G.R. No.
173034 October 9, 2007 On May 15, 2006, the DOH issued herein assailed RIRR which was to take effect on July 7,
PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF THE
PHILIPPINES, petitioner,
vs.
HEALTH SECRETARY FRANCISCO T. DUQUE III; HEALTH UNDER SECRETARIES
DR. ETHELYN P. NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A.
PADILLA, & DR. JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR. MARIO
C. VILLAVERDE, DR. DAVID J. LOZADA, AND DR. NEMESIO T. GAKO,respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
The Court and all parties involved are in agreement that the best nourishment for an infant
is mother's milk. There is nothing greater than for a mother to nurture her beloved child
straight from her bosom. The ideal is, of course, for each and every Filipino child to enjoy
the unequaled benefits of breastmilk. But how should this end be attained?
Before the Court is a petition for certiorari under Rule 65 of the Rules of Court, seeking
to nullify Administrative Order (A.O.) No. 2006-0012 entitled, Revised Implementing
Rules and Regulations of Executive Order No. 51, Otherwise Known as The "Milk
Code," Relevant International Agreements, Penalizing Violations Thereof, and for
Other Purposes (RIRR). Petitioner posits that the RIRR is not valid as it contains
provisions that are not constitutional and go beyond the law it is supposed to implement.
Named as respondents are the Health Secretary, Undersecretaries, and Assistant
Secretaries of the Department of Health (DOH). For purposes of herein petition, the DOH
is deemed impleaded as a co-respondent since respondents issued the questioned RIRR in
their capacity as officials of said executive agency. 1
Executive Order No. 51 (Milk Code) was issued by President Corazon Aquino on October 28,
1986 by virtue of the legislative powers granted to the president under the Freedom
Constitution. One of the preambular clauses of the Milk Code states that the law seeks to
give effect to Article 112 of the International Code of Marketing of Breastmilk
Substitutes (ICMBS), a code adopted by the World Health Assembly (WHA) in 1981. From
1982 to 2006, the WHA adopted several Resolutions to the effect that breastfeeding
should be supported, promoted and protected, hence, it should be ensured that nutrition
and health claims are not permitted for breastmilk substitutes.
In 1990, the Philippines ratified the International Convention on the Rights of the Child.
Article 24 of said instrument provides that State Parties should take appropriate
measures to diminish infant and child mortality, and ensure that all segments of society,
specially parents and children, are informed of the advantages of breastfeeding.
2006.
However, on June 28, 2006, petitioner, representing its members that are manufacturers
of breastmilk substitutes, filed the present Petition for Certiorari and Prohibition with
Prayer for the Issuance of a Temporary Restraining Order (TRO) or Writ of Preliminary
Injunction.
The main issue raised in the petition is whether respondents officers of the DOH acted
without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and in violation of the provisions of the Constitution in promulgating
the RIRR.3
On August 15, 2006, the Court issued a Resolution granting a TRO enjoining respondents
from implementing the questioned RIRR.
After the Comment and Reply had been filed, the Court set the case for oral arguments on
June 19, 2007. The Court issued an Advisory (Guidance for Oral Arguments) dated June 5,
2007, to wit:
The Court hereby sets the following issues:
1. Whether or not petitioner is a real party-in-interest;
2. Whether Administrative Order No. 2006-0012 or the Revised Implementing
Rules and Regulations (RIRR) issued by the Department of Health (DOH) is not
constitutional;
2.1 Whether the RIRR is in accord with the provisions of Executive Order No. 51
(Milk Code);
2.2 Whether pertinent international agreements 1 entered into by the Philippines
are part of the law of the land and may be implemented by the DOH through the
RIRR; If in the affirmative, whether the RIRR is in accord with the international
agreements;
2.3 Whether Sections 4, 5(w), 22, 32, 47, and 52 of the RIRR violate the due
process clause and are in restraint of trade; and
2.4 Whether Section 13 of the RIRR on Total Effect provides sufficient
standards.
_____________
 1 (1) United Nations Convention on the Rights of the Child; (2) the WHO and
Unicef "2002 Global Strategy on Infant and Young Child Feeding;" and (3) various
World Health Assembly (WHA) Resolutions.
The parties filed their respective memoranda.
The petition is partly imbued with merit.
On the issue of petitioner's standing
With regard to the issue of whether petitioner may prosecute this case as the real party-
in-interest, the Court adopts the view enunciated in Executive Secretary v. Court of
Appeals,4 to wit:
The modern view is that an association has standing to complain of injuries to its
members. This view fuses the legal identity of an association with that of its
members. An association has standing to file suit for its workers despite its
lack of direct interest if its members are affected by the action. An
organization has standing to assert the concerns of its constituents.
xxxx
x x x We note that, under its Articles of Incorporation, the respondent was
organized x x x to act as the representative of any individual, company, entity or
association on matters related to the manpower recruitment industry, and to
perform other acts and activities necessary to accomplish the purposes embodied
therein. The respondent is, thus, the appropriate party to assert the rights
of its members, because it and its members are in every practical sense
identical. x x x The respondent [association] is but the medium through which
its individual members seek to make more effective the expression of their
voices and the redress of their grievances. 5 (Emphasis supplied)
which was reasserted in Purok Bagong Silang Association, Inc. v. Yuipco ,6 where the Court
ruled that an association has the legal personality to represent its members because the
results of the case will affect their vital interests. 7
Herein petitioner's Amended Articles of Incorporation contains a similar provision just like
in Executive Secretary, that the association is formed "to represent directly or through
approved representatives the pharmaceutical and health care industry before the
Philippine Government and any of its agencies, the medical professions and the general
public."8 Thus, as an organization, petitioner definitely has an interest in fulfilling its
avowed purpose of representing members who are part of the pharmaceutical and health
care industry. Petitioner is duly authorized9 to take the appropriate course of action to
bring to the attention of government agencies and the courts any grievance suffered by its
members which are directly affected by the RIRR. Petitioner, which is mandated by its
Amended Articles of Incorporation to represent the entire industry, would be remiss in its
duties if it fails to act on governmental action that would affect any of its industry
members, no matter how few or numerous they are. Hence, petitioner, whose legal identity
is deemed fused with its members, should be considered as a real party-in-interest which
stands to be benefited or injured by any judgment in the present action.
On the constitutionality of the provisions of the RIRR
First, the Court will determine if pertinent international instruments adverted to by
respondents are part of the law of the land.
Petitioner assails the RIRR for allegedly going beyond the provisions of the Milk Code,
thereby amending and expanding the coverage of said law. The defense of the DOH is that
the RIRR implements not only the Milk Code but also various international
instruments10 regarding infant and young child nutrition. It is respondents' position that
said international instruments are deemed part of the law of the land and therefore the
DOH may implement them through the RIRR.
The Court notes that the following international instruments invoked by respondents,
namely: (1) The United Nations Convention on the Rights of the Child; (2) The International
Covenant on Economic, Social and Cultural Rights; and (3) the Convention on the Elimination
of All Forms of Discrimination Against Women, only provide in general terms that steps
must be taken by State Parties to diminish infant and child mortality and inform society of
the advantages of breastfeeding, ensure the health and well-being of families, and ensure
that women are provided with services and nutrition in connection with pregnancy and
lactation. Said instruments do not contain specific provisions regarding the use or
marketing of breastmilk substitutes.
The international instruments that do have specific provisions regarding breastmilk
substitutes are the ICMBS and various WHA Resolutions.
Under the 1987 Constitution, international law can become part of the sphere of domestic
law either by transformation or incorporation.11 The transformation method requires that
an international law be transformed into a domestic law through a constitutional mechanism
such as local legislation. The incorporation method applies when, by mere constitutional
declaration, international law is deemed to have the force of domestic law. 12
Treaties become part of the law of the land through transformation pursuant to Article
VII, Section 21 of the Constitution which provides that "[n]o treaty or international
agreement shall be valid and effective unless concurred in by at least two-thirds of all the
members of the Senate." Thus, treaties or conventional international law must go through a
process prescribed by the Constitution for it to be transformed into municipal law that can
be applied to domestic conflicts.13
The ICMBS and WHA Resolutions are not treaties as they have not been concurred in by
at least two-thirds of all members of the Senate as required under Section 21, Article VII
of the 1987 Constitution.
However, the ICMBS which was adopted by the WHA in 1981 had been transformed into
domestic law through local legislation, the Milk Code. Consequently, it is the Milk Code that
has the force and effect of law in this jurisdiction and not the ICMBS per se.
The Milk Code is almost a verbatim reproduction of the ICMBS, but it is well to emphasize
at this point that the Code did not adopt the provision in the ICMBS absolutely
prohibiting advertising or other forms of promotion to the general public of products
within the scope of the ICMBS. Instead, the Milk Code expressly provides that
advertising, promotion, or other marketing materials may be allowed if such materials
are duly authorized and approved by the Inter-Agency Committee (IAC).
On the other hand, Section 2, Article II of the 1987 Constitution, to wit:
SECTION 2. The Philippines renounces war as an instrument of national
policy, adopts the generally accepted principles of international law as part of
the law of the land and adheres to the policy of peace, equality, justice,
freedom, cooperation and amity with all nations. (Emphasis supplied)
embodies the incorporation method.14
In Mijares v. Ranada,15 the Court held thus:
[G]enerally accepted principles of international law, by virtue of the incorporation
clause of the Constitution, form part of the laws of the land even if they do not
derive from treaty obligations. The classical formulation in international law sees
those customary rules accepted as binding result from the combination [of] two
elements: the established, widespread, and consistent practice on the part of
States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a
belief that the practice in question is rendered obligatory by the existence of a
rule of law requiring it.16 (Emphasis supplied)
"Generally accepted principles of international law" refers to norms of general or
customary international law which are binding on all states, 17 i.e., renunciation of war as an
instrument of national policy, the principle of sovereign immunity, 18 a person's right to life,
liberty and due process,19 and pacta sunt servanda,20 among others. The concept of
"generally accepted principles of law" has also been depicted in this wise:
Some legal scholars and judges look upon certain "general principles of law" as a primary
source of international law because they have the "character of jus rationale" and are
"valid through all kinds of human societies."(Judge Tanaka in his dissenting opinion in the
1966 South West Africa Case, 1966 I.C.J. 296). O'Connell holds that certain priniciples
are part of international law because they are "basic to legal systems generally" and
hence part of the jus gentium. These principles, he believes, are established by a process
of reasoning based on the common identity of all legal systems. If there should be doubt or
disagreement, one must look to state practice and determine whether the municipal law
principle provides a just and acceptable solution. x x x 21 (Emphasis supplied)
Fr. Joaquin G. Bernas defines customary international law as follows:
Custom or customary international law means "a general and consistent practice
of states followed by them from a sense of legal obligation [opinio juris]."
(Restatement) This statement contains the two basic elements of custom:
the material factor, that is, how states behave, and the psychological
or subjective factor, that is, why they behave the way they do.
xxxx
The initial factor for determining the existence of custom is the actual behavior
of states. This includes several elements: duration, consistency, and generality of
the practice of states.
The required duration can be either short or long. x x x
xxxx
Duration therefore is not the most important element. More important is the
consistency and the generality of the practice. x x x
xxxx
Once the existence of state practice has been established, it becomes necessary
to determine why states behave the way they do. Do states behave the way they
do because they consider it obligatory to behave thus or do they do it only as
a matter of courtesy? Opinio juris, or the belief that a certain form of
behavior is obligatory, is what makes practice an international rule. Without
it, practice is not law.22(Underscoring and Emphasis supplied)
Clearly, customary international law is deemed incorporated into our domestic system. 23
WHA Resolutions have not been embodied in any local legislation. Have they attained the
status of customary law and should they then be deemed incorporated as part of the law of
the land?
The World Health Organization (WHO) is one of the international specialized agencies
allied with the United Nations (UN) by virtue of Article 57, 24 in relation to Article 6325 of
the UN Charter. Under the 1946 WHO Constitution, it is the WHA which determines the
policies of the WHO,26 and has the power to adopt regulations concerning "advertising and
labeling of biological, pharmaceutical and similar products moving in international
commerce,"27and to "make recommendations to members with respect to any matter within
the competence of the Organization."28 The legal effect of its regulations, as opposed to
recommendations, is quite different.
Regulations, along with conventions and agreements, duly adopted by the WHA bind
member states thus:
Article 19. The Health Assembly shall have authority to adopt conventions or
agreements with respect to any matter within the competence of the
Organization. A two-thirds vote of the Health Assembly shall be required for the
adoption of such conventions or agreements, which shall come into force for
each Member when accepted by it in accordance with its constitutional
processes.
Article 20. Each Member undertakes that it will, within eighteen months after
the adoption by the Health Assembly of a convention or agreement, take action
relative to the acceptance of such convention or agreement. Each Member
shall notify the Director-General of the action taken, and if it does not accept
such convention or agreement within the time limit, it will furnish a statement of
the reasons for non-acceptance. In case of acceptance, each Member agrees to
make an annual report to the Director-General in accordance with Chapter XIV.
Article 21. The Health Assembly shall have authority to adopt regulations
concerning: (a) sanitary and quarantine requirements and other procedures
designed to prevent the international spread of disease; (b) nomenclatures with
respect to diseases, causes of death and public health practices; (c) standards
with respect to diagnostic procedures for international use; (d) standards with
respect to the safety, purity and potency of biological, pharmaceutical and similar
products moving in international commerce; (e) advertising and labeling of
biological, pharmaceutical and similar products moving in international commerce.
Article 22. Regulations adopted pursuant to Article 21 shall come into force for
all Members after due notice has been given of their adoption by the Health
Assembly except for such Members as may notify the Director-General of
rejection or reservations within the period stated in the notice. (Emphasis
supplied)
On the other hand, under Article 23, recommendations of the WHA do not come into
force for members, in the same way that conventions or agreements under Article 19
and regulations under Article 21 come into force. Article 23 of the WHO Constitution
reads:
Article 23. The Health Assembly shall have authority to make
recommendations to Members with respect to any matter within the competence
of the Organization. (Emphasis supplied)
The absence of a provision in Article 23 of any mechanism by which the recommendation
would come into force for member states is conspicuous.
The former Senior Legal Officer of WHO, Sami Shubber, stated that WHA
recommendations are generally not binding, but they "carry moral and political weight, as
they constitute the judgment on a health issue of the collective membership of the highest
international body in the field of health."29 Even the ICMBS itself was adopted as a mere
recommendation, as WHA Resolution No. 34.22 states:
"The Thirty-Fourth World Health Assembly x x x adopts, in the sense of
Article 23 of the Constitution, the International Code of Marketing of
Breastmilk Substitutes annexed to the present resolution." (Emphasis supplied)
The Introduction to the ICMBS also reads as follows:
In January 1981, the Executive Board of the World Health Organization at its
sixty-seventh session, considered the fourth draft of the code, endorsed it, and
unanimously recommended to the Thirty-fourth World Health Assembly the text
of a resolution by which it would adopt the code in the form of a
recommendation rather than a regulation. x x x (Emphasis supplied)
The legal value of WHA Resolutions as recommendations is summarized in Article 62 of the
WHO Constitution, to wit:
Art. 62. Each member shall report annually on the action taken with respect to
recommendations made to it by the Organization, and with respect to
conventions, agreements and regulations.
Apparently, the WHA Resolution adopting the ICMBS and subsequent WHA Resolutions
urging member states to implement the ICMBS are merely recommendatory and legally
non-binding. Thus, unlike what has been done with the ICMBS whereby the legislature
enacted most of the provisions into law which is the Milk Code, the subsequent WHA
Resolutions,30 specifically providing for exclusive breastfeeding from 0-6 months,
continued breastfeeding up to 24 months, and absolutely prohibiting advertisements
and promotions of breastmilk substitutes, have not been adopted as a domestic law.
It is propounded that WHA Resolutions may constitute "soft law" or non-binding norms,
principles and practices that influence state behavior. 31
"Soft law" does not fall into any of the categories of international law set forth in Article
38, Chapter III of the 1946 Statute of the International Court of Justice. 32 It is,
however, an expression of non-binding norms, principles, and practices that influence state
behavior.33 Certain declarations and resolutions of the UN General Assembly fall under this
category.34 The most notable is the UN Declaration of Human Rights, which this Court has
enforced in various cases, specifically, Government of Hongkong Special Administrative
Region v. Olalia,35 Mejoff v. Director of Prisons,36 Mijares v. Rañada37 and Shangri-la
International Hotel Management, Ltd. v. Developers Group of Companies, Inc.. 38
The World Intellectual Property Organization (WIPO), a specialized agency attached to
the UN with the mandate to promote and protect intellectual property worldwide, has
resorted to soft law as a rapid means of norm creation, in order "to reflect and respond to
the changing needs and demands of its constituents." 39 Other international organizations
which have resorted to soft law include the International Labor Organization and the Food
and Agriculture Organization (in the form of the Codex Alimentarius).40
WHO has resorted to soft law. This was most evident at the time of the Severe Acute
Respiratory Syndrome (SARS) and Avian flu outbreaks.
Although the IHR Resolution does not create new international law binding on
WHO member states, it provides an excellent example of the power of "soft
law" in international relations. International lawyers typically distinguish
binding rules of international law-"hard law"-from non-binding norms,
principles, and practices that influence state behavior-"soft law." WHO has
during its existence generated many soft law norms, creating a "soft law
regime" in international governance for public health.
The "soft law" SARS and IHR Resolutions represent significant steps in laying
the political groundwork for improved international cooperation on infectious
diseases. These resolutions clearly define WHO member states' normative duty
to cooperate fully with other countries and with WHO in connection with
infectious disease surveillance and response to outbreaks.
This duty is neither binding nor enforceable, but, in the wake of the SARS
epidemic, the duty is powerful politically for two reasons. First, the SARS
outbreak has taught the lesson that participating in, and enhancing, international
cooperation on infectious disease controls is in a country's self-interest x x x if
this warning is heeded, the "soft law" in the SARS and IHR Resolution could
inform the development of general and consistent state practice on infectious
disease surveillance and outbreak response, perhaps crystallizing eventually into
customary international law on infectious disease prevention and control. 41
In the Philippines, the executive department implemented certain measures recommended
by WHO to address the outbreaks of SARS and Avian flu by issuing Executive Order
(E.O.) No. 201 on April 26, 2003 and E.O. No. 280 on February 2, 2004, delegating to
various departments broad powers to close down schools/establishments, conduct health
surveillance and monitoring, and ban importation of poultry and agricultural products.
It must be emphasized that even under such an international emergency, the duty of a
state to implement the IHR Resolution was still considered not binding or enforceable,
although said resolutions had great political influence.
As previously discussed, for an international rule to be considered as customary law, it
must be established that such rule is being followed by states because they consider it
obligatory to comply with such rules (opinio juris). Respondents have not presented any
evidence to prove that the WHA Resolutions, although signed by most of the member
states, were in fact enforced or practiced by at least a majority of the member states;
neither have respondents proven that any compliance by member states with said WHA
Resolutions was obligatory in nature.
Respondents failed to establish that the provisions of pertinent WHA Resolutions are
customary international law that may be deemed part of the law of the land.
Consequently, legislation is necessary to transform the provisions of the WHA Resolutions
into domestic law. The provisions of the WHA Resolutions cannot be considered as part
of the law of the land that can be implemented by executive agencies without the
need of a law enacted by the legislature.
