G.R. No. 104776, Rollo, pp.
623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to
cite Atty. De Castro and Atty. Katz Tierra for contempt of court and for
violation of Canons 1, 15 and 16 of the Code of Professional Responsibility.
The said lawyers allegedly misled this Court, by making it appear that the
claimants who entered into the compromise agreements were represented
by Atty. De Castro, when in fact they were represented by Atty. Del Mundo
(G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty.
De Castro for unethical practices and moved for the voiding of the quitclaims
submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on
the grounds that NLRC gravely abused its discretion when it: (1) applied the
three-year prescriptive period under the Labor Code of the Philippines; and
(2) it denied the claimant's formula based on an average overtime pay of
three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the
negotiation for an amicable settlement of their money claims in Bahrain as
shown in the Memorandum dated April 16, 1983 of the Ministry of Labor of
Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No.
104776 that the prescriptive period in the Labor Code of the Philippines, a

special law, prevails over that provided in the Civil Code of the Philippines, a
general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of
computing the overtime pay, BRII and AIBC claimed that they were not
bound by what appeared therein, because such memorandum was proposed
by a subordinate Bahrain official and there was no showing that it was
approved by the Bahrain Minister of Labor. Likewise, they claimed that the
averaging method was discussed in the course of the negotiation for the
amicable settlement of the dispute and any offer made by a party therein
could not be used as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its
discretion when it: (1) enforced the provisions of the Amiri Decree No. 23 of
1976 and not the terms of the employment contracts; (2) granted claims for
holiday, overtime and leave indemnity pay and other benefits, on evidence
admitted in contravention of petitioner's constitutional right to due process;
and (3) ordered the POEA Administrator to hold new hearings for the 683
claimants whose claims had been dismissed for lack of proof by the POEA
Administrator or NLRC itself. Lastly, they allege that assuming that the Amiri
Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply the
one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they
disagreed as to the time that should be embraced within the prescriptive
period.
To the POEA Administrator, the prescriptive period was ten years, applying
Article 1144 of the Civil Code of the Philippines. NLRC believed otherwise,
fixing the prescriptive period at three years as provided in Article 291 of the
Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking
different grounds, insisted that NLRC erred in ruling that the prescriptive

period applicable to the claims was three years, instead of ten years, as
found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period
was one year as prescribed by the Amiri Decree No. 23 of 1976 but he
deferred to the ruling of NLRC that Article 291 of the Labor Code of the
Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer
to those arising from the employer's violation of the employee's
right as provided by the Labor Code.
In the instant case, what the respondents violated are not the
rights of the workers as provided by the Labor Code, but the
provisions of the Amiri Decree No. 23 issued in Bahrain,
which ipso factoamended the worker's contracts of employment.
Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It
was only after June 30, 1983, four months after the brown
builders brought a suit against B & R in Bahrain for this same
claim, when respondent AIBC's contracts have undergone
amendments in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to
this instant case is Article 1144 of the Civil Code of the
Philippines, which provides:
Art. 1144. The following actions may be brought
within ten years from the time the cause of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the
respondents shall prescribe in ten years from August 16, 1976.
Inasmuch as all claims were filed within the ten-year prescriptive

period, no claim suffered the infirmity of being prescribed (G.R.

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

outside as well as within the foreign country concerned, of the

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

Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the
Labor Code of the Philippines, which was applied by NLRC, refers only to
claims "arising from the employer's violation of the employee's right as
provided by the Labor Code." They assert that their claims are based on the
violation of their employment contracts, as amended by the Amiri Decree No.
23 of 1976 and therefore the claims may be brought within ten years as
provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos.
104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc.,
70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under
the Amiri Decree No. 23 of 1976, argue that there is in force in the
Philippines a "borrowing law," which is Section 48 of the Code of Civil
Procedure and that where such kind of law exists, it takes precedence over
the common-law conflicts rule (G.R. No. 104776,Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of
action based on the Amiri Decree No. 23 of 1976 or a Philippine law on
prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry
of the contract. (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum.
This is true even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International
Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense
that it may be viewed either as procedural or substantive, depending on the
characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court
applied the statute of limitations of New York, instead of the Panamanian law,
after finding that there was no showing that the Panamanian law on

prescription was intended to be substantive. Being considered merely a

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

The state shall promote social justice in all phases of national

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

The case of Philippine Air Lines Employees Association v. Philippine Air Lines,
Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R. Nos. 104911-14 is
inapplicable to the cases at bench (Rollo, p. 21). The said case involved the
correct computation of overtime pay as provided in the collective bargaining
agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any
reference as to the computation for overtime work under the Eight-Hour
Labor Law (Secs. 3 and 4, CA No. 494) and instead insisted that work
computation provided in the collective bargaining agreements between the
parties be observed. Since the claim for pay differentials is primarily
anchored on the written contracts between the litigants, the ten-year
prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No.
19933) provides:
Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued
otherwise such action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor
Law (CA No. 444 as amended) will apply, if the claim for
differentials for overtime work is solely based on said law, and
not on a collective bargaining agreement or any other contract.
In the instant case, the claim for overtime compensation is not so
much because of Commonwealth Act No. 444, as amended but
because the claim is demandable right of the employees, by
reason of the above-mentioned collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for
filing "actions to enforce any cause of action under said law." On the other
hand, Article 291 of the Labor Code of the Philippines provides the
prescriptive period for filing "money claims arising from employer-employee
relations." The claims in the cases at bench all arose from the employeremployee 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. 7374).

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 antiforum 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. 352353).
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.