Second, the Court will determine whether the DOH may implement the provisions of the
WHA Resolutions by virtue of its powers and functions under the Revised Administrative
Code even in the absence of a domestic law.
Section 3, Chapter 1, Title IX of the Revised Administrative Code of 1987 provides that
the DOH shall define the national health policy and implement a national health plan
within the framework of the government's general policies and plans, and issue orders and
regulations concerning the implementation of established health policies.
It is crucial to ascertain whether the absolute prohibition on advertising and other forms
of promotion of breastmilk substitutes provided in some WHA Resolutions has been
adopted as part of the national health policy.
Respondents submit that the national policy on infant and young child feeding is embodied
in A.O. No. 2005-0014, dated May 23, 2005. Basically, the Administrative Order declared
the following policy guidelines: (1) ideal breastfeeding practices, such as early initiation of
breastfeeding, exclusive breastfeeding for the first six months, extended breastfeeding
up to two years and beyond; (2) appropriate complementary feeding, which is to start at
age six months; (3) micronutrient supplementation; (4) universal salt iodization; (5) the
exercise of other feeding options; and (6) feeding in exceptionally difficult circumstances.
Indeed, the primacy of breastfeeding for children is emphasized as a national health
policy. However, nowhere in A.O. No. 2005-0014 is it declared that as part of such
health policy, the advertisement or promotion of breastmilk substitutes should be
absolutely prohibited.
The national policy of protection, promotion and support of breastfeeding cannot
automatically be equated with a total ban on advertising for breastmilk substitutes.
In view of the enactment of the Milk Code which does not contain a total ban on the
advertising and promotion of breastmilk substitutes, but instead, specifically creates an
IAC which will regulate said advertising and promotion, it follows that a total ban policy
could be implemented only pursuant to a law amending the Milk Code passed by the
constitutionally authorized branch of government, the legislature.
Thus, only the provisions of the Milk Code, but not those of subsequent WHA Resolutions,
can be validly implemented by the DOH through the subject RIRR.
Third, the Court will now determine whether the provisions of the RIRR are in accordance
with those of the Milk Code.
cd9. The RIRR provides for repeal of existing laws to the contrary.
The Court shall resolve the merits of the allegations of petitioner seriatim.
1. Petitioner is mistaken in its claim that the Milk Code's coverage is limited only to
children 0-12 months old. Section 3 of the Milk Code states:
SECTION 3. Scope of the Code – The Code applies to the marketing, and
practices related thereto, of the following products: breastmilk substitutes,
including infant formula; other milk products, foods and beverages, including
bottle-fed complementary foods, when marketed or otherwise represented to be
suitable, with or without modification, for use as a partial or total replacement of
breastmilk; feeding bottles and teats. It also applies to their quality and
availability, and to information concerning their use.
Clearly, the coverage of the Milk Code is not dependent on the age of the child but on
the kind of product being marketed to the public. The law treats infant formula, bottle-
fed complementary food, and breastmilk substitute as separate and distinct product
categories.
Section 4(h) of the Milk Code defines infant formula as "a breastmilk substitute x x x to
satisfy the normal nutritional requirements of infants up to between four to six months of
age, and adapted to their physiological characteristics"; while under Section 4(b), bottle-
fed complementary food refers to "any food, whether manufactured or locally prepared,
suitable as a complement to breastmilk or infant formula, when either becomes insufficient
to satisfy the nutritional requirements of the infant." An infant under Section 4(e) is a
person falling within the age bracket 0-12 months. It is the nourishment of this group of
infants or children aged 0-12 months that is sought to be promoted and protected by the
Milk Code.
But there is another target group. Breastmilk substitute is defined under Section 4(a) as
"any food being marketed or otherwise presented as a partial or total replacement for
breastmilk, whether or not suitable for that purpose." This section conspicuously lacks
reference to any particular age-group of children. Hence, the provision of the Milk
Code cannot be considered exclusive for children aged 0-12 months. In other words,
breastmilk substitutes may also be intended for young children more than 12 months of
age. Therefore, by regulating breastmilk substitutes, the Milk Code also intends to protect
and promote the nourishment of children more than 12 months old.
Evidently, as long as what is being marketed falls within the scope of the Milk Code as
provided in Section 3, then it can be subject to regulation pursuant to said law, even if the
product is to be used by children aged over 12 months.
There is, therefore, nothing objectionable with Sections 2 42 and 5(ff)43 of the RIRR.
2. It is also incorrect for petitioner to say that the RIRR, unlike the Milk Code, does not
recognize that breastmilk substitutes may be a proper and possible substitute for
breastmilk.
The entirety of the RIRR, not merely truncated portions thereof, must be considered and
construed together. As held in De Luna v. Pascual,44 "[t]he particular words, clauses and
phrases in the Rule should not be studied as detached and isolated expressions, but the
whole and every part thereof must be considered in fixing the meaning of any of its parts
and in order to produce a harmonious whole."
Section 7 of the RIRR provides that "when medically indicated and only when
necessary, the use of breastmilk substitutes is proper if based on complete and updated
information." Section 8 of the RIRR also states that information and educational materials
should include information on the proper use of infant formula when the use thereof is
needed.
Hence, the RIRR, just like the Milk Code, also recognizes that in certain cases, the
use of breastmilk substitutes may be proper.
3. The Court shall ascertain the merits of allegations 345 and 446 together as they are
interlinked with each other.
To resolve the question of whether the labeling requirements and advertising regulations
under the RIRR are valid, it is important to deal first with the nature, purpose, and depth
of the regulatory powers of the DOH, as defined in general under the 1987 Administrative
Code,47 and as delegated in particular under the Milk Code.
Health is a legitimate subject matter for regulation by the DOH (and certain other
administrative agencies) in exercise of police powers delegated to it. The sheer span of
jurisprudence on that matter precludes the need to further discuss it. .48 However, health
information, particularly advertising materials on apparently non-toxic products like
breastmilk substitutes and supplements, is a relatively new area for regulation by the
DOH.49
As early as the 1917 Revised Administrative Code of the Philippine Islands, 50 health
information was already within the ambit of the regulatory powers of the predecessor of
DOH.51 Section 938 thereof charged it with the duty to protect the health of the people,
and vested it with such powers as "(g) the dissemination of hygienic information among the
people and especially the inculcation of knowledge as to the proper care of infants and
the methods of preventing and combating dangerous communicable diseases."
Seventy years later, the 1987 Administrative Code tasked respondent DOH to carry out
the state policy pronounced under Section 15, Article II of the 1987 Constitution, which is
"to protect and promote the right to health of the people and instill health
consciousness among them."52 To that end, it was granted under Section 3 of the
Administrative Code the power to "(6) propagate health information and educate the
population on important health, medical and environmental matters which have health
implications."53
When it comes to information regarding nutrition of infants and young children, however,
the Milk Code specifically delegated to the Ministry of Health (hereinafter referred to as
DOH) the power to ensure that there is adequate, consistent and objective information on
breastfeeding and use of breastmilk substitutes, supplements and related products; and
the power to control such information. These are expressly provided for in Sections 12 and
5(a), to wit:
SECTION 12. Implementation and Monitoring –
xxxx
(b) The Ministry of Health shall be principally responsible for the implementation
and enforcement of the provisions of this Code. For this purpose, the Ministry of
Health shall have the following powers and functions:
(1) To promulgate such rules and regulations as are necessary or proper
for the implementation of this Code and the accomplishment of its
purposes and objectives.
xxxx
(4) To exercise such other powers and functions as may be necessary
for or incidental to the attainment of the purposes and objectives of
this Code.
SECTION 5. Information and Education –
(a) The government shall ensure that objective and consistent information is
provided on infant feeding, for use by families and those involved in the field of
infant nutrition. This responsibility shall cover the planning, provision, design and
dissemination of information, and the control thereof, on infant nutrition.
(Emphasis supplied)
Further, DOH is authorized by the Milk Code to control the content of any information on
breastmilk vis-à-visbreastmilk substitutes, supplement and related products, in the
following manner:
SECTION 5. x x x
(b) Informational and educational materials, whether written, audio, or visual,
dealing with the feeding of infants and intended to reach pregnant women and
mothers of infants, shall include clear information on all the following points: (1)
the benefits and superiority of breastfeeding; (2) maternal nutrition, and the
preparation for and maintenance of breastfeeding; (3) the negative effect on
breastfeeding of introducing partial bottlefeeding; (4) the difficulty of reversing
the decision not to breastfeed; and (5) where needed, the proper use of infant
formula, whether manufactured industrially or home-prepared. When such
materials contain information about the use of infant formula, they shall
include the social and financial implications of its use; the health hazards of
inappropriate foods or feeding methods; and, in particular, the health
hazards of unnecessary or improper use of infant formula and other
breastmilk substitutes. Such materials shall not use any picture or text
which may idealize the use of breastmilk substitutes.
SECTION 8. Health Workers –
xxxx
(b) Information provided by manufacturers and distributors to health
professionals regarding products within the scope of this Code shall be
restricted to scientific and factual matters, and such information shall not
imply or create a belief that bottlefeeding is equivalent or superior to
breastfeeding. It shall also include the information specified in Section 5(b).
SECTION 10. Containers/Label –
(a) Containers and/or labels shall be designed to provide the necessary
information about the appropriate use of the products, and in such a way as not
to discourage breastfeeding.
xxxx
(d) The term "humanized," "maternalized" or similar terms shall not be used.
(Emphasis supplied)
The DOH is also authorized to control the purpose of the information and to whom such
information may be disseminated under Sections 6 through 9 of the Milk Code 54 to ensure
that the information that would reach pregnant women, mothers of infants, and health
professionals and workers in the health care system is restricted to scientific and factual
matters and shall not imply or create a belief that bottlefeeding is equivalent or superior
to breastfeeding.
It bears emphasis, however, that the DOH's power under the Milk Code
to control information regarding breastmilk vis-a-vis breastmilk substitutes is not
absolute as the power to control does not encompass the power to absolutely prohibit the
advertising, marketing, and promotion of breastmilk substitutes.
The following are the provisions of the Milk Code that unequivocally indicate that the
control over information given to the DOH is not absolute and that absolute prohibition is
not contemplated by the Code:
a) Section 2 which requires adequate information and appropriate marketing and
distribution of breastmilk substitutes, to wit:
SECTION 2. Aim of the Code – The aim of the Code is to contribute to
the provision of safe and adequate nutrition for infants by the
protection and promotion of breastfeeding and by ensuring the proper
use of breastmilk substitutes and breastmilk supplements when these
are necessary, on the basis of adequate information and through
appropriate marketing and distribution.
b) Section 3 which specifically states that the Code applies to the marketing of
and practices related to breastmilk substitutes, including infant formula, and to
information concerning their use;
c) Section 5(a) which provides that the government shall ensure that objective
and consistent information is provided on infant feeding;
d) Section 5(b) which provides that written, audio or visual informational and
educational materials shall not use any picture or text which may idealize the use
of breastmilk substitutes and should include information on the health hazards of
unnecessary or improper use of said product;
e) Section 6(a) in relation to Section 12(a) which creates and empowers the IAC
to review and examine advertising, promotion, and other marketing materials;
f) Section 8(b) which states that milk companies may provide information to
health professionals but such information should be restricted to factual and
scientific matters and shall not imply or create a belief that bottlefeeding is
equivalent or superior to breastfeeding; and
g) Section 10 which provides that containers or labels should not contain
information that would discourage breastfeeding and idealize the use of infant
formula.
It is in this context that the Court now examines the assailed provisions of the RIRR
regarding labeling and advertising.
Sections 1355 on "total effect" and 2656 of Rule VII of the RIRR contain some labeling
requirements, specifically: a) that there be a statement that there is no substitute to
breastmilk; and b) that there be a statement that powdered infant formula may contain
pathogenic microorganisms and must be prepared and used appropriately. Section 16 57of
the RIRR prohibits all health and nutrition claims for products within the scope of the Milk
Code, such as claims of increased emotional and intellectual abilities of the infant and
young child.
These requirements and limitations are consistent with the provisions of Section 8 of the
Milk Code, to wit:
SECTION 8. Health workers -
xxxx
(b) Information provided by manufacturers and distributors to health
professionals regarding products within the scope of this Code shall
be restricted to scientific and factual matters, and such information shall
notimply or create a belief that bottlefeeding is equivalent or superior to
breastfeeding. It shall also include the information specified in Section
5.58 (Emphasis supplied)
and Section 10(d)59 which bars the use on containers and labels of the terms "humanized,"
"maternalized," or similar terms.
These provisions of the Milk Code expressly forbid information that would imply or create
a belief that there is any milk product equivalent to breastmilk or which is humanized or
maternalized, as such information would be inconsistent with the superiority of
breastfeeding.
It may be argued that Section 8 of the Milk Code refers only to information given to
health workers regarding breastmilk substitutes, not to containers and labels thereof.
However, such restrictive application of Section 8(b) will result in the absurd situation in
which milk companies and distributors are forbidden to claim to health workers that their
products are substitutes or equivalents of breastmilk, and yet be allowed to display on the
containers and labels of their products the exact opposite message. That askewed
interpretation of the Milk Code is precisely what Section 5(a) thereof seeks to avoid by
mandating that all information regarding breastmilk vis-a-vis breastmilk substitutes
be consistent, at the same time giving the government control over planning, provision,
design, and dissemination of information on infant feeding.
Thus, Section 26(c) of the RIRR which requires containers and labels to state that the
product offered is not a substitute for breastmilk, is a reasonable means of enforcing
Section 8(b) of the Milk Code and deterring circumvention of the protection and promotion
of breastfeeding as embodied in Section 260 of the Milk Code.
Section 26(f)61 of the RIRR is an equally reasonable labeling requirement. It implements
Section 5(b) of the Milk Code which reads:
SECTION 5. x x x
xxxx
(b) Informational and educational materials, whether written, audio, or visual,
dealing with the feeding of infants and intended to reach pregnant women and
mothers of infants, shall include clear information on all the following points: x x
x (5) where needed, the proper use of infant formula, whether manufactured
industrially or home-prepared. When such materials contain information about
the use of infant formula, they shall include the social and financial implications
of its use; the health hazards of inappropriate foods or feeding methods;
and, in particular, the health hazards of unnecessary or improper use of
infant formula and other breastmilk substitutes. Such materials shall not use
any picture or text which may idealize the use of breastmilk substitutes.
(Emphasis supplied)
The label of a product contains information about said product intended for the buyers
thereof. The buyers of breastmilk substitutes are mothers of infants, and Section 26 of
the RIRR merely adds a fair warning about the likelihood of pathogenic microorganisms
being present in infant formula and other related products when these are prepared and
used inappropriately.
Petitioner’s counsel has admitted during the hearing on June 19, 2007 that formula milk is
prone to contaminations and there is as yet no technology that allows production of
powdered infant formula that eliminates all forms of contamination. 62
Ineluctably, the requirement under Section 26(f) of the RIRR for the label to contain the
message regarding health hazards including the possibility of contamination with
pathogenic microorganisms is in accordance with Section 5(b) of the Milk Code.
The authority of DOH to control information regarding breastmilk vis-a-vis breastmilk
substitutes and supplements and related products cannot be questioned. It is its
intervention into the area of advertising, promotion, and marketing that is being assailed
by petitioner.
In furtherance of Section 6(a) of the Milk Code, to wit:
SECTION 6. The General Public and Mothers. –
(a) No advertising, promotion or other marketing materials, whether written,
audio or visual, for products within the scope of this Code shall be printed,
published, distributed, exhibited and broadcast unless such materials are duly
authorized and approved by an inter-agency committee created herein pursuant
to the applicable standards provided for in this Code.
the Milk Code invested regulatory authority over advertising, promotional and marketing
materials to an IAC, thus:
SECTION 12. Implementation and Monitoring -
(a) For purposes of Section 6(a) of this Code, an inter-agency committee
composed of the following members is hereby created:
Minister of Health -------------------
Minister of Trade and Industry -------------------
Minister of Justice -------------------
Minister of Social Services and Development -------------------
The members may designate their duly authorized representative to every
meeting of the Committee.
The Committee shall have the following powers and functions:
(1) To review and examine all advertising. promotion or other marketing
materials, whether written, audio or visual, on products within the scope
of this Code;
(2) To approve or disapprove, delete objectionable portions from and
prohibit the printing, publication, distribution, exhibition and broadcast
of, all advertising promotion or other marketing materials, whether
written, audio or visual, on products within the scope of this Code;
 (3) To prescribe the internal and operational procedure for the
exercise of its powers and functions as well as the performance of its
duties and responsibilities; and
(4) To promulgate such rules and regulations as are necessary or
proper for the implementation of Section 6(a) of this Code. x x x
(Emphasis supplied)
However, Section 11 of the RIRR, to wit:
SECTION 11. Prohibition – No advertising, promotions, sponsorships, or
marketing materials and activities for breastmilk substitutes intended for
infants and young children up to twenty-four (24) months, shall be allowed,
because they tend to convey or give subliminal messages or impressions that
undermine breastmilk and breastfeeding or otherwise exaggerate breastmilk
substitutes and/or replacements, as well as related products covered within the
scope of this Code.
prohibits advertising, promotions, sponsorships or marketing materials and activities for
breastmilk substitutes in line with the RIRR’s declaration of principle under Section 4(f),
to wit:
SECTION 4. Declaration of Principles –
xxxx
(f) Advertising, promotions, or sponsorships of infant formula, breastmilk
substitutes and other related products are prohibited.
The DOH, through its co-respondents, evidently arrogated to itself not only the regulatory
authority given to the IAC but also imposed absolute prohibition on advertising, promotion,
and marketing.
Yet, oddly enough, Section 12 of the RIRR reiterated the requirement of the Milk Code in
Section 6 thereof for prior approval by IAC of all advertising, marketing and promotional
materials prior to dissemination.
Even respondents, through the OSG, acknowledged the authority of IAC, and repeatedly
insisted, during the oral arguments on June 19, 2007, that the prohibition under Section 11
is not actually operational, viz:
SOLICITOR GENERAL DEVANADERA:
xxxx
x x x Now, the crux of the matter that is being questioned by Petitioner is
whether or not there is an absolute prohibition on advertising making AO 2006-
12 unconstitutional. We maintained that what AO 2006-12 provides is not an
absolute prohibition because Section 11 while it states and it is entitled
prohibition it states that no advertising, promotion, sponsorship or marketing
materials and activities for breast milk substitutes intended for infants and
young children up to 24 months shall be allowed because this is the standard they
tend to convey or give subliminal messages or impression undermine that
breastmilk or breastfeeding x x x.
We have to read Section 11 together with the other Sections because the other
Section, Section 12, provides for the inter agency committee that is empowered
to process and evaluate all the advertising and promotion materials.
xxxx
What AO 2006-12, what it does, it does not prohibit the sale and manufacture, it
simply regulates the advertisement and the promotions of breastfeeding milk
substitutes.
xxxx
Now, the prohibition on advertising, Your Honor, must be taken together with the
provision on the Inter-Agency Committee that processes and evaluates because
there may be some information dissemination that are straight forward
information dissemination. What the AO 2006 is trying to prevent is any material
that will undermine the practice of breastfeeding, Your Honor.
xxxx
ASSOCIATE JUSTICE SANTIAGO:
Madam Solicitor General, under the Milk Code, which body has authority or power
to promulgate Rules and Regulations regarding the Advertising, Promotion and
Marketing of Breastmilk Substitutes?
SOLICITOR GENERAL DEVANADERA:
Your Honor, please, it is provided that the Inter-Agency Committee, Your Honor.
xxxx
ASSOCIATE JUSTICE SANTIAGO:
x x x Don't you think that the Department of Health overstepped its rule making
authority when it totally banned advertising and promotion under Section 11
prescribed the total effect rule as well as the content of materials under Section
13 and 15 of the rules and regulations?
SOLICITOR GENERAL DEVANADERA:
Your Honor, please, first we would like to stress that there is no total absolute
ban. Second, the Inter-Agency Committee is under the Department of Health,
Your Honor.
xxxx
ASSOCIATE JUSTICE NAZARIO:
x x x Did I hear you correctly, Madam Solicitor, that there is no absolute ban on
advertising of breastmilk substitutes in the Revised Rules?
SOLICITOR GENERAL DEVANADERA:
Yes, your Honor.
ASSOCIATE JUSTICE NAZARIO:
But, would you nevertheless agree that there is an absolute ban on advertising of
breastmilk substitutes intended for children two (2) years old and younger?
SOLICITOR GENERAL DEVANADERA:
It's not an absolute ban, Your Honor, because we have the Inter-Agency
Committee that can evaluate some advertising and promotional materials, subject
to the standards that we have stated earlier, which are- they should not
undermine breastfeeding, Your Honor.
xxxx
x x x Section 11, while it is titled Prohibition, it must be taken in relation with the
other Sections, particularly 12 and 13 and 15, Your Honor, because it is
recognized that the Inter-Agency Committee has that power to evaluate
promotional materials, Your Honor.
ASSOCIATE JUSTICE NAZARIO:
So in short, will you please clarify there's no absolute ban on advertisement
regarding milk substitute regarding infants two (2) years below?
SOLICITOR GENERAL DEVANADERA:
We can proudly say that the general rule is that there is a prohibition, however,
we take exceptions and standards have been set. One of which is that, the Inter-
Agency Committee can allow if the advertising and promotions will not undermine
breastmilk and breastfeeding, Your Honor.63
Sections 11 and 4(f) of the RIRR are clearly violative of the Milk Code.
However, although it is the IAC which is authorized to promulgate rules and regulations for
the approval or rejection of advertising, promotional, or other marketing materials under
Section 12(a) of the Milk Code, said provision must be related to Section 6 thereof which
in turn provides that the rules and regulations must be "pursuant to the applicable
standards provided for in this Code." Said standards are set forth in Sections 5(b), 8(b),
and 10 of the Code, which, at the risk of being repetitious, and for easy reference, are
quoted hereunder:
SECTION 5. Information and Education –
xxxx
(b) Informational and educational materials, whether written, audio, or visual,
dealing with the feeding of infants and intended to reach pregnant women and
mothers of infants, shall include clear information on all the following points: (1)
the benefits and superiority of breastfeeding; (2) maternal nutrition, and the
preparation for and maintenance of breastfeeding; (3) the negative effect on
breastfeeding of introducing partial bottlefeeding; (4) the difficulty of reversing
the decision not to breastfeed; and (5) where needed, the proper use of infant
formula, whether manufactured industrially or home-prepared. When such
materials contain information about the use of infant formula, they shall include
the social and financial implications of its use; the health hazards of
inappropriate foods of feeding methods; and, in particular, the health hazards of
unnecessary or improper use of infant formula and other breastmilk substitutes.
Such materials shall not use any picture or text which may idealize the use of
breastmilk substitutes.
xxxx
SECTION 8. Health Workers. –
xxxx
 (b) Information provided by manufacturers and distributors to health
professionals regarding products within the scope of this Code shall be
restricted to scientific and factual matters and such information shall not imply
or create a belief that bottle feeding is equivalent or superior to breastfeeding.
It shall also include the information specified in Section 5(b).
xxxx
SECTION 10. Containers/Label –
(a) Containers and/or labels shall be designed to provide the necessary
information about the appropriate use of the products, and in such a way as not
to discourage breastfeeding.
(b) Each container shall have a clear, conspicuous and easily readable and
understandable message in Pilipino or English printed on it, or on a label, which
message can not readily become separated from it, and which shall include the
following points:
(i) the words "Important Notice" or their equivalent;
(ii) a statement of the superiority of breastfeeding;
(iii) a statement that the product shall be used only on the advice of a
health worker as to the need for its use and the proper methods of use;
and
(iv) instructions for appropriate preparation, and a warning against the
health hazards of inappropriate preparation.
Section 12(b) of the Milk Code designates the DOH as the principal implementing agency
for the enforcement of the provisions of the Code. In relation to such responsibility of the
DOH, Section 5(a) of the Milk Code states that:
SECTION 5. Information and Education –
(a) The government shall ensure that objective and consistent information is
provided on infant feeding, for use by families and those involved in the field of
infant nutrition. This responsibility shall cover the planning, provision, design and
dissemination of information, and the control thereof, on infant nutrition.
(Emphasis supplied)
Thus, the DOH has the significant responsibility to translate into operational terms
the standards set forth in Sections 5, 8, and 10 of the Milk Code, by which the IAC
shall screen advertising, promotional, or other marketing materials.
It is pursuant to such responsibility that the DOH correctly provided for Section 13 in the
RIRR which reads as follows:
SECTION 13. "Total Effect" - Promotion of products within the scope of this
Code must be objective and should not equate or make the product appear to be
as good or equal to breastmilk or breastfeeding in the advertising concept. It
must not in any case undermine breastmilk or breastfeeding. The "total effect"
should not directly or indirectly suggest that buying their product would produce
better individuals, or resulting in greater love, intelligence, ability, harmony or in
any manner bring better health to the baby or other such exaggerated and
unsubstantiated claim.
Such standards bind the IAC in formulating its rules and regulations on advertising,
promotion, and marketing. Through that single provision, the DOH exercises control over
the information content of advertising, promotional and marketing materials on
breastmilk vis-a-vis breastmilk substitutes, supplements and other related products. It
also sets a viable standard against which the IAC may screen such materials before they
are made public.
In Equi-Asia Placement, Inc. vs. Department of Foreign Affairs ,64 the Court held:
x x x [T]his Court had, in the past, accepted as sufficient standards the
following: "public interest," "justice and equity," "public convenience and welfare,"
and "simplicity, economy and welfare."65
In this case, correct information as to infant feeding and nutrition is infused with public
interest and welfare.
4. With regard to activities for dissemination of information to health professionals, the
Court also finds that there is no inconsistency between the provisions of the Milk Code and
the RIRR. Section 7(b)66 of the Milk Code, in relation to Section 8(b) 67 of the same Code,
allows dissemination of information to health professionals but such information is
restricted to scientific and factual matters.
Contrary to petitioner's claim, Section 22 of the RIRR does not prohibit the giving of
information to health professionals on scientific and factual matters. What it prohibits
is the involvement of the manufacturer and distributor of the products covered by the
Code in activities for the promotion, education and production of Information, Education
and Communication (IEC) materials regarding breastfeeding that are intended for women
and children. Said provision cannot be construed to encompass even the dissemination of
information to health professionals, as restricted by the Milk Code.
5. Next, petitioner alleges that Section 8(e)68 of the Milk Code permits milk manufacturers
and distributors to extend assistance in research and in the continuing education of health
professionals, while Sections 22 and 32 of the RIRR absolutely forbid the same. Petitioner
also assails Section 4(i)69 of the RIRR prohibiting milk manufacturers' and distributors'
participation in any policymaking body in relation to the advancement of breastfeeding.
Section 4(i) of the RIRR provides that milk companies and their representatives should not
form part of any policymaking body or entity in relation to the advancement of
breastfeeding. The Court finds nothing in said provisions which contravenes the Milk Code.
Note that under Section 12(b) of the Milk Code, it is the DOH which shall be principally
responsible for the implementation and enforcement of the provisions of said Code. It is
entirely up to the DOH to decide which entities to call upon or allow to be part of
policymaking bodies on breastfeeding. Therefore, the RIRR's prohibition on milk companies’
participation in any policymaking body in relation to the advancement of breastfeeding is in
accord with the Milk Code.
Petitioner is also mistaken in arguing that Section 22 of the RIRR prohibits milk companies
from giving reasearch assistance and continuing education to health professionals. Section
2270 of the RIRR does not pertain to research assistance to or the continuing
education of health professionals; rather, it deals with breastfeeding promotion
and education for women and children. Nothing in Section 22 of the RIRR prohibits milk
companies from giving assistance for research or continuing education to health
professionals; hence, petitioner's argument against this particular provision must be struck
down.
It is Sections 971 and 1072 of the RIRR which govern research assistance. Said sections of
the RIRR provide that research assistance for health workers and researchers may be
allowed upon approval of an ethics committee, and with certain disclosure requirements
imposed on the milk company and on the recipient of the research award.
The Milk Code endows the DOH with the power to determine how such research or
educational assistance may be given by milk companies or under what conditions health
workers may accept the assistance. Thus, Sections 9 and 10 of the RIRR imposing
limitations on the kind of research done or extent of assistance given by milk companies
are completely in accord with the Milk Code.
Petitioner complains that Section 3273 of the RIRR prohibits milk companies from giving
assistance, support, logistics or training to health workers. This provision is within the
prerogative given to the DOH under Section 8(e)74of the Milk Code, which provides that
manufacturers and distributors of breastmilk substitutes may assist in researches,
scholarships and the continuing education, of health professionals in accordance with the
rules and regulations promulgated by the Ministry of Health, now DOH.
6. As to the RIRR's prohibition on donations, said provisions are also consistent with the
Milk Code. Section 6(f) of the Milk Code provides that donations may be made by
manufacturers and distributors of breastmilk substitutes upon the request or with the
approval of the DOH. The law does not proscribe the refusal of donations. The Milk Code
leaves it purely to the discretion of the DOH whether to request or accept such donations.
The DOH then appropriately exercised its discretion through Section 51 75 of the RIRR
which sets forth its policy not to request or approve donations from manufacturers and
distributors of breastmilk substitutes.
It was within the discretion of the DOH when it provided in Section 52 of the RIRR that
any donation from milk companies not covered by the Code should be coursed through the
IAC which shall determine whether such donation should be accepted or refused. As
reasoned out by respondents, the DOH is not mandated by the Milk Code to accept
donations. For that matter, no person or entity can be forced to accept a donation. There
is, therefore, no real inconsistency between the RIRR and the law because the Milk Code
does not prohibit the DOH from refusing donations.
7. With regard to Section 46 of the RIRR providing for administrative sanctions that are
not found in the Milk Code, the Court upholds petitioner's objection thereto.
Respondent's reliance on Civil Aeronautics Board v. Philippine Air Lines, Inc.76 is misplaced.
The glaring difference in said case and the present case before the Court is that, in
the Civil Aeronautics Board, the Civil Aeronautics Administration (CAA) was expressly
granted by the law (R.A. No. 776) the power to impose fines and civil penalties, while
the Civil Aeronautics Board (CAB) was granted by the same law the power to review on
appeal the order or decision of the CAA and to determine whether to impose, remit,
mitigate, increase or compromise such fine and civil penalties. Thus, the Court upheld the
CAB's Resolution imposing administrative fines.
In a more recent case, Perez v. LPG Refillers Association of the Philippines, Inc .,77 the
Court upheld the Department of Energy (DOE) Circular No. 2000-06-10
implementing Batas Pambansa (B.P.) Blg. 33. The circular provided for fines for the
commission of prohibited acts. The Court found that nothing in the circular contravened
the law because the DOE was expressly authorized by B.P. Blg. 33 and R.A. No. 7638 to
impose fines or penalties.
In the present case, neither the Milk Code nor the Revised Administrative Code grants the
DOH the authority to fix or impose administrative fines. Thus, without any express grant
of power to fix or impose such fines, the DOH cannot provide for those fines in the RIRR.
In this regard, the DOH again exceeded its authority by providing for such fines or
sanctions in Section 46 of the RIRR. Said provision is, therefore, null and void.
The DOH is not left without any means to enforce its rules and regulations. Section 12(b)
(3) of the Milk Code authorizes the DOH to "cause the prosecution of the violators of this
Code and other pertinent laws on products covered by this Code." Section 13 of the Milk
Code provides for the penalties to be imposed on violators of the provision of the Milk
Code or the rules and regulations issued pursuant to it, to wit:
SECTION 13. Sanctions –
(a) Any person who violates the provisions of this Code or the rules and
regulations issued pursuant to this Code shall, upon conviction, be punished by a
 penalty of two (2) months to one (1) year imprisonment or a fine of not less than
One Thousand Pesos (P1,000.00) nor more than Thirty Thousand Pesos
(P30,000.00) or both. Should the offense be committed by a juridical person, the
chairman of the Board of Directors, the president, general manager, or the
partners and/or the persons directly responsible therefor, shall be penalized.
(b) Any license, permit or authority issued by any government agency to any
health worker, distributor, manufacturer, or marketing firm or personnel for the
practice of their profession or occupation, or for the pursuit of their business,
may, upon recommendation of the Ministry of Health, be suspended or revoked in
the event of repeated violations of this Code, or of the rules and regulations
issued pursuant to this Code. (Emphasis supplied)
8. Petitioner’s claim that Section 57 of the RIRR repeals existing laws that are contrary to
the RIRR is frivolous.
Section 57 reads:
SECTION 57. Repealing Clause - All orders, issuances, and rules and regulations
or parts thereof inconsistent with these revised rules and implementing
regulations are hereby repealed or modified accordingly.
Section 57 of the RIRR does not provide for the repeal of laws but only orders, issuances
and rules and regulations. Thus, said provision is valid as it is within the DOH's rule-making
power.
An administrative agency like respondent possesses quasi-legislative or rule-making power
or the power to make rules and regulations which results in delegated legislation that is
within the confines of the granting statute and the Constitution, and subject to the
doctrine of non-delegability and separability of powers. 78 Such express grant of rule-
making power necessarily includes the power to amend, revise, alter, or repeal the
same.79 This is to allow administrative agencies flexibility in formulating and adjusting the
details and manner by which they are to implement the provisions of a law, 80 in order to
make it more responsive to the times. Hence, it is a standard provision in administrative
rules that prior issuances of administrative agencies that are inconsistent therewith are
declared repealed or modified.
In fine, only Sections 4(f), 11 and 46 are ultra vires, beyond the authority of the DOH to
promulgate and in contravention of the Milk Code and, therefore, null and void. The rest of
the provisions of the RIRR are in consonance with the Milk Code.
Lastly, petitioner makes a "catch-all" allegation that:
x x x [T]he questioned RIRR sought to be implemented by the Respondents
is unnecessary and oppressive, and is offensive to the due process clause of
the Constitution, insofar as the same is in restraint of trade and because a
provision therein is inadequate to provide the public with a comprehensible basis
to determine whether or not they have committed a violation. 81 (Emphasis
supplied)
Petitioner refers to Sections 4(f),82 4(i),83 5(w),84 11,85 22,86 32,87 46,88 and 5289 as the
provisions that suppress the trade of milk and, thus, violate the due process clause of the
Constitution.
The framers of the constitution were well aware that trade must be subjected to some
form of regulation for the public good. Public interest must be upheld over business
interests.90 In Pest Management Association of the Philippines v. Fertilizer and Pesticide
Authority,91 it was held thus:
x x x Furthermore, as held in Association of Philippine Coconut Desiccators v.
Philippine Coconut Authority, despite the fact that "our present Constitution
enshrines free enterprise as a policy, it nonetheless reserves to the
government the power to intervene whenever necessary to promote the
general welfare." There can be no question that the unregulated use or
proliferation of pesticides would be hazardous to our environment. Thus, in the
aforecited case, the Court declared that "free enterprise does not call for
removal of ‘protective regulations’." x x x It must be clearly explained and
proven by competent evidence just exactly how such protective regulation
would result in the restraint of trade. [Emphasis and underscoring supplied]
In this case, petitioner failed to show that the proscription of milk manufacturers’
participation in any policymaking body (Section 4(i)), classes and seminars for women and
children (Section 22); the giving of assistance, support and logistics or training (Section
32); and the giving of donations (Section 52) would unreasonably hamper the trade of
breastmilk substitutes. Petitioner has not established that the proscribed activities are
indispensable to the trade of breastmilk substitutes. Petitioner failed to demonstrate that
the aforementioned provisions of the RIRR are unreasonable and oppressive for being in
restraint of trade.
Petitioner also failed to convince the Court that Section 5(w) of the RIRR is unreasonable
and oppressive. Said section provides for the definition of the term "milk company," to wit:
SECTION 5 x x x. (w) "Milk Company" shall refer to the owner, manufacturer,
distributor of infant formula, follow-up milk, milk formula, milk supplement,
breastmilk substitute or replacement, or by any other description of such nature,
including their representatives who promote or otherwise advance their
commercial interests in marketing those products;
On the other hand, Section 4 of the Milk Code provides:
(d) "Distributor" means a person, corporation or any other entity in the public or
private sector engaged in the business (whether directly or indirectly) of
 marketing at the wholesale or retail level a product within the scope of this Code.
A "primary distributor" is a manufacturer's sales agent, representative, national
distributor or broker.
xxxx
(j) "Manufacturer" means a corporation or other entity in the public or private
sector engaged in the business or function (whether directly or indirectly or
through an agent or and entity controlled by or under contract with it) of
manufacturing a products within the scope of this Code.
Notably, the definition in the RIRR merely merged together under the term "milk company"
the entities defined separately under the Milk Code as "distributor" and "manufacturer."
The RIRR also enumerated in Section 5(w) the products manufactured or distributed by an
entity that would qualify it as a "milk company," whereas in the Milk Code, what is used is
the phrase "products within the scope of this Code." Those are the only differences
between the definitions given in the Milk Code and the definition as re-stated in the RIRR.
Since all the regulatory provisions under the Milk Code apply equally to both manufacturers
and distributors, the Court sees no harm in the RIRR providing for just one term to
encompass both entities. The definition of "milk company" in the RIRR and the definitions
of "distributor" and "manufacturer" provided for under the Milk Code are practically the
same.
The Court is not convinced that the definition of "milk company" provided in the RIRR
would bring about any change in the treatment or regulation of "distributors" and
"manufacturers" of breastmilk substitutes, as defined under the Milk Code.
Except Sections 4(f), 11 and 46, the rest of the provisions of the RIRR are in consonance
with the objective, purpose and intent of the Milk Code, constituting reasonable regulation
of an industry which affects public health and welfare and, as such, the rest of the RIRR
do not constitute illegal restraint of trade nor are they violative of the due process clause
of the Constitution.
WHEREFORE, the petition is PARTIALLY GRANTED. Sections 4(f), 11 and 46 of
Administrative Order No. 2006-0012 dated May 12, 2006 are
declared NULL and VOID for being ultra vires. The Department of Health and respondents
are PROHIBITED from implementing said provisions.
The Temporary Restraining Order issued on August 15, 2006 is LIFTED insofar as the rest
of the provisions of Administrative Order No. 2006-0012 is concerned.
SO ORDERED.
SECOND DIVISION
[G.R. No. 139325. April 12, 2005]
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR.
MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf
and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United
States District Court of Hawaii, petitioners, vs. HON. SANTIAGO JAVIER
RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial
Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through
its court appointed legal representatives in Class Action MDL 840, United
States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand
Marcos, Jr., respondents.
D E C I S I O N
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish
weeding out its bitter crop. While the restoration of freedom and the fundamental
structures and processes of democracy have been much lauded, according to a significant
number, the changes, however, have not sufficiently healed the colossal damage wrought
under the oppressive conditions of the martial law period. The cries of justice for the
tortured, the murdered, and the desaparecidos arouse outrage and sympathy in the hearts
of the fair-minded, yet the dispensation of the appropriate relief due them cannot be
extended through the same caprice or whim that characterized the ill-wind of martial rule.
The damage done was not merely personal but institutional, and the proper rebuke to the
iniquitous past has to involve the award of reparations due within the confines of the
restored rule of law.
The petitioners in this case are prominent victims of human rights violations [1] who,
deprived of the opportunity to directly confront the man who once held absolute rule over
this country, have chosen to do battle instead with the earthly representative, his estate.
The clash has been for now interrupted by a trial court ruling, seemingly comported to
legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred
Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to enforce a
judgment awarded them by a foreign court. There is an understandable temptation to cast
the struggle within the simplistic confines of a morality tale, and to employ short-cuts to
arrive at what might seem the desirable solution. But easy, reflexive resort to the equity
principle all too often leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will comfort
those who maintain that our substantive and procedural laws, for all their perceived
ambiguity and susceptibility to myriad interpretations, are inherently fair and just. The
relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in
order to correct the legally infirm and unabashedly unjust ruling of the respondent judge.
 The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with
the United States District Court (US District Court), District of Hawaii, against the
Estate of former Philippine President Ferdinand E. Marcos (Marcos Estate). The action was
brought forth by ten Filipino citizens [2] who each alleged having suffered human rights
abuses such as arbitrary detention, torture and rape in the hands of police or military
forces during the Marcos regime. [3] The Alien Tort Act was invoked as basis for the US
District Courts jurisdiction over the complaint, as it involved a suit by aliens for tortious
violations of international law. [4] These plaintiffs brought the action on their own behalf
and on behalf of a class of similarly situated individuals, particularly consisting of all
current civilian citizens of the Philippines, their heirs and beneficiaries, who between 1972
and 1987 were tortured, summarily executed or had disappeared while in the custody of
military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately
ten thousand (10,000) members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of
the US Federal Rules of Civil Procedure, the provisions of which were invoked by the
plaintiffs. Subsequently, the US District Court certified the case as a class action and
created three (3) sub-classes of torture, summary execution and disappearance victims.
[5]
Trial ensued, and subsequently a jury rendered a verdict and an award of compensatory
and exemplary damages in favor of the plaintiff class. Then, on 3 February 1995, the US
District Court, presided by Judge Manuel L. Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty Four
Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents
($1,964,005,859.90). The Final Judgment was eventually affirmed by the US Court of
Appeals for the Ninth Circuit, in a decision rendered on 17 December 1996. [6]
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial
Court, City of Makati (Makati RTC) for the enforcement of the Final Judgment. They
alleged that they are members of the plaintiff class in whose favor the US District Court
awarded damages.[7] They argued that since the Marcos Estate failed to file a petition for
certiorari with the US Supreme Court after the Ninth Circuit Court of Appeals had
affirmed the Final Judgment, the decision of the US District Court had become final and
executory, and hence should be recognized and enforced in the Philippines, pursuant to
Section 50, Rule 39 of the Rules of Court then in force. [8]
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among
others, the non-payment of the correct filing fees. It alleged that petitioners had only
paid Four Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact
that they sought to enforce a monetary amount of damages in the amount of over Two and
a Quarter Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court
Circular No. 7, pertaining to the proper computation and payment of docket fees. In
response, the petitioners claimed that an action for the enforcement of a foreign
judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred
Ten Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141. [9]
On 9 September 1998, respondent Judge Santiago Javier Ranada [10] of the Makati
RTC issued the subject Order dismissing the complaint without prejudice. Respondent
judge opined that contrary to the petitioners submission, the subject matter of the
complaint was indeed capable of pecuniary estimation, as it involved a judgment rendered
by a foreign court ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section 7(a) of Rule 141
of the Rules of Civil Procedure would find application, and the RTC estimated the proper
amount of filing fees was approximately Four Hundred Seventy Two Million Pesos, which
obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada
denied in an Order dated 28 July 1999. From this denial, petitioners filed a Petition for
Certiorariunder Rule 65 assailing the twin orders of respondent judge. [11] They prayed for
the annulment of the questioned orders, and an order directing the reinstatement of Civil
Case No. 97-1052 and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the
subject matter of the suit is the enforcement of a foreign judgment, and not an action for
the collection of a sum of money or recovery of damages. They also point out that to
require the class plaintiffs to pay Four Hundred Seventy Two Million Pesos
(P472,000,000.00) in filing fees would negate and render inutile the liberal construction
ordained by the Rules of Court, as required by Section 6, Rule 1 of the Rules of Civil
Procedure, particularly the inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution,
which provides that Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty, a mandate which is
essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable,
and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case. [12] It
urged that the petition be granted and a judgment rendered, ordering the enforcement
and execution of the District Court judgment in accordance with Section 48, Rule 39 of
the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in interpreting the
action for the execution of a foreign judgment as a new case, in violation of the principle
that once a case has been decided between the same parties in one country on the same
issue with finality, it can no longer be relitigated again in another country. [13] The CHR
likewise invokes the principle of comity, and of vested rights.
The Courts disposition on the issue of filing fees will prove a useful jurisprudential
guidepost for courts confronted with actions enforcing foreign judgments, particularly
those lodged against an estate. There is no basis for the issuance a limited pro hac
vice ruling based on the special circumstances of the petitioners as victims of martial law,
or on the emotionally-charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the respondent
judge ignored the clear letter of the law when he concluded that the filing fee be
computed based on the total sum claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as
basis for the computation of the filing fee of over P472 Million. The provision states:
SEC. 7. Clerk of Regional Trial Court.-
 (a) For filing an action or a permissive counterclaim or money claim
against an estate not based on judgment, or for filing with leave of court a
third-party, fourth-party, etc., complaint, or a complaint in intervention, and for
all clerical services in the same time, if the total sum claimed, exclusive of
interest, or the started value of the property in litigation, is:
1. Less than P 100,00.00 P 500.00
2. P 100,000.00 or more - P 800.00
but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 - P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00
...
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions,
permissive counterclaims, third-party, etc. complaints and complaints-in-interventions, and
on the other, money claims against estates which are not based on judgment. Thus, the
relevant question for purposes of the present petition is whether the action filed with the
lower court is a money claim against an estate not based on judgment.
Petitioners complaint may have been lodged against an estate, but it is clearly based
on a judgment, the Final Judgment of the US District Court. The provision does not make
any distinction between a local judgment and a foreign judgment, and where the law does
not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee
is computed on the basis of the amount of the relief sought, or on the value of the
property in litigation. The filing fee for requests for extrajudicial foreclosure of mortgage
is based on the amount of indebtedness or the mortgagees claim. [14] In special proceedings
involving properties such as for the allowance of wills, the filing fee is again based on the
value of the property.[15] The aforecited rules evidently have no application to petitioners
complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value
of the subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.-
(b) For filing
1. Actions where the value
of the subject matter
cannot be estimated --- P 600.00
2. Special civil actions except
judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00
3. All other actions not
involving property --- P 600.00
In a real action, the assessed value of the property, or if there is none, the estimated
value, thereof shall be alleged by the claimant and shall be the basis in computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed
value or estimated value of the property shall be alleged by the claimant and shall be the
basis in computing the fees. Yet again, this provision does not apply in the case at bar. A
real action is one where the plaintiff seeks the recovery of real property or an action
affecting title to or recovery of possession of real property. [16] Neither the complaint nor
the award of damages adjudicated by the US District Court involves any real property of
the Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the
filing fees should be computed on the basis of the schematic table of Section 7(a), as the
action involved pertains to a claim against an estate based on judgment. What provision, if
any, then should apply in determining the filing fees for an action to enforce a foreign
judgment?
To resolve this question, a proper understanding is required on the nature and
effects of a foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage
among civilized states by which final judgments of foreign courts of competent jurisdiction
are reciprocally respected and rendered efficacious under certain conditions that may vary
in different countries.[17] This principle was prominently affirmed in the leading American
case of Hilton v. Guyot[18] and expressly recognized in our jurisprudence beginning
with Ingenholl v. Walter E. Olsen & Co .[19] The conditions required by the Philippines for
recognition and enforcement of a foreign judgment were originally contained in Section 311
of the Code of Civil Procedure, which was taken from the California Code of Civil Procedure
which, in turn, was derived from the California Act of March 11, 1872. [20] Remarkably, the
procedural rule now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has
remained unchanged down to the last word in nearly a century. Section 48 states:
SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign
country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to
the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right
as between the parties and their successors in interest by a subsequent title;
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
There is an evident distinction between a foreign judgment in an action in rem and
one in personam. For an action in rem, the foreign judgment is deemed conclusive upon the
title to the thing, while in an action in personam, the foreign judgment is presumptive, and
not conclusive, of a right as between the parties and their successors in interest by a
subsequent title.[21]However, in both cases, the foreign judgment is susceptible to
impeachment in our local courts on the grounds of want of jurisdiction or notice to the
party,[22] collusion, fraud,[23] or clear mistake of law or fact. [24] Thus, the party aggrieved by
the foreign judgment is entitled to defend against the enforcement of such decision in the
local forum. It is essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its efficacy. [25]
It is clear then that it is usually necessary for an action to be filed in order to
enforce a foreign judgment[26], even if such judgment has conclusive effect as in the case
of in rem actions, if only for the purpose of allowing the losing party an opportunity to
challenge the foreign judgment, and in order for the court to properly determine its
efficacy.[27] Consequently, the party attacking a foreign judgment has the burden of
overcoming the presumption of its validity.[28]
The rules are silent as to what initiatory procedure must be undertaken in order to
enforce a foreign judgment in the Philippines. But there is no question that the filing of a
civil complaint is an appropriate measure for such purpose. A civil action is one by which a
party sues another for the enforcement or protection of a right, [29] and clearly an action to
enforce a foreign judgment is in essence a vindication of a right prescinding either from a
conclusive judgment upon title or the presumptive evidence of a right. [30] Absent perhaps a
statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of
judgment must be brought before the regular courts.[31]
There are distinctions, nuanced but discernible, between the cause of action arising
from the enforcement of a foreign judgment, and that arising from the facts or allegations
that occasioned the foreign judgment. They may pertain to the same set of facts, but
there is an essential difference in the right-duty correlatives that are sought to be
vindicated. For example, in a complaint for damages against a tortfeasor, the cause of
action emanates from the violation of the right of the complainant through the act or
omission of the respondent. On the other hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the same tortfeasor, for the violation of the
same right through the same manner of action, the cause of action derives not from the
tortious act but from the foreign judgment itself.
More importantly, the matters for proof are different. Using the above example, the
complainant will have to establish before the court the tortious act or omission committed
by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On the other hand, in an action to
enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and
not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a
review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud,
or mistake of fact or law. The limitations on review is in consonance with a strong and
pervasive policy in all legal systems to limit repetitive litigation on claims and issues.
[32]
Otherwise known as the policy of preclusion, it seeks to protect party expectations
resulting from previous litigation, to safeguard against the harassment of defendants, to
insure that the task of courts not be increased by never-ending litigation of the same
disputes, and in a larger sense to promote what Lord Coke in the Ferrers Case of 1599
stated to be the goal of all law: rest and quietness. [33] If every judgment of a foreign court
were reviewable on the merits, the plaintiff would be forced back on his/her original cause
of action, rendering immaterial the previously concluded litigation. [34]
Petitioners appreciate this distinction, and rely upon it to support the proposition
that the subject matter of the complaintthe enforcement of a foreign judgmentis
incapable of pecuniary estimation. Admittedly the proposition, as it applies in this case, is
counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and
purposes, the matter at hand is capable of pecuniary estimation, down to the last cent. In
the assailed Order, the respondent judge pounced upon this point without equivocation:
The Rules use the term where the value of the subject matter cannot be estimated. The
subject matter of the present case is the judgment rendered by the foreign court
ordering defendant to pay plaintiffs definite sums of money, as and for compensatory
damages. The Court finds that the value of the foreign judgment can be estimated; indeed,
it can even be easily determined. The Court is not minded to distinguish between the
enforcement of a judgment and the amount of said judgment, and separate the two, for
purposes of determining the correct filing fees. Similarly, a plaintiff suing on promissory
note for P1 million cannot be allowed to pay only P400 filing fees (sic), on the reasoning
that the subject matter of his suit is not the P1 million, but the enforcement of the
promissory note, and that the value of such enforcement cannot be estimated. [35]
The jurisprudential standard in gauging whether the subject matter of an action is
capable of pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v.
Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the nature
of the principal action or remedy sought. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is
in the municipal courts or in the courts of first instance would depend on the amount of the
claim. However, where the basic issue is something other than the right to recover a sum
of money, where the money claim is purely incidental to, or a consequence of, the principal
relief sought, this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable exclusively by courts
of first instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,[36] from which the rule in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the principal
relief sought, like in suits to have the defendant perform his part of the contract
(specific performance) and in actions for support, or for annulment of judgment or to
foreclose a mortgage, this Court has considered such actions as cases where the subject
of the litigation may not be estimated in terms of money, and are cognizable exclusively by
courts of first instance.[37]
Petitioners go on to add that among the actions the Court has recognized as being
incapable of pecuniary estimation include legality of conveyances and money deposits,
[38]
validity of a mortgage,[39] the right to support,[40] validity of documents,[41] rescission of
contracts,[42] specific performance,[43] and validity or annulment of judgments. [44] It is urged
that an action for enforcement of a foreign judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject
matter of the action is undoubtedly the enforcement of a foreign judgment, the effect of
a providential award would be the adjudication of a sum of money. Perhaps in theory, such
an action is primarily for the enforcement of the foreign judgment, but there is a certain
obtuseness to that sort of argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must
examine its possible ramifications. Petitioners raise the point that a declaration that an
action for enforcement of foreign judgment may be capable of pecuniary estimation might
lead to an instance wherein a first level court such as the Municipal Trial Court would have
jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction
of first level courts, B.P. 129, such courts are not vested with jurisdiction over actions for
the enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in civil cases. Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings,
testate and intestate, including the grant of provisional remedies in proper
cases, where the value of the personal property, estate, or amount of the
demand does not exceed One hundred thousand pesos (P100,000.00) or, in
Metro Manila where such personal property, estate, or amount of the demand
does not exceed Two hundred thousand pesos (P200,000.00) exclusive of
interest damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided, That where
there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question
of ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be
resolved only to determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value
of the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses and costs: Provided, That
value of such property shall be determined by the assessed value of the
adjacent lots.[45]
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject
matter pertains to an assertion of rights and interests over property or a sum of money.
But as earlier pointed out, the subject matter of an action to enforce a foreign judgment
is the foreign judgment itself, and the cause of action arising from the adjudication of
such judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for
enforcement of a foreign judgment, even if capable of pecuniary estimation, would fall
under the jurisdiction of the Regional Trial Courts, thus negating the fears of the
petitioners. Indeed, an examination of the provision indicates that it can be relied upon as
jurisdictional basis with respect to actions for enforcement of foreign judgments,
provided that no other court or office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising jurisdiction or any court, tribunal, person or body exercising judicial or quasi-
judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce the
US District Court judgment is one capable of pecuniary estimation. But at the same time, it
is also an action based on judgment against an estate, thus placing it beyond the ambit of
Section 7(a) of Rule 141. What provision then governs the proper computation of the filing
fees over the instant complaint? For this case and other similarly situated instances, we
find that it is covered by Section 7(b)(3), involving as it does, other actions not involving
property.
 Notably, the amount paid as docket fees by the petitioners on the premise that it
was an action incapable of pecuniary estimation corresponds to the same amount required
for other actions not involving property. The petitioners thus paid the correct amount of
filing fees, and it was a grave abuse of discretion for respondent judge to have applied
instead a clearly inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which should
disabuse the notion that the doctrine affirmed in this decision is grounded solely on the
letter of the procedural rule. We earlier adverted to the the internationally recognized
policy of preclusion,[46] as well as the principles of comity, utility and convenience of
nations[47] as the basis for the evolution of the rule calling for the recognition and
enforcement of foreign judgments. The US Supreme Court in Hilton v. Guyot[48] relied
heavily on the concept of comity, as especially derived from the landmark treatise of
Justice Story in his Commentaries on the Conflict of Laws of 1834. [49] Yet the notion of
comity has since been criticized as one of dim contours [50] or suffering from a number of
fallacies.[51] Other conceptual bases for the recognition of foreign judgments have evolved
such as the vested rights theory or the modern doctrine of obligation. [52]
There have been attempts to codify through treaties or multilateral agreements the
standards for the recognition and enforcement of foreign judgments, but these have not
borne fruition. The members of the European Common Market accede to the Judgments
Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and rvision au fond.[53] The most ambitious of
these attempts is the Convention on the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague Conference of
International Law.[54] While it has not received the ratifications needed to have it take
effect,[55] it is recognized as representing current scholarly thought on the topic.
[56]
Neither the Philippines nor the United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition
and enforcement of foreign judgments or a universal treaty rendering it obligatory force,
there is consensus that the viability of such recognition and enforcement is essential.
Steiner and Vagts note:
. . . The notion of unconnected bodies of national law on private international law, each
following a quite separate path, is not one conducive to the growth of a transnational
community encouraging travel and commerce among its members. There is a contemporary
resurgence of writing stressing the identity or similarity of the values that systems of
public and private international law seek to further a community interest in common, or at
least reasonable, rules on these matters in national legal systems. And such generic
principles as reciprocity play an important role in both fields. [57]
Salonga, whose treatise on private international law is of worldwide renown, points
out:
Whatever be the theory as to the basis for recognizing foreign judgments, there can be
little dispute that the end is to protect the reasonable expectations and demands of the
parties. Where the parties have submitted a matter for adjudication in the court of one
state, and proceedings there are not tainted with irregularity, they may fairly be expected
to submit, within the state or elsewhere, to the enforcement of the judgment issued by
the court.[58]
There is also consensus as to the requisites for recognition of a foreign judgment
and the defenses against the enforcement thereof. As earlier discussed, the exceptions
enumerated in Section 48, Rule 39 have remain unchanged since the time they were
adapted in this jurisdiction from long standing American rules. The requisites and
exceptions as delineated under Section 48 are but a restatement of generally accepted
principles of international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that a valid judgment rendered in a foreign nation after a fair trial in a contested
proceeding will be recognized in the United States, and on its face, the term valid brings
into play requirements such notions as valid jurisdiction over the subject matter and
parties.[59] Similarly, the notion that fraud or collusion may preclude the enforcement of a
foreign judgment finds affirmation with foreign jurisprudence and commentators, [60] as
well as the doctrine that the foreign judgment must not constitute a clear mistake of law
or fact.[61] And finally, it has been recognized that public policy as a defense to the
recognition of judgments serves as an umbrella for a variety of concerns in international
practice which may lead to a denial of recognition. [62]
The viability of the public policy defense against the enforcement of a foreign
judgment has been recognized in this jurisdiction. [63] This defense allows for the
application of local standards in reviewing the foreign judgment, especially when such
judgment creates only a presumptive right, as it does in cases wherein the judgment is
against a person.[64] The defense is also recognized within the international sphere, as many
civil law nations adhere to a broad public policy exception which may result in a denial of
recognition when the foreign court, in the light of the choice-of-law rules of the
recognizing court, applied the wrong law to the case. [65] The public policy defense can
safeguard against possible abuses to the easy resort to offshore litigation if it can be
demonstrated that the original claim is noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the
Philippines to recognize foreign judgments, or allow a procedure for the enforcement
thereof. However, generally accepted principles of international law, by virtue of the
incorporation clause of the Constitution, form part of the laws of the land even if they do
not derive from treaty obligations.[66] The classical formulation in international law sees
those customary rules accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a psychological
element known as the opinion juris sive necessitates (opinion as to law or necessity).
Implicit in the latter element is a belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it. [67]
While the definite conceptual parameters of the recognition and enforcement of
foreign judgments have not been authoritatively established, the Court can assert with
certainty that such an undertaking is among those generally accepted principles of
international law.[68] As earlier demonstrated, there is a widespread practice among states
accepting in principle the need for such recognition and enforcement, albeit subject to
limitations of varying degrees. The fact that there is no binding universal treaty governing
the practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for recognition
and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory or
jurisprudential, adopted in various foreign jurisdictions. In the Philippines, this is
evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed in its
current form since the early 1900s. Certainly, the Philippine legal system has long ago
accepted into its jurisprudence and procedural rules the viability of an action for
enforcement of foreign judgment, as well as the requisites for such valid enforcement, as
derived from internationally accepted doctrines. Again, there may be distinctions as to the
rules adopted by each particular state, [69] but they all prescind from the premise that
there is a rule of law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has attained the
status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule,
but by virtue of the incorporation clause of the Constitution. Rules of procedure are
promulgated by the Supreme Court,[70] and could very well be abrogated or revised by the
high court itself. Yet the Supreme Court is obliged, as are all State components, to obey
the laws of the land, including generally accepted principles of international law which form
part thereof, such as those ensuring the qualified recognition and enforcement of foreign
judgments.[71]
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges
that there is a general right recognized within our body of laws, and affirmed by the
Constitution, to seek recognition and enforcement of foreign judgments, as well as a right
to defend against such enforcement on the grounds of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country
merely due to an exhorbitant assessment of docket fees is alien to generally accepted
practices and principles in international law. Indeed, there are grave concerns in
conditioning the amount of the filing fee on the pecuniary award or the value of the
property subject of the foreign decision. Such pecuniary award will almost certainly be in
foreign denomination, computed in accordance with the applicable laws and standards of
the forum.[72] The vagaries of inflation, as well as the relative low-income capacity of the
Filipino, to date may very well translate into an award virtually unenforceable in this
country, despite its integral validity, if the docket fees for the enforcement thereof were
predicated on the amount of the award sought to be enforced. The theory adopted by
respondent judge and the Marcos Estate may even lead to absurdities, such as if applied to
an award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well require
that the filing fee be computed based on the value of the foreign property as determined
by the standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it
recognizes that the subject matter of an action for enforcement of a foreign judgment is
the foreign judgment itself, and not the right-duty correlatives that resulted in the
foreign judgment. In this particular circumstance, given that the complaint is lodged
against an estate and is based on the US District Courts Final Judgment, this foreign
judgment may, for purposes of classification under the governing procedural rule, be
deemed as subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of all other
actions not involving property. Thus, only the blanket filing fee of minimal amount is
required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which
states that [F]ree access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty. Since the provision is
among the guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable
right. However, now is not the occasion to elaborate on the parameters of this
constitutional right. Given our preceding discussion, it is not necessary to utilize this
provision in order to grant the relief sought by the petitioners. It is axiomatic that the
constitutionality of an act will not be resolved by the courts if the controversy can be
settled on other grounds[73] or unless the resolution thereof is indispensable for the
determination of the case.[74]
One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final
Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners
against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present
evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact. This ruling, decisive as it is on the question of filing fees and
no other, does not render verdict on the enforceability of the Final Judgment before the
courts under the jurisdiction of the Philippines, or for that matter any other issue which
may legitimately be presented before the trial court. Such issues are to be litigated
before the trial court, but within the confines of the matters for proof as laid down in
Section 48, Rule 39. On the other hand, the speedy resolution of this claim by the trial
court is encouraged, and contumacious delay of the decision on the merits will not be
brooked by this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and
SET ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby issued. No
costs.
SO ORDERED.
G.R. No. 145587 October 26, 2007
EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.
D E C I S I O N
VELASCO, JR., J.:
 The Case
This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the
January 15, 1999 Decision3 and September 30, 1999 Resolution 4 rendered by the National
Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194, ordering
Expertise Search International (ESI), EDI-Staffbuilders International, Inc. (EDI), and
Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar S. Gran (Gran)
the amount of USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino
Workers (OFWs).5 ESI is another recruitment agency which collaborated with EDI to
process the documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for
OAB, in Riyadh, Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of
qualified applicants for the position of "Computer Specialist." 7 In a facsimile transmission
dated November 29, 1993, OAB informed EDI that, from the applicants' curricula
vitae submitted to it for evaluation, it selected Gran for the position of "Computer
Specialist." The faxed letter also stated that if Gran agrees to the terms and conditions
of employment contained in it, one of which was a monthly salary of SR (Saudi Riyal)
2,250.00 (USD 600.00), EDI may arrange for Gran's immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an employment contract 9 that
granted him a monthly salary of USD 850.00 for a period of two years. Gran was then
deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary—his
employment contract stated USD 850.00; while his Philippine Overseas Employment Agency
(POEA) Information Sheet indicated USD 600.00 only. However, through the assistance of
the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his employment was
terminated through OAB's July 9, 1994 letter,11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily
on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment agency[,]
vide OAB letter ref. F-5751-93, dated October 3, 1993. 12
3. Insubordination or disobedience to Top Management Order and/or instructions
(non-submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing
his final pay, and on the same day, he executed a Declaration 13 releasing OAB from any
financial obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against
ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty
Corporation with the NLRC, National Capital Region, Quezon City, which was docketed as
POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14 Labor Arbiter Manuel R. Caday, to whom Gran's case
was assigned, ruled that there was neither underpayment nor illegal dismissal.
The Labor Arbiter reasoned that there was no underpayment of salaries since according to
the POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary
was USD 600.00, and in his Confirmation of Appointment as Computer Specialist, his
monthly basic salary was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no
claim for unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to
refute EDI's allegations; namely, (1) that Gran did not submit a single activity report of his
daily activity as dictated by company policy; (2) that he was not qualified for the job as
computer specialist due to his insufficient knowledge in programming and lack of knowledge
in ACAD system; (3) that Gran refused to follow management's instruction for him to gain
more knowledge of the job to prove his worth as computer specialist; (4) that Gran's
employment contract had never been substituted; (5) and that Gran was paid a monthly
salary of USD 850.00, and USD 350.00 monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due
to insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third Division.
However, it appears from the records that Gran failed to furnish EDI with a copy of his
Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is
actually "reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor
Code. This scheme constituted misrepresentation through the conspiracy between EDI and
ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW's
employment. In addition, it was found that Gran did not commit any act that constituted a
legal ground for dismissal. The alleged non-compliance with contractual stipulations relating
to Gran's salary and contract duration, and the absence of pre-qualification requirements
cannot be attributed to Gran but to EDI, which dealt directly with OAB. In addition, the
charge of insubordination was not substantiated, and Gran was not even afforded the
required notice and investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the
dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise
Search International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali Bin
Bechr Est. (OAB) are hereby ordered jointly and severally liable to pay the
complainant Eleazar Gran the Philippine peso equivalent at the time of actual
payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for the unexpired portion of his
contract.
SO ORDERED.16
Gran then filed a Motion for Execution of Judgment 17 on March 29, 1999 with the NLRC
and petitioner receiving a copy of this motion on the same date. 18
To prevent the execution, petitioner filed an Opposition 19 to Gran's motion arguing that the
Writ of Execution cannot issue because it was not notified of the appellate proceedings
before the NLRC and was not given a copy of the memorandum of appeal nor any
opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition,
petitioner filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision
after receiving a copy of the Decision on August 16, 1999. 20
The NLRC then issued a Resolution 21 denying petitioner's Motion for Reconsideration,
ratiocinating that the issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there was "no cogent
reason or patent or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA.
Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in
giving due course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition.
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of
his appeal memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a
jurisdictional defect which would justify the dismissal of his appeal." 22 The court also held
that petitioner EDI failed to prove that private respondent was terminated for a valid
cause and in accordance with due process; and that Gran's Declaration releasing OAB from
any monetary obligation had no force and effect. The appellate court ratiocinated that EDI
had the burden of proving Gran's incompetence; however, other than the termination
letter, no evidence was presented to show how and why Gran was considered to be
incompetent. The court held that since the law requires the recruitment agencies to
subject OFWs to trade tests before deployment, Gran must have been competent and
qualified; otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a
"Daily Activity Report," the appellate court found that EDI failed to show that the
submission of the "Daily Activity Report" was a part of Gran's duty or the company's
policy. The court also held that even if Gran was guilty of insubordination, he should have
just been suspended or reprimanded, but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide by
the twin notice requirement. The court found that Gran was terminated on the same day he
received the termination letter, without having been apprised of the bases of his dismissal
or afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding
benefits to which he was entitled. The appellate court found that the Declaration was in
the form of a quitclaim, and as such is frowned upon as contrary to public policy especially
where the monetary consideration given in the Declaration was very much less than what he
was legally entitled to—his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition
to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL
MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S
RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN'S
APPEAL.
 II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF INCOMPETENCE. COROLLARY HERETO,
WHETHER THE PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT OF
APPEALS, IS APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON
OF INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO
TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED
PORTION OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his
Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the
Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum
constitutes a jurisdictional defect and a deprivation of due process that would warrant a
rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the
appeal to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission ,24 this Court set aside the order of the
NLRC which dismissed an appeal on the sole ground that the appellant did not furnish the
appellee a memorandum of appeal contrary to the requirements of Article 223 of the New
Labor Code and Section 9, Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC , the order of dismissal of an appeal
to the NLRC based on the ground that "there is no showing whatsoever that a copy of the
appeal was served by the appellant on the appellee "25was annulled. The Court ratiocinated
as follows:
The failure to give a copy of the appeal to the adverse party was a mere formal
lapse, an excusable neglect. Time and again We have acted on petitions to review
decisions of the Court of Appeals even in the absence of proof of service of a
copy thereof to the Court of Appeals as required by Section 1 of Rule 45, Rules
of Court. We act on the petitions and simply require the petitioners to comply
with the rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-
FFW v. National Labor Relations Commission, 27 Pagdonsalan v. NLRC,28 and in Sunrise
Manning Agency, Inc. v. NLRC.29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse
party with a copy of the appeal is treated only as a formal lapse, an excusable neglect, and
hence, not a jurisdictional defect. Accordingly, in such a situation, the appeal should not be
dismissed; however, it should not be given due course either. As enunciated in J.D.
Magpayo, the duty that is imposed on the NLRC, in such a case, is to require the
appellant to comply with the rule that the opposing party should be provided with a
copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable,
the abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum
constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of
the Appeal Memorandum. The NLRC then ordered Gran to present proof of service. In
compliance with the order, Gran submitted a copy of Camp Crame Post Office's list of
mail/parcels sent on April 7, 1998.30 The post office's list shows that private respondent
Gran sent two pieces of mail on the same date: one addressed to a certain Dan O. de
Guzman of Legaspi Village, Makati; and the other appears to be addressed to Neil B. Garcia
(or Gran),31 of Ermita, Manila—both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the
Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of
service in proceedings before the NLRC:
Section 5.32 Proof and completeness of service.—The return is prima facie proof
of the facts indicated therein. Service by registered mail is complete upon
receipt by the addressee or his agent; but if the addressee fails to claim his
mail from the post office within five (5) days from the date of first notice of
the postmaster, service shall take effect after such time. (Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when the
addressee or his agent received the mail or after five (5) days from the date of first
notice of the postmaster. However, the NLRC Rules do not state what would constitute
proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:
Section 13. Proof of service.—Proof of personal service shall consist of a written
admission of the party served or the official return of the server, or the
affidavit of the party serving, containing a full statement of the date, place and
manner of service. If the service is by ordinary mail, proof thereof shall consist
of an affidavit of the person mailing of facts showing compliance with section 7
of this Rule. If service is made by registered mail, proof shall be made by
such affidavit and registry receipt issued by the mailing office. The registry
return card shall be filed immediately upon its receipt by the sender, or in
lieu thereof the unclaimed letter together with the certified or sworn copy
of the notice given by the postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not
conclusive proof that he had served a copy of his appeal memorandum to EDI, nor is it
conclusive proof that EDI received its copy of the Appeal Memorandum. He should have
submitted an affidavit proving that he mailed the Appeal Memorandum together with the
registry receipt issued by the post office; afterwards, Gran should have immediately filed
the registry return card.
Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not
have simply accepted the post office's list of mail and parcels sent; but it should have
required Gran to properly furnish the opposing parties with copies of his Appeal
Memorandum as prescribed in J.D. Magpayo and the other cases. The NLRC should not
have proceeded with the adjudication of the case, as this constitutes grave abuse of
discretion.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a
copy of the Appeal Memorandum before rendering judgment reversing the dismissal of
Gran's complaint constitutes an evasion of the pertinent NLRC Rules and established
jurisprudence. Worse, this failure deprived EDI of procedural due process guaranteed by
the Constitution which can serve as basis for the nullification of proceedings in the appeal
before the NLRC. One can only surmise the shock and dismay that OAB, EDI, and ESI
experienced when they thought that the dismissal of Gran's complaint became final, only to
receive a copy of Gran's Motion for Execution of Judgment which also informed them that
Gran had obtained a favorable NLRC Decision. This is not level playing field and absolutely
unfair and discriminatory against the employer and the job recruiters. The rights of the
employers to procedural due process cannot be cavalierly disregarded for they too have
rights assured under the Constitution.
However, instead of annulling the dispositions of the NLRC and remanding the case for
further proceedings we will resolve the petition based on the records before us to avoid a
protracted litigation.33
The second and third issues have a common matter—whether there was just cause for
Gran's dismissal—hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable by reason of
incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the local
recruiter/agent, and the foreign employer/principal are governed by the employment
contract. A contract freely entered into is considered law between the parties; and hence,
should be respected. In formulating the contract, the parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or public policy. 34
In the present case, the employment contract signed by Gran specifically states that Saudi
Labor Laws will govern matters not provided for in the contract (e.g. specific causes for
termination, termination procedures, etc.). Being the law intended by the parties ( lex loci
intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating
to the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of proving the foreign law. The foreign law is treated as a question of fact
to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice
of a foreign law. He is presumed to know only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus,
the International Law doctrine of presumed-identity approach or processual
presumption comes into play.36 Where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the same as ours. 37 Thus, we apply Philippine
labor laws in determining the issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to
incompetence and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that
the employer should prove that the dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard and to defend himself
 with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the workers to contest the validity or
legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the
termination was for a valid or authorized cause shall rest on the employer. x
xx
In many cases, it has been held that in termination disputes or illegal dismissal cases, the
employer has the burden of proving that the dismissal is for just and valid causes; and
failure to do so would necessarily mean that the dismissal was not justified and therefore
illegal.40 Taking into account the character of the charges and the penalty meted to an
employee, the employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal. 41 This is consistent with the principle
of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b)
of the Labor Code of the Philippines.42
In the instant case, petitioner claims that private respondent Gran was validly dismissed
for just cause, due to incompetence and insubordination or disobedience. To prove its
allegations, EDI submitted two letters as evidence. The first is the July 9, 1994
termination letter,43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of
OAB. The second is an unsigned April 11, 1995 letter 44 from OAB addressed to EDI and
ESI, which outlined the reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because
he had "insufficient knowledge in programming and zero knowledge of [the] ACAD
system."45 Petitioner also claims that Gran was justifiably dismissed due to insubordination
or disobedience because he continually failed to submit the required "Daily Activity
Reports."46However, other than the abovementioned letters, no other evidence was
presented to show how and why Gran was considered incompetent, insubordinate, or
disobedient. Petitioner EDI had clearly failed to overcome the burden of proving that Gran
was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient
knowledge in programming and zero knowledge of the ACAD system" based only on the
above mentioned letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be
shown by weighing it against a standard, benchmark, or criterion. However, EDI failed to
establish any such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful
disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC , we held that:
For willful disobedience to be a valid cause for dismissal, the following twin
elements must concur: (1) the employee's assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge. 47
EDI failed to discharge the burden of proving Gran's insubordination or willful
disobedience. As indicated by the second requirement provided for in Micro Sales
Operation Network, in order to justify willful disobedience, we must determine whether
the order violated by the employee is reasonable, lawful, made known to the employee, and
pertains to the duties which he had been engaged to discharge. In the case at bar,
petitioner failed to show that the order of the company which was violated—the
submission of "Daily Activity Reports"—was part of Gran's duties as a Computer Specialist.
Before the Labor Arbiter, EDI should have provided a copy of the company policy, Gran's
job description, or any other document that would show that the "Daily Activity Reports"
were required for submission by the employees, more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies
and not the foreign employer, they should have adduced additional evidence to convincingly
show that Gran's employment was validly and legally terminated. The burden devolves not
only upon the foreign-based employer but also on the employment or recruitment agency
for the latter is not only an agent of the former, but is also solidarily liable with the
foreign principal for any claims or liabilities arising from the dismissal of the worker. 48
Thus, petitioner failed to prove that Gran was justifiably dismissed due to
incompetence, insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision, is
not applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the
petitioners were subjected to trade tests required by law to be conducted by the
recruiting agency to insure employment of only technically qualified workers for the
foreign principal."50 The CA, using the ruling in the said case, ruled that Gran must have
passed the test; otherwise, he would not have been hired. Therefore, EDI was at fault
when it deployed Gran who was allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand,
Gran misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was
not qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out
incompetent applicants from the pool of available workers. It is supposed to reveal
applicants with false educational backgrounds, and expose bogus qualifications. Since EDI
deployed Gran to Riyadh, it can be presumed that Gran had passed the required trade test
and that Gran is qualified for the job. Even if there was no objective trade test done by
EDI, it was still EDI's responsibility to subject Gran to a trade test; and its failure to do
so only weakened its position but should not in any way prejudice Gran. In any case, the
issue is rendered moot and academic because Gran's incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and
regulations shall govern the relationship between Gran and EDI. Thus, our laws and rules on
the requisites of due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was
allowed to work and improve his capabilities for five months prior to his termination. 51 EDI
also claims that the requirements of due process, as enunciated in Santos, Jr. v.
NLRC,52 and Malaya Shipping Services, Inc. v. NLRC,53 cited by the CA in its Decision, were
properly observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity
to be heard if requested by the employee before terminating the employment: a
notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of
the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.
Under the twin notice requirement, the employees must be given two (2) notices before
their employment could be terminated: (1) a first notice to apprise the employees of their
fault, and (2) a second notice to communicate to the employees that their employment is
being terminated. In between the first and second notice, the employees should be given a
hearing or opportunity to defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing
Gran fell short of the two notice requirement. While it furnished Gran the written notice
informing him of his dismissal, it failed to furnish Gran the written notice apprising him of
the charges against him, as prescribed by the Labor Code. 56 Consequently, he was denied
the opportunity to respond to said notice. In addition, OAB did not schedule a hearing or
conference with Gran to defend himself and adduce evidence in support of his defenses.
Moreover, the July 9, 1994 termination letter was effective on the same day. This shows
that OAB had already condemned Gran to dismissal, even before Gran was furnished the
termination letter. It should also be pointed out that OAB failed to give Gran the chance
to be heard and to defend himself with the assistance of a representative in accordance
with Article 277 of the Labor Code. Clearly, there was no intention to provide Gran with
due process. Summing up, Gran was notified and his employment arbitrarily terminated on
the same day, through the same letter, and for unjustified grounds. Obviously, Gran was
not afforded due process.
Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay nominal damages
as indemnity for violating the employee's right to statutory due process. Since OAB was in
breach of the due process requirements under the Labor Code and its regulations, OAB,
ESI, and EDI, jointly and solidarily, are liable to Gran in the amount of PhP 30,000.00 as
indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of
employment, in cases arising before the effectivity of R.A. No. 8042 58 (Migrant Workers
and Overseas Filipinos Act) on August 25, 1995, that when the contract is for a fixed term
and the employees are dismissed without just cause, they are entitled to the payment of
their salaries corresponding to the unexpired portion of their contract. 59 On the other
hand, for cases arising after the effectivity of R.A. No. 8042, when the termination of
employment is without just, valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term
whichever is less.60
In the present case, the employment contract provides that the employment contract shall
be valid for a period of two (2) years from the date the employee starts to work with the
employer.61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7,
1994;62 hence, his employment contract is until February 7, 1996. Since he was illegally
dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore
entitled to backwages corresponding to the unexpired portion of his contract, which was
equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran. The
relevant portions of the Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL
SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
 REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES
I RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN
MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN
CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN
WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY
SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more
particularly those executed by employees. This requirement was clearly articulated by
Chief Justice Artemio V. Panganiban in Land and Housing Development Corporation v.
Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or contracts
in favor of workers should be strictly scrutinized to protect the weak and the
disadvantaged. The waivers should be carefully examined, in regard not only
to the words and terms used, but also the factual circumstances under which
they have been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation , citing Periquet
v. NLRC,64 the parameters for valid compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement,
it is binding on the parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is
unreasonably low. As correctly pointed out by the court a quo, the payment of SR 2,948.00
is even lower than his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is also
very much less than the USD 16,150.00 which is the amount Gran is legally entitled to get
from petitioner EDI as backwages.
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for
Gran's salary for the services he rendered to OAB as Computer Specialist. If the
Declaration is a quitclaim, then the consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00)—although possibly less than the estimated
Gran's salaries for the remaining duration of his contract and other benefits as employee
of OAB. A quitclaim will understandably be lower than the sum total of the amounts and
benefits that can possibly be awarded to employees or to be earned for the remainder of
the contract period since it is a compromise where the employees will have to forfeit a
certain portion of the amounts they are claiming in exchange for the early payment of a
compromise amount. The court may however step in when such amount is unconscionably low
or unreasonable although the employee voluntarily agreed to it. In the case of the
Declaration, the amount is unreasonably small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show that
Gran did not voluntarily and freely execute the document. Consider the following
chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to
pay his plane ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and
constrained to receive the amount of SR 2,948.00 even if it was against his will—since he
was told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but to
sign the Declaration as he needed the amount of SR 2,948.00 for the payment of his
ticket. He could have entertained some apprehensions as to the status of his stay or
safety in Saudi Arabia if he would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion
which should be construed against the employer, OAB. An adhesion contract is contrary to
public policy as it leaves the weaker party—the employee—in a "take-it-or-leave-it"
situation. Certainly, the employer is being unjust to the employee as there is no meaningful
choice on the part of the employee while the terms are unreasonably favorable to the
employer.66
Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under
Philippine laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement;
2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English, Filipino,
or in the dialect known to the employees—that by signing the waiver or quitclaim, they are
forfeiting or relinquishing their right to receive the benefits which are due them under
the law; and
4. A statement that the employees signed and executed the document voluntarily, and had
fully understood the contents of the document and that their consent was freely given
without any threat, violence, duress, intimidation, or undue influence exerted on their
person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known
to the employee. There should be two (2) witnesses to the execution of the quitclaim who
must also sign the quitclaim. The document should be subscribed and sworn to under oath
preferably before any administering official of the Department of Labor and Employment
or its regional office, the Bureau of Labor Relations, the NLRC or a labor attaché in a
foreign country. Such official shall assist the parties regarding the execution of the
quitclaim and waiver.67 This compromise settlement becomes final and binding under Article
227 of the Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance of the
Bureau of Labor Relations or the regional office of the DOLE, shall be final and
binding upon the parties and the NLRC or any court "shall not assume jurisdiction
over issues involved therein except in case of non-compliance thereof or if there
is prima facieevidence that the settlement was obtained through fraud,
misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor
contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon
to govern said contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP No.
56120 of the Court of Appeals affirming the January 15, 1999 Decision and September 30,
1999 Resolution of the NLRC
is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International,
Inc. shall pay the amount of PhP 30,000.00 to respondent Gran as nominal damages for non-
compliance with statutory due process.
No costs.
SO ORDERED.
SECOND DIVISION
[ G.R. No. 205487, November 12, 2014 ]
ORION SAVINGS BANK, PETITIONER, VS. SHIGEKANE SUZUKI, RESPONDENT.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari[1] filed by petitioner Orion Savings Bank
(Orion) under Rule 45 of the Rules of Court, assailing the decision [2] dated August 23, 2012
and the resolution[3] dated January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV
No. 94104.
The Factual Antecedents
In the first week of August 2003, respondent Shigekane Suzuki ( Suzuki), a Japanese
national, met with Ms. Helen Soneja ( Soneja) to inquire about a condominium unit and a
parking slot at Cityland Pioneer, Mandaluyong City, allegedly owned by Yung Sam Kang
(Kang), a Korean national and a Special Resident Retiree's Visa ( SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium
Certificate of Title (CCT) No. 18186][4] and Parking Slot No. 42 [covered by CCT No. 9118]
[5]
were for sale for P3,000,000.00. Soneja likewise assured Suzuki that the titles to the
unit and the parking slot were clean. After a brief negotiation, the parties agreed to
reduce the price to P2,800,000.00.
On August 5, 2003, Suzuki issued Kang a Bank of the Philippine Island ( BPI) Check No.
83349[6] for One Hundred Thousand Pesos (P100,000.00) as reservation fee. [7] On August
21, 2003, Suzuki issued Kang another check, BPI Check No. 83350, [8] this time for
P2,700,000.00 representing the remaining balance of the purchase price. Suzuki and Kang
then executed a Deed of Absolute Sale dated August 26, 2003 [9] covering Unit No. 536 and 1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and
Parking Slot No. 42. Soon after, Suzuki took possession of the condominium unit and Parking Slot No. 42;
parking lot, and commenced the renovation of the interior of the condominium unit.

Kang thereafter made several representations with Suzuki to deliver the titles to the
2. That the mortgage in favor of Orion supposedly executed by Kang, with Entry
properties, which were then allegedly in possession of Alexander Perez ( Perez, Orion's
No. 66432/C-10186 dated February 2, 1999, was subsequently cancelled by Entry
Loans Officer) for safekeeping. Despite several verbal demands, Kang failed to deliver the
No. 73232/T No. 10186 dated June 16, 2000;
documents. Suzuki later on learned that Kang had left the country, prompting Suzuki to
verify the status of the properties with the Mandaluyong City Registry of Deeds.

Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot 3. That the alleged Dacion en Pago was never annotated in CCT Nos. 18186 and 9118;
No. 42 contained no annotations although it remained under the name of Cityland Pioneer.
This notwithstanding, Cityland Pioneer, through Assistant Vice President Rosario D. Perez,
certified that Kang had fully paid the purchase price of Unit. No. 536 [10] and Parking Slot
4. That Orion only paid the appropriate capital gains tax and the documentary stamp
No. 42.[11]
tax for the alleged Dacion en Pago on October 15, 2003;

CCT No. 18186 representing the title to the condominium unit had no existing encumbrance,
except for an annotation under Entry No. 73321/C-10186 which provided that any
conveyance or encumbrance of CCT No. 18186 shall be subject to approval by the Philippine 5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to
Retirement Authority (PRA). Although CCT No. 18186 contained Entry No. 66432/C-10186 Orion; and
dated February 2, 1999 representing a mortgage in favor of Orion for a P1,000,000.00
loan, that annotation was subsequently cancelled on June 16, 2000 by Entry No. 73232/T.
No. 10186. Despite the cancellation of the mortgage to Orion, the titles to the 6. That when Suzuki bought the properties, he went to Orion to obtain possession
properties remained in possession of Perez. of the titles.

To protect his interests, Suzuki then executed an Affidavit of Adverse Claim [12] dated
September 8, 2003, with the Registry of Deeds of Mandaluyong City, annotated as Entry
No. 3292/C-No. 18186 in CCT No. 18186. Suzuki then demanded the delivery of the titles.
[13]
Orion, (through Perez), however, refused to surrender the titles, and cited the need to
consult Orion's legal counsel as its reason.
On October 14, 2003, Suzuki received a letter from Orion's counsel dated October 9,
2003, stating that Kang obtained another loan in the amount of P1,800,000.00. When Kang
failed to pay, he executed a Dacion en Pago dated February 2, 2003, in favor of Orion
covering Unit No. 536. Orion, however, did not register the Dacion en Pago, until October
15, 2003.
On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot
No. 42 (covered by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in
the parking lot's title.
The RTC Ruling
In its decision[14] dated June 29, 2009, the Regional Trial Court (RTC), Branch 213,
Mandaluyong City ruled in favor of Suzuki and ordered Orion to deliver the CCT Nos. 18186
and 9118 to Suzuki.
The court found that Suzuki was an innocent purchaser for value whose rights over the
properties prevailed over Orion's. The RTC further noted that Suzuki exerted efforts to
verify the status of the properties but he did not find any existing encumbrance in the
titles. Although Orion claims to have purchased the property by way of a Dacion en Pago,
Suzuki only learned about it two (2) months after he bought the properties because Orion
never bothered to register or annotate the Dacion en Pago in CCT Nos. 18186 and 9116.

On January 27, 2004, Suzuki filed a complaint for specific performance and damages The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral
against Kang and Orion. At the pre-trial, the parties made the following admissions and damages, exemplary damages, attorney's fees, appearance fees, expenses for litigation and
stipulations: cost of suit. Orion timely appealed the RTC decision with the CA.

The CA Ruling

On August 23, 2012, the CA partially granted Orion's appeal and sustained the RTC insofar
as it upheld Suzuki's right over the properties. The CA further noted that Entry No.
73321/C-10186 pertaining to the withdrawal of investment of an SRRV only serves as a
warning to an SRRV holder about the implications of a conveyance of a property
investment. It deviated from the RTC ruling, however, by deleting the award for moral
damages, exemplary damages, attorney's fees, expenses for litigation and cost of suit.
Orion sought a reconsideration of the CA decision but the CA denied the motion in its
January 25, 2013 resolution. Orion then filed a petition for review on certiorari under Rule
45 with this Court.
The Petition and Comment
Orion's petition is based on the following grounds/arguments: [15]
1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under
Korean law, any conveyance of a conjugal property should be made with the
consent of both spouses;
2. Suzuki is not a buyer in good faith for he failed to check the owner's duplicate
copies of the CCTs;
3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which
prohibits any conveyance or encumbrance of the property investment, defeats
the alleged claim of good faith by Suzuki; and
4. Orion should not be faulted for exercising due diligence.
In his Comment,[16] Suzuki asserts that the issue on spousal consent was belatedly raised on
appeal. Moreover, proof of acquisition during the marital coverture is a condition sine qua
non for the operation of the presumption of conjugal ownership.[17] Suzuki additionally
maintains that he is a purchaser in good faith, and is thus entitled to the protection of the
law.
The Court's Ruling
We deny the petition for lack of merit.
The Court may inquire into
conclusions of fact when the
inference made is manifestly
mistaken
In a Rule 45 petition, the latitude of judicial review generally excludes a factual and
evidentiary re-evaluation, and the Court ordinarily abides by the uniform factual
conclusions of the trial court and the appellate court.[18] In the present case, while the
courts below both arrived at the same conclusion, there appears to be an incongruence in
their factual findings and the legal principle they applied to the attendant factual
circumstances. Thus, we are compelled to examine certain factual issues in the exercise of
our sound discretion to correct any mistaken inference that may have been made. [19]
Philippine Law governs the
transfer of real property
Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot
uphold this position, however, because the issue of spousal consent was only raised on
appeal to the CA. It is a well-settled principle that points of law, theories, issues, and
arguments not brought to the attention of the trial court cannot be raised for the first
time on appeal and considered by a reviewing court.[20] To consider these belated
arguments would violate basic principles of fair play, justice, and due process.
Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only
to put an end to lingering doubts on the correctness of the denial of the present
petition.
It is a universal principle that real or immovable property is exclusively subject to the laws
of the country or state where it is located.[21] The reason is found in the very nature of
immovable property its immobility. Immovables are part of the country and so closely
connected to it that all rights over them have their natural center of gravity there. [22]
Thus, all matters concerning the title and disposition of real property are determined by
what is known as the lex loci rei sitae, which can alone prescribe the mode by which a title
can pass from one person to another, or by which an interest therein can be gained or lost.
[23]
This general principle includes all rules governing the descent, alienation and transfer of
immovable property and the validity, effect and construction of wills and other
conveyances.[24]
This principle even governs the capacity of the person making a deed relating to immovable
property, no matter what its nature may be. Thus, an instrument will be ineffective to
transfer title to land if the person making it is incapacitated by the lex loci rei sitae, even
though under the law of his domicile and by the law of the place where the instrument is
actually made, his capacity is undoubted.[25]
On the other hand, property relations between spouses are governed principally by the
national law of the spouses.[26] However, the party invoking the application of a foreign law
has the burden of proving the foreign law. The foreign law is a question of fact to be
properly pleaded and proved as the judge cannot take judicial notice of a foreign law. [27]
He
is presumed to know only domestic or the law of the forum. [28]
To prove a foreign law, the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:
SEC. 24. Proof of official record. The record of public documents referred to in paragraph
(a) of Section 19, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody of the
record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with
a certificate that such officer has the custody. If the office in which the record is kept is
in a foreign country, the certificate may be made by a secretary of the embassy or
legation, consul general, consul, vice consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. (Emphasis supplied)
SEC. 25. What attestation of copy must state. Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state, in substance, that
the copy is a correct copy of the original, or a specific part thereof, as the case may be.
The attestation must be under the official seal of the attesting officer, if there be any, or
if he be the clerk of a court having a seal, under the seal of such court.
Accordingly, matters concerning the title and disposition of real property shall be
governed by Philippine law while issues pertaining to the conjugal nature of the property
shall be governed by South Korean law, provided it is proven as a fact.
In the present case, Orion, unfortunately failed to prove the South Korean law on the
conjugal ownership of property. It merely attached a "Certification from the Embassy of
the Republic of Korea"[29] to prove the existence of Korean Law. This certification, does not
qualify as sufficient proof of the conjugal nature of the property for there is no showing
that it was properly authenticated by the seal of his office, as required under Section
24 of Rule 132.[30]
Accordingly, the International Law doctrine of presumed-identity approach or processual
presumption comes into play, i.e., where a foreign law is not pleaded or, even if pleaded, is
not proven, the presumption is that foreign law is the same as Philippine Law. [31]
Under Philippine Law, the phrase "Yung Sam Kang 'married to' Hyun Sook Jung" is merely
descriptive of the civil status of Kang. [32] In other words, the import from the certificates
of title is that Kang is the owner of the properties as they are registered in his name
alone, and that he is married to Hyun Sook Jung.
We are not unmindful that in numerous cases we have held that registration of the
property in the name of only one spouse does not negate the possibility of it being conjugal
or community property.[33] In those cases, however, there was proof that the properties,
though registered in the name of only one spouse, were indeed either conjugal or
community properties.[34] Accordingly, we see no reason to declare as invalid Kang's
conveyance in favor of Suzuki for the supposed lack of spousal consent.
The petitioner failed to adduce sufficient
evidence to prove the due execution of the
Dacion en Pago
Article 1544 of the New Civil Code of the Philippines provides that:
ART. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who
in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith
was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.
The application of Article 1544 of the New Civil Code presupposes the existence of two or
more duly executed contracts of sale. In the present case, the Deed of Sale dated
August 26, 2003[35] between Suzuki and Kang was admitted by Orion [36] and was properly
identified by Suzuki's witness Ms. Mary Jane Samin (Samin).[37]
It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In
a contract of sale, the seller obligates himself to transfer the ownership of the
determinate thing sold, and to deliver the same to the buyer, who obligates himself to pay
a price certain to the seller. [38] The execution of the notarized deed of sale and the actual
transfer of possession amounted to delivery that produced the legal effect of transferring
ownership to Suzuki.[39]
On the other hand, although Orion claims priority in right under the principle of prius
tempore, potior jure (i.e., first in time, stronger in right), it failed to prove the existence
and due execution of the Dacion en Pago in its favor.
At the outset, Orion offered the Dacion en Pago as Exhibit "5" with submarkings "5-
a" to "5-c" to prove the existence of the February 6, 2003 transaction in its Formal Offer
dated July 20, 2008. Orion likewise offered in evidence the supposed promissory note
dated September 4, 2002 as Exhibit "12" to prove the existence of the additional
P800,000.00 loan. The RTC, however, denied the admission of Exhibits "5" and "12," among
others, in its order dated August 19, 2008 "since the same [were] not identified in court
by any witness."[40]
Despite the exclusion of its most critical documentary evidence, Orion failed to make a
tender of excluded evidence, as provided under Section 40, Rule 132 of the Rules of
Court. For this reason alone, we are prevented from seriously considering Exhibit "5" and
its submarkings and Exhibit "12" in the present petition.
 that but....
Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the Q: Can you read the Second Whereas Clause, Mr. Witness?
present petition, the copious inconsistencies and contradictions in the testimonial and Whereas the first party failed to pay the said loan to the second party and
documentary evidence of Orion, militate against the conclusion that the Dacion en Pago was as of February 10, 2003, the outstanding obligation which is due and
A:
duly executed. demandable principal and interest and other charges included amounts to
P1,800,000.00 pesos, sir.
First, there appears to be no due and demandable obligation when the Dacion en Pago xxxx
was executed, contrary to the allegations of Orion. Orion's witness Perez tried to impress You are now changing your answer[.] [I]t now includes interest and other charges,
Q:
upon the RTC that Kang was in default in his P1,800,000.00 loan. During his direct based on this document?
examination, he stated: A: Yes, based on that document, sir.[43]

Third, the Dacion en Pago, mentioned that the P1,800,000.00 loan was secured by a real
ATTY. CRUZAT: estate mortgage. However, no document was ever presented to prove this real estate
Q: Okay, so this loan of P1.8 million, what happened to this loan, Mr. Witness? mortgage aside from it being mentioned in the Dacion en Pago itself.
Well it became past due, there has been delayed interest payment by Mr.
A:
Kang and...
Q: So what did you do after there were defaults[?] ATTY. DE CASTRO:
We have to secure the money or the investment of the bank through loans and we Would you know if there is any other document like a supplement to that Credit
have executed a dacion en pagobecause Mr. Kang said he has no money. So we just Line Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which
A: Q:
execute[d] the dacion en pago rather than going through the Foreclosure says that there was a subsequent collateralization or security given by Mr. Yung
proceedings. [Sam] Kang for the loan?
xxxx xxxx
Q: Can you tell the court when was this executed? A: The [dacion en pago], sir.[44]
A: February 6, 2003, your Honor.[41]
A reading of the supposed promissory note, however, shows that there was no default to Fourth, the Dacion en Pago was first mentioned only two (2) months after Suzuki and
speak of when the supposed Dacion en Pago was executed. Samin demanded the delivery of the titles sometime in August 2003, and after Suzuki
caused the annotation of his affidavit of adverse claim. Records show that it was only on
Based on the promissory note, Kang's loan obligation would mature only on August 27, October 9, 2003, when Orion, through its counsel, Cristobal Balbin Mapile &
2003. Neither can Orion claim that Kang had been in default in his installment payments Associates first spoke of the Dacion en Pago.[45] Not even Perez mentioned any Dacion
because the wordings of the promissory note provide that "[t]he principal of this loan and en Pago on October 1, 2003, when he personally received a letter demanding the delivery of
its interest and other charges shall be paid by me/us in accordance the titles. Instead, Perez refused to accept the letter and opted to first consult with his
hereunder: SINGLE PAYMENT LOANS.[42]" There was thus no due and demandable lawyer.[46]
loan obligation when the alleged Dacion en Pago was executed.
Notably, even the October 9, 2003 letter contained material inconsistencies in its recital
Second, Perez, the supposed person who prepared the Dacion en Pago, appears to only have of facts surrounding the execution of the Dacion en Pago. In particular, it mentioned that
a vague idea of the transaction he supposedly prepared. During his cross-examination, he "on [September 4, 2002], after paying the original loan, [Kang] applied and was granted a
testified: new Credit Line Facility by [Orion] x x x for ONE MILLION EIGHT HUNDRED
THOUSAND PESOS (P1,800,000.00)." Perez, however, testified that there was "no cash
movement" in the original P1,000,000.00 loan. In his testimony, he said:
ATTY. DE CASTRO:
Q: And were you the one who prepared this [dacion en pago] Mr. witness?
A: Yes, sir. I personally prepared this. COURT:
xxxx xxxx
So this 1.8 million pesos is already inclusive of all the penalties, interest and Would you remember what was the subject matter of that real estate mortgage
Q: Q:
surcharge due from Mr. Yung Sam Kang? for that first P1,000,000.00 loan?
A: It's just the principal, sir. A: It's a condominium Unit in Cityland, sir.
Q: So you did not state the interest [and] penalties? xxxx
A: In the [dacion en pago], we do not include interest, sir. We may actually include Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this
 P1,000,000.00 loan? validity of its contents."[50] The presumption of regularity of notarized documents is not
A: None sir. absolute and may be rebutted by clear and convincing evidence to the contrary. [51]
Q: No payments?
A: None sir. In the present case, the presumption cannot apply because the regularity in the execution
And from 1999 to 2002, there was no payment, either by way of payment to of the Dacion en Pago and the loan documents was challenged in the proceedings below
Q: the principal, by way of payment of interest, there was no payment by Mr. where their prima facie validity was overthrown by the highly questionable circumstances
Yung Sam Kang of this loan? surrounding their execution.[52]
A: Literally, there was no actual cash movement, sir.
Q: There was no actual cash? Effect of the PRA restriction on
A: Yes, sir. the validity of Suzuki's title to the
And yet despite no payment, the bank Orion Savings Bank still extended an property
Q:
P800,000.00 additional right?
A: Yes, sir.[47] Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki.
In particular, Orion assails the status of Suzuki as a purchaser in good faith in view of the
Fifth, it is undisputed that notwithstanding the supposed execution of the Dacion en express PRA restriction contained in CCT No. 18186.[53]
Pago on February 2, 2003, Kang remained in possession of the condominium unit. In fact,
nothing in the records shows that Orion even bothered to take possession of the property We reject this suggested approach outright because, to our mind, the PRA restriction
even six (6) months after the supposed date of execution of the Dacion en Pago. Kang was cannot affect the conveyance in favor of Suzuki. On this particular point, we concur with
even able to transfer possession of the condominium unit to Suzuki, who then made the following findings of the CA:
immediate improvements thereon. If Orion really purchased the condominium unit on
February 2, 2003 and claimed to be its true owner, why did it not assert its ownership
immediately after the alleged sale took place? Why did it have to assert its ownership only x x x the annotation merely serves as a warning to the owner who holds a Special Resident
after Suzuki demanded the delivery of the titles? These gaps have remained unanswered Retiree's Visa (SRRV) that he shall lose his visa if he disposes his property which serves as
and unfilled. his investment in order to qualify for such status. Section 14 of the I mplementing
Investment Guidelines under Rule VIII-A of the Rules and Regulations Implementing
In Suntay v. CA,[48] we held that the most prominent index of simulation is the complete Executive Order No. 1037, Creating the Philippine Retirement Park System Providing Funds
absence of an attempt on the part of the vendee to assert his rights of ownership over the Therefor and For Other Purpose ( otherwise known as the Philippine Retirement
property in question. After the sale, the vendee should have entered the land and occupied Authority) states:
the premises. The absence of any attempt on the part of Orion to assert its right of
dominion over the property allegedly sold to it is a clear badge of fraud. That
Section 14. Should the retiree-investor withdraw his investment from the Philippines, or
notwithstanding the execution of the Dacion en Pago, Kang remained in possession of
transfer the same to another domestic enterprise, or sell, convey or transfer his
the disputed condominium unit from the time of the execution of the Dacion en
condominium unit or units to another person, natural or juridical without the prior approval
Pago until the property's subsequent transfer to Suzuki unmistakably strengthens the
of the Authority, the Special Resident Retiree's Visa issued to him, and/or unmarried
fictitious nature of the Dacion en Pago.
minor child or children[,] may be cancelled or revoked by the Philippine Government,
through the appropriate government department or agency, upon recommendation of the
These circumstances, aside from the glaring inconsistencies in the documents and
Authority.[54]
testimony of Orion's witness, indubitably prove the spurious nature of the Dacion en Pago.
Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on
The fact that the Dacion en Pago the basis of the PRA restriction. Orion knew of the PRA restriction when it transacted
is a notarized document does not with Kang. Incidentally, Orion admitted accommodating Kang's request to cancel the
support the conclusion that the mortgage annotation despite the lack of payment to circumvent the PRA restriction.
sale it embodies is a true Orion, thus, is estopped from impugning the validity of the conveyance in favor of Suzuki
conveyance on the basis of the PRA restriction that Orion itself ignored and "attempted" to
circumvent.

Public instruments are evidence of the facts that gave rise to their execution and are to With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we
be considered as containing all the terms of the agreement. [49] While a notarized document see no reason for the application of the rules on double sale under Article 1544 of the New
enjoys this presumption, "the fact that a deed is notarized is not a guarantee of the Civil Code. Suzuki, moreover, successfully adduced sufficient evidence to establish the
validity of conveyance in his favor.
WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against
petitioner Orion Savings Bank.
SO ORDERED.
NORMA. DEL SOCORRO, for and in behalf of her minor child RODERIGO NORJO
VAN WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Orders 1 dated February 19, 2010 and September 1,
2010, respectively, of the Regional Trial Court of Cebu City (RTC-Cebu), which dismissed
the criminal case entitled People of the Philippines v. Ernst Johan Brinkman Van Wilsem,
docketed as Criminal Case No. CBU-85503, for violation of Republic Act (R.A.) No. 9262,
otherwise known as the Anti-Violence Against Women and Their Children Act of 2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem
contracted marriage in Holland on September 25, 1990.2 On January 19, 1994, they were
blessed with a son named Roderigo Norjo Van Wilsem, who at the time of the filing of the
instant petition was sixteen (16) years of age. 3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree
issued by the appropriate Court of Holland.4 At that time, their son was only eighteen (18)
months old.5 Thereafter, petitioner and her son came home to the Philippines. 6
According to petitioner, respondent made a promise to provide monthly support to their
son in the amount of Two Hundred Fifty (250) Guildene (which is equivalent to
Php17,500.00 more or less).7 However, since the arrival of petitioner and her son in the
Philippines, respondent never gave support to the son, Roderigo. 8
Not long thereafter, respondent cameto the Philippines and remarried in Pinamungahan,
Cebu, and since then, have been residing thereat. 9 Respondent and his new wife established
a business known as Paree Catering, located at Barangay Tajao, Municipality of
Pinamungahan, Cebu City.10 To date, all the parties, including their son, Roderigo, are
presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter demanding for support
from respondent. However, respondent refused to receive the letter. 12
Because of the foregoing circumstances, petitioner filed a complaint affidavit with the
Provincial Prosecutor of Cebu City against respondent for violation of Section 5, paragraph
E(2) of R.A. No. 9262 for the latter’s unjust refusal to support his minor child with
petitioner.13 Respondent submitted his counter-affidavit thereto, to which petitioner also
submitted her reply-affidavit.14 Thereafter, the Provincial Prosecutor of Cebu City issued a
Resolution recommending the filing of an information for the crime charged against herein
respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof,
states that:
That sometime in the year 1995 and up to the present, more or less, in the Municipality of
Minglanilla, Province of Cebu, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, did then and there wilfully, unlawfully and deliberately
deprive, refuse and still continue to deprive his son RODERIGO NORJO VAN WILSEM, a
fourteen (14) year old minor, of financial support legally due him, resulting in economic
abuse to the victim. CONTRARY TO LAW. 15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order
against respondent.16Consequently, respondent was arrested and, subsequently, posted
bail.17 Petitioner also filed a Motion/Application of Permanent Protection Order to which
respondent filed his Opposition. 18 Pending the resolution thereof, respondent was
arraigned.19 Subsequently, without the RTC-Cebu having resolved the application of the
protection order, respondent filed a Motion to Dismiss on the ground of: (1) lack of
jurisdiction over the offense charged; and (2) prescription of the crime charged. 20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order, 21 dismissing the
instant criminal case against respondent on the ground that the facts charged in the
information do not constitute an offense with respect to the respondent who is an alien,
the dispositive part of which states:
WHEREFORE, the Court finds that the facts charged in the information do not constitute
an offense with respect to the accused, he being an alien, and accordingly, orders this case
DISMISSED.
The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional
liberty is hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating
respondent’s obligation to support their child under Article 195 23 of the Family Code, thus,
failure to do so makes him liable under R.A. No. 9262 which "equally applies to all persons in
the Philippines who are obliged to support their minor children regardless of the obligor’s
nationality."24
On September 1, 2010, the lower court issued an Order25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling. Thus:
x x x The arguments therein presented are basically a rehash of those advanced earlier in
the memorandum of the prosecution. Thus, the court hereby reiterates its ruling that
since the accused is a foreign national he is not subject to our national law (The Family
Code) in regard to a parent’s duty and obligation to givesupport to his child. Consequently,
he cannot be charged of violating R.A. 9262 for his alleged failure to support his child.
Unless it is conclusively established that R.A. 9262 applies to a foreigner who fails to give
support tohis child, notwithstanding that he is not bound by our domestic law which
mandates a parent to give such support, it is the considered opinion of the court that no
prima faciecase exists against the accused herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following issues:
1. Whether or not a foreign national has an obligation to support his minor child
under Philippine law; and
2. Whether or not a foreign national can be held criminally liable under R.A. No.
9262 for his unjustified failure to support his minor child. 27
At the outset, let it be emphasized that We are taking cognizance of the instant petition
despite the fact that the same was directly lodged with the Supreme Court, consistent
with the ruling in Republic v. Sunvar Realty Development Corporation, 28 which lays down the
instances when a ruling of the trial court may be brought on appeal directly to the Supreme
Court without violating the doctrine of hierarchy of courts, to wit:
x x x Nevertheless, the Rules do not prohibit any of the parties from filing a Rule 45
Petition with this Court, in case only questions of law are raised or involved. This latter
situation was one that petitioners found themselves in when they filed the instant Petition
to raise only questions of law. In Republic v. Malabanan, the Court clarified the three
modes of appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ
of error under Rule 41, whereby judgment was rendered in a civil or criminal action by the
RTC in the exercise of its original jurisdiction; (2) by a petition for review under Rule 42,
whereby judgment was rendered by the RTC in the exercise of its appellate jurisdiction;
and (3) by a petition for review on certiorari before the Supreme Court under Rule 45.
"The first mode of appeal is taken to the [Court of Appeals] on questions of fact or mixed
questions of fact and law. The second mode of appeal is brought to the CA on questions of
fact, of law, or mixed questions of fact and law. The third mode of appealis elevated to the
Supreme Court only on questions of law." (Emphasis supplied)
There is a question of law when the issue does not call for an examination of the probative
value of the evidence presented or of the truth or falsehood of the facts being admitted,
and the doubt concerns the correct application of law and jurisprudence on the matter.
The resolution of the issue must rest solely on what the law provides on the given set of
circumstances.29
Indeed, the issues submitted to us for resolution involve questions of law – the response
thereto concerns the correct application of law and jurisprudence on a given set of facts,
i.e.,whether or not a foreign national has an obligation to support his minor child under
Philippine law; and whether or not he can be held criminally liable under R.A. No. 9262 for
his unjustified failure to do so.
It cannot be negated, moreover, that the instant petition highlights a novel question of law
concerning the liability of a foreign national who allegedly commits acts and omissions
punishable under special criminal laws, specifically in relation to family rights and duties.
The inimitability of the factual milieu of the present case, therefore, deserves a definitive
ruling by this Court, which will eventually serve as a guidepost for future cases.
Furthermore, dismissing the instant petition and remanding the same to the CA would only
waste the time, effort and resources of the courts. Thus, in the present case,
considerations of efficiency and economy in the administration of justice should prevail
over the observance of the hierarchy of courts.
Now, on the matter of the substantive issues, We find the petition meritorious.
Nonetheless, we do not fully agree with petitioner’s contentions.
To determine whether or not a person is criminally liable under R.A. No. 9262, it is
imperative that the legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code, which provides the parent’s obligation
to support his child. Petitioner contends that notwithstanding the existence of a divorce
decree issued in relation to Article 26 of the Family Code, 31 respondent is not excused
from complying with his obligation to support his minor child with petitioner.
On the other hand, respondent contends that there is no sufficient and clear basis
presented by petitioner that she, as well as her minor son, are entitled to financial
support.32 Respondent also added that by reason of the Divorce Decree, he is not obligated
topetitioner for any financial support.33
On this point, we agree with respondent that petitioner cannot rely on Article 195 34 of the
New Civil Code in demanding support from respondent, who is a foreign citizen, since
Article 1535 of the New Civil Code stresses the principle of nationality. In other words,
insofar as Philippine laws are concerned, specifically the provisions of the Family Code on
support, the same only applies to Filipino citizens. By analogy, the same principle applies to
foreigners such that they are governed by their national law with respect to family rights
and duties.36
The obligation to give support to a child is a matter that falls under family rights and
duties. Since the respondent is a citizen of Holland or the Netherlands, we agree with the
RTC-Cebu that he is subject to the laws of his country, not to Philippinelaw, as to whether
he is obliged to give support to his child, as well as the consequences of his failure to do
so.37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position to invoke the provisions of the Civil
Code of the Philippines, for that Code cleaves to the principle that family rights and duties
are governed by their personal law, i.e.,the laws of the nation to which they belong even
when staying in a foreign country (cf. Civil Code, Article 15). 39
It cannot be gainsaid, therefore, that the respondent is not obliged to support petitioner’s
son under Article195 of the Family Code as a consequence of the Divorce Covenant
obtained in Holland. This does not, however, mean that respondent is not obliged to support
petitioner’s son altogether.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of proving the foreign law.40 In the present case, respondent hastily
concludes that being a national of the Netherlands, he is governed by such laws on the
matter of provision of and capacity to support.41 While respondent pleaded the laws of the
Netherlands in advancing his position that he is not obliged to support his son, he never
proved the same.
It is incumbent upon respondent to plead and prove that the national law of the
Netherlands does not impose upon the parents the obligation to support their child (either
before, during or after the issuance of a divorce decree), because Llorente v. Court of
Appeals,42 has already enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to takejudicial notice of them. Like any other fact, they must be alleged and
proved.43
In view of respondent’s failure to prove the national law of the Netherlands in his favor,
the doctrine of processual presumption shall govern. Under this doctrine, 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.44 Thus, since the law of the Netherlands
as regards the obligation to support has not been properly pleaded and proved in the
instant case, it is presumed to be the same with Philippine law, which enforces the
obligation of parents to support their children and penalizing the non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera, 45 the Court held that a divorce obtained in a
foreign land as well as its legal effects may be recognized in the Philippines in view of the
nationality principle on the matter of status of persons, the Divorce Covenant presented by
respondent does not completely show that he is notliable to give support to his son after
the divorce decree was issued. Emphasis is placed on petitioner’s allegation that under the
second page of the aforesaid covenant, respondent’s obligation to support his child is
specifically stated,46 which was not disputed by respondent.
We likewise agree with petitioner that notwithstanding that the national law of respondent
states that parents have no obligation to support their children or that such obligation is
not punishable by law, said law would still not find applicability,in light of the ruling in Bank
of America, NT and SA v. American Realty Corporation,47 to wit:
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, 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.
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.
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. 48
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s
obligation to support his child nor penalize the noncompliance therewith, such obligation is
still duly enforceable in the Philippines because it would be of great injustice to the child
to be denied of financial support when the latter is entitled thereto.
We emphasize, however, that as to petitioner herself, respondent is no longer liable to
support his former wife, in consonance with the ruling in San Luis v. San Luis, 49 to wit:
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no
longerbe considered marriedto the alien spouse. Further, she should not be required to
perform her marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations
under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged
to live together with, observe respect and fidelity, and render support to private
respondent. The latter should not continue to be one of her heirs with possible rights to
conjugal property. She should not be discriminated against in her own country if the ends
of justice are to be served. (Emphasis added)50
Based on the foregoing legal precepts, we find that respondent may be made liable under
Section 5(e) and (i) of R.A. No. 9262 for unjustly refusing or failing to give support
topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence
against women and their children is committed through any of the following acts:
xxxx
(e) Attempting to compel or compelling the woman or her child to engage in conduct which
the woman or her child has the right to desist from or desist from conduct which the
woman or her child has the right to engage in, or attempting to restrict or restricting the
woman's or her child's freedom of movement or conduct by force or threat of force,
physical or other harm or threat of physical or other harm, or intimidation directed against
the woman or child. This shall include, butnot limited to, the following acts committed with
the purpose or effect of controlling or restricting the woman's or her child's movement or
conduct:
xxxx
(2) Depriving or threatening to deprive the woman or her children of financial support
legally due her or her family, or deliberately providing the woman's children insufficient
financial support; x x x x
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her
child, including, but not limited to, repeated verbal and emotional abuse, and denial of
financial support or custody of minor childrenof access to the woman's child/children. 51
Under the aforesaid special law, the deprivation or denial of financial support to the child
is considered anact of violence against women and children.
In addition, considering that respondent is currently living in the Philippines, we find
strength in petitioner’s claim that the Territoriality Principle in criminal law, in relation to
Article 14 of the New Civil Code, applies to the instant case, which provides that: "[p]enal
laws and those of public security and safety shall be obligatory upon all who live and
sojourn in Philippine territory, subject to the principle of public international law and to
treaty stipulations." On this score, it is indisputable that the alleged continuing acts of
respondent in refusing to support his child with petitioner is committed here in the
Philippines as all of the parties herein are residents of the Province of Cebu City. As such,
our courts have territorial jurisdiction over the offense charged against respondent. It is
likewise irrefutable that jurisdiction over the respondent was acquired upon his arrest.
Finally, we do not agree with respondent’s argument that granting, but not admitting, that
there is a legal basis for charging violation of R.A. No. 9262 in the instant case, the
criminal liability has been extinguished on the ground of prescription of crime 52 under
Section 24 of R.A. No. 9262, which provides that:
SECTION 24. Prescriptive Period. – Acts falling under Sections 5(a) to 5(f) shall prescribe
in twenty (20) years. Acts falling under Sections 5(g) to 5(I) shall prescribe in ten (10)
years.
The act of denying support to a child under Section 5(e)(2) and (i) of R.A. No. 9262 is a
continuing offense,53 which started in 1995 but is still ongoing at present. Accordingly, the
crime charged in the instant case has clearly not prescribed.
Given, however, that the issue on whether respondent has provided support to petitioner’s
child calls for an examination of the probative value of the evidence presented, and the
truth and falsehood of facts being admitted, we hereby remand the determination of this
issue to the RTC-Cebu which has jurisdiction over the case.
WHEREFORE, the petition is GRANTED. The Orders dated February 19, 2010 and
September 1, 2010, respectively, of the Regional Trial Court of the City of Cebu are
hereby REVERSED and SET ASIDE. The case is REMANDED to the same court to conduct
further proceedings based on the merits of the case.
SO ORDERED.
JARDELEZA, J.:
This is a Petition for Review on Certiorari[1] under Rule 45 of the levised Rules of Court
assailing the Decision[2] dated May 23, 2006 and Resolution[3] dated June 19, 2007 of the
Court of Appeals in the consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No.
84281. These assailed Decision and Resolution set aside the Decision [4] dated November 28,
2003 of the National Labor Relations Commission (NLRC) declaring Joseph Basso's (Basso)
dismissal illegal, and ordering the payment of separation pay as alternative to
reinstatement and full backwages until the date of the Decision.
The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation organized and
existing under the laws of and domiciled in the United States of America (US). It is
licensed to do business in the Philippines.[5] Basso, a US citizen, resided in the Philippines
prior to his death.[6]
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden), Managing Director-
Asia of Continental Airlines, Inc. (Continental), offered Basso the position of General
Manager of the Philippine Branch of Continental. Basso accepted the offer. [7]
It was not until much later that Mr. Braden, who had since returned to the US, sent Basso
the employment contract[8] dated February 1, 1991, which Mr. Braden had already signed.
Basso then signed the employment contract and returned it to Mr. Braden as instructed.
On November 7, 1992, CMI took over the Philippine operations of Continental, with Basso
retaining his position as General Manager. [9]
On December 20, 1995, Basso received a letter from Mr. Ralph Schulz (Mr. Schulz), who
was then CMI's Vice President of Marketing and Sales, informing Basso that he has agreed
to work in CMI as a consultant on an "as needed basis" effective February 1, 1996 to July
31, 1996. The letter also informed Basso that: (1) he will not receive any monetary
compensation but will continue being covered by the insurance provided by CMI; (2) he will
enjoy travel privileges; and (3) CMI will advance Php1,140,000.00 for the payment of
housing lease for 12 months.[10]
On January 11, 1996, Basso wrote a counter-proposal[11] to Mr. Schulz regarding his
employment status in CMI. On March 14, 1996, Basso wrote another letter addressed to
Ms. Marty Woodward (Ms. Woodward) of CMI's Human Resources Department inquiring
about the status of his employment.[12] On the same day, Ms. Woodward responded that
pursuant to the employment contract dated February 1, 1991, Basso could be terminated at
will upon a thirty-day notice. This notice was allegedly the letter Basso received from Mr.
Schulz on December 20, 1995. Ms. Woodward also reminded Basso of the telephone
conversation between him, Mr. Schulz and Ms. Woodward on December 19, 1995, where
they informed him of the company's decision to relieve him as General Manager. Basso,
instead, was offered the position of consultant to CMI. Ms. Woodward also informed Basso
that CMI rejected his counter-proposal and, thus, terminated his employment effective
January 31, 1996. CMI offered Basso a severance pay, in consideration of the
Php1,140,000.00 housing advance that CMI promised him.[13]
Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages against
CMI on December 19, 1996.[14] Alleging the presence of foreign elements, CMI filed a
Motion to Dismiss[15] dated February 10, 1997 on the ground of lack of jurisdiction over the
person of CMI and the subject matter of the controversy. In an Order [16] dated August 27,
1997, the Labor Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci
contractus, the Labor Arbiter held that the terms and provisions of the employment
contract show that the parties did not intend to apply our Labor Code (Presidential Decree
No. 442). The Labor Arbiter also held that no employer-employee relationship existed
between Basso and the branch office of CMI in the Philippines, but between Basso and the
foreign corporation itself.
On appeal, the NLRC remanded the case to the Labor Arbiter for the determination of
certain facts to settle the issue on jurisdiction. NLRC ruled that the issue on whether the
principle of lex loci contractus or lex loci celebrationis should apply has to be further
threshed out.[17]
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his Decision[18] dated September 24, 1999 dismissed
the case for lack of merit and jurisdiction.
The Labor Arbiter agreed with CMI that the employment contract was xecuted in the US
"since the letter-offer was under the Texas letterhead and the acceptance of Complainant
was returned there."[19] Thus, applying the doctrine of lex loci celebrationis, US laws apply.
Also, applying lex loci contractus, the Labor Arbiter ruled that the parties did not intend
to apply Philippine laws, thus:
Although the contract does not state what law shall apply, it is obvious that Philippine laws
were not written into it. More specifically, the Philippine law on taxes and the Labor Code
were not intended by the parties to apply, otherwise Par. 7 on the payment by Complainant
U.S. Federal and Home State income taxes, and Pars. 22/23 on termination by 30-day prior
notice, will not be there. The contract was prepared in contemplation of Texas or U.S. laws
where Par. 7 is required and Pars. 22/23 is allowed. [20]
The Labor Arbiter also ruled that Basso was terminated for a valid cause based on the
allegations of CMI that Basso committed a series of acts that constitute breach of trust
and loss of confidence.[21]
The Labor Arbiter, however, found CMI to have voluntarily submitted to his office's
jurisdiction. CMI participated in the proceedings, submitted evidence on the merits of the
case, and sought affirmative relief through a motion to dismiss. [22]
NLRC's Ruling
On appeal, the NLRC Third Division promulgated its Decision [23] dated November 28, 2003,
the decretal portion of which reads:
WHEREFORE, the decision dated 24 September 1999 is VACATED and SET ASIDE.
Respondent CMI is ordered to pay complainant the amount of US$5,416.00 for failure to
comply with the due notice requirement. The other claims are dismissed.
SO ORDERED.[24]
The NLRC did not agree with the pronouncement of the Labor Arbiter that his office has
no jurisdiction over the controversy. It ruled that the Labor Arbiter acquired jurisdiction
over the case when CMI voluntarily submitted to his office's jurisdiction by presenting
evidence, advancing arguments in support of the legality of its acts, and praying for reliefs
on the merits of the case.[25]
On the merits, the NLRC agreed with the Labor Arbiter that Basso was dismissed for just
and valid causes on the ground of breach of trust and loss of confidence. The NLRC ruled
that under the applicable rules on loss of trust and confidence of a managerial employee,
such as Basso, mere existence of a basis for believing that such employee has breached
the trust of his employer suffices. However, the NLRC found that CMI denied Basso the
required due process notice in his dismissal.[26]
Both CMI and Basso filed their respective Motions for Reconsideration dated January 15,
2004[27] and January 8, 2004.[28] Both motions were dismissed in separate Resolutions dated
March 15, 2004[29] and February 27, 2004,[30] respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with the Court of Appeals
docketed as CA-G.R. SP No. 83938.[31] Basso imputed grave abuse of discretion on the part
of the NLRC in ruling that he was validiy dismissed. CMI filed its own Petition
for Certiorari dated May 13, 2004 docketed as CA-G.R. SP No. 84281,[32] alleging that the
NLRC gravely abused its discretion when it assumed jurisdiction over the person of CMI
and the subject matter of the case.
In its Resolution dated October 7, 2004, the Court of Appeals consolidated the two
cases[33] and ordered the parties to file their respective Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed Decision [34] dated May 23, 2006, the
relevant dispositive portion of which reads:
WHEREFORE, the petition of Continental docketed as CA-G.R. SP No. 84281 is DENIED
DUE COURSE and DISMISSED.
On the other hand the petition of Basso docketed as CA-G.R. SP No. 83938 is GIVEN DUE
COURSE and GRANTED, and accordingly, the assailed Decision dated November 28, 2003
and Resolution dated February 27, 2004 of the NLRC are SET ASIDEand VACATED.
Instead judgment is rendered hereby declaring the dismissal of Basso illegal and ordering
Continental to pay him separation pay equivalent to one (1) month pay for every year of
service as an alternative to reinstatement. Further, ordering Continental to pay Basso his
full backwages from the date of his said illegal dismissal until date of this decision. The
claim for moral and exemplary damages as well as attorney's fees are dismissed. [35]
The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the
subject matter of the case and over the parties. The Court of Appeals explained that
jurisdiction over the subject matter of the action is determined by the allegations of the
complaint and the law. Since the case filed by Basso is a termination dispute that is
"undoubtedly cognizable by the labor tribunals", the Labor Arbiter and the NLRC had
jurisdiction to rule on the merits of the case. On the issue of jurisdiction over he person
of the parties, who are foreigners, the Court of Appeals ruled that jurisdiction over the
person of Basso was acquired when he filed the complaint for illegal dismissal, while
jurisdiction over the person of CMI was acquired through coercive process of service of
summons to its agent in the Philippines. The Court of Appeals also agreed that the active
participation of CMI in the case rendered moot the issue on jurisdiction.
On the merits of the case, the Court of Appeals declared that CMI illegally dismissed
Basso. The Court of Appeals found that CMI's allegations of loss of trust and confidence
were not established. CMI "failed to prove its claim of the incidents which were its alleged
bases for loss of trust or confidence."[36] While managerial employees can be dismissed for
loss of trust and confidence, there must be a basis for such loss, beyond mere whim or
caprice.
After the parties filed their Motions for Reconsideration, [37] the Court of Appeals
promulgated Resolution[38] dated June 19, 2007 denying CMI's motion, while partially
granting Basso's as to the computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING THE FACTUAL
FINDINGS OF THE NLRC INSTEAD OF LIMITING ITS INQUIRY INTO WHETHER OR
NOT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE LABOR
ARBITER AND THE NLRC HAD JURISDICTION TO HEAR AND TRY THE ILLEGAL
DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT BASSO WAS
NOT VALIDLY DISMISSED ON THE GROUND OF LOSS OF TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the Labor Arbiter and the NLRC in
the illegal dismissal case. The first and third issues will be discussed jointly.
The labor tribunals had jurisdiction over the parties and the subject matter of the
case.
CMI maintains that there is a conflict-of-laws issue that must be settled to determine
proper jurisdiction over the parties and the subject matter of the case. It also alleges
that the existence of foreign elements calls or the application of US laws and the
doctrines of lex loci celebrationis (the law of the place of the ceremony), lex loci
contractus (law of the place where a contract is executed), and lex loci intentionis (the
intention of the parties as to the law that should govern their agreement). CMI also
invokes the application of the rule of forum non conveniens to determine the propriety of
the assumption of jurisdiction by the labor tribunals.
We agree with CMI that there is a conflict-of-laws issue that needs to be resolved first.
Where the facts establish the existence of foreign elements, he case presents a conflict-
of-laws issue.[39] The foreign element in a case nay appear in different forms, such as in
this case, where one of the parties s an alien and the other is domiciled in another state.
In Hasegawa v. Kitamura,[40] we stated that in the judicial resolution of conflict-of-laws
problems, three consecutive phases are involved: jurisdiction, choice of law, and recognition
and enforcement of judgments. In resolving the conflicts problem, courts should ask the
following questions:
1. "Under the law, do I have jurisdiction over the subject matter and the parties to this
case?
2. "If the answer is yes, is this a convenient forum to the parties, in light of the facts?
3. "If the answer is yes, what is the conflicts rule for this particular problem?
4. "If the conflicts rule points to a foreign law, has said law been properly pleaded and
proved by the one invoking it?
5. "If so, is the application or enforcement of the foreign law in the forum one of the basic
exceptions to the application of foreign law? In short, is there any strong policy or vital
interest of the forum that is at stake in this case and which should preclude the
application of foreign law?[41]
Jurisdiction is defined as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law and
by the material allegations in the complaint, regardless of whether or not the plaintiff is
entitled to recover all or some of the claims or reliefs sought therein. [42] It cannot be
acquired through a waiver or enlarged by the omission of the parties or conferred by the
acquiescence of the court.[43] That the employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US, do not
automatically preclude our labor tribunals from exercising jurisdiction to hear and try this
case.
This case stemmed from an illegal dismissal complaint. The Labor Code, under Article 217,
clearly vests original and exclusive jurisdiction to hear and decide cases involving
termination disputes to the Labor Arbiter. Hence, the Labor Arbiter and the NLRC have
jurisdiction over the subject matter of the case.
As regards jurisdiction over the parties, we agree with the Court of Appeals that the
Labor Arbiter acquired jurisdiction over the person of Basso, notwithstanding his
citizenship, when he filed his complaint against CMI. On the other hand, jurisdiction over
the person of CMI was acquired through the coercive process of service of summons. We
note that CMI never denied that it was served with summons. CMI has, in fact, voluntarily
appeared and participated in the proceedings before the courts. Though a foreign
corporation, CMI is licensed to do business in the Philippines and has a local business
address here. The purpose of the law in requiring that foreign corporations doing business
in the country be licensed to do so, is to subject the foreign corporations to the
jurisdiction of our courts.[44]
Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and
the subject matter of this case, these tribunals may proceed to try the case even if the
rules of conflict-of-laws or the convenience of the parties point to a foreign forum, this
being an exercise of sovereign prerogative of the country where the case is filed. [45]
The next question is whether the local forum is the convenient forum in light of the facts
of the case. CMI contends that a Philippine court is an inconvenient forum.
We disagree.
Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case
may assume jurisdiction if it chooses to do so, provided, that the following requisites are
met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as to the law and
the facts; and (3) that the Philippine Court has or is likely to have power to enforce its
decision.[46] All these requisites are present here.
Basso may conveniently resort to our labor tribunals as he and CMI lad physical presence in
the Philippines during the duration of the trial. CMI has a Philippine branch, while Basso,
before his death, was residing here. Thus, it could be reasonably expected that no
extraordinary measures were needed for the parties to make arrangements in advocating
their respective cases.
The labor tribunals can make an intelligent decision as to the law and facts. The incident
subject of this case (i.e. dismissal of Basso) happened in the Philippines, the surrounding
circumstances of which can be ascertained without having to leave the Philippines. The acts
that allegedly led to loss of trust and confidence and Basso's eventual dismissal were
committed in the Philippines. As to the law, we hold that Philippine law is the proper law of
he forum, as we shall discuss shortly. Also, the labor tribunals have the power to enforce
their judgments because they acquired jurisdiction over the persons of both parties.
Our labor tribunals being the convenient fora, the next question is what law should apply in
resolving this case.
The choice-of-law issue in a conflict-of-laws case seeks to answer the following 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.[47] These questions are entirely different from the
question of jurisdiction that only seeks to answer whether the courts of a state where the
case is initiated have jurisdiction to enter a judgment. [48] As such, the power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum law.
[49]
CMI insists that US law is the applicable choice-of-law under the principles of lex loci
celebrationis and lex loci contractus. It argues that the contract of employment originated
from and was returned to the US after Basso signed it, and hence, was perfected there.
CMI further claims that the references to US law in the employment contract show the
parties' intention to apply US law and not ours. These references are:
a. Foreign station allowance of forty percent (40%) using the "U.S. State
Department Index, the base being Washington, D.C."
b. Tax equalization that made Basso responsible for "federal and any home state
income taxes."
c. Hardship allowance of fifteen percent (15%) of base pay based upon the "U.S.
Department of State Indexes of living costs abroad."
d. The employment arrangement is "one at will, terminable by either party without
any further liability on thirty days prior written notice." [50]
CMI asserts that the US law on labor relations particularly, the US Railway Labor Act
sanctions termination-at-will provisions in an employment contract. Thus, CMI concludes
that if such laws were applied, there would have been no illegal dismissal to speak of
because the termination-at-will provision in Basso's employment contract would have been
perfectly valid.
We disagree.
In Saudi Arabian Airlines v. Court of Appeals,[51] we emphasized that 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 fact or point of contact, such as the situs of the res, the
place of celebration, the place of performance, or the place of wrongdoing. Pursuant
to Saudi Arabian Airlines, we hold that the "test factors," "points of contact" or
"connecting factors" in this case are the following:
(1) The nationality, domicile or residence of Basso;
(2) The seat of CMI;
(3) The place where the employment contract has been made, the locus actus;
(4) The place where the act is intended to come into effect, e.g., the place of performance
of contractual duties;
(5) The intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis; and
(6) The place where judicial or administrative proceedings are instituted or done. [52]
Applying the foregoing in this case, we conclude that Philippine law the applicable law.
Basso, though a US citizen, was a resident here from he time he was hired by CMI until his
death during the pendency of the case. CMI, while a foreign corporation, has a license to
do business in the Philippines and maintains a branch here, where Basso was hired to work.
The contract of employment was negotiated in the Philippines. A purely consensual
contract, it was also perfected in the Philippines when Basso accepted the terms and
conditions of his employment as offered by CMI. The place of performance relative to
Biasso's contractual duties was in the Philippines. The alleged prohibited acts of Basso that
warranted his dismissal were committed in the Philippines.
Clearly, the Philippines is the state with the most significant relationship to the problem.
Thus, we hold that CMI and Basso intended Philippine law to govern, notwithstanding some
references made to US laws and the fact that this intention was not expressly stated in
the contract. We explained in Philippine Export and Foreign Loan Guarantee Corporation v.
V. P. Eusebio Construction, Inc.[53] that the law selected may be implied from such factors
as substantial connection with the transaction, or the nationality or domicile of the parties.
[54]
We cautioned, however, that while Philippine courts would do well to adopt the first and
most basic rule in most legal systems, namely, to allow the parties to select the law
applicable to their contract, the selection is subject to the limitation that it is not against
the law, morals, or public policy of the forum.[55]
Similarly, in Bank of America, NT&SA v. American Realty Corporation,[56] we ruled that a
foreign law, judgment or contract contrary to a sound and established public policy of the
forum shall not be applied. Thus:
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.[57]
Termination-at-will is anathema to the public policies on labor protection espoused by our
laws and Constitution, which dictates that no worker shall be dismissed except for just and
authorized causes provided by law and after due process having been complied with.
[58]
Hence, the US Railway Labor Act, which sanctions termination-at-will, should not be
applied in this case.
Additionally, the rule is that there is no judicial notice of any foreign law. As any other
fact, it must be alleged and proved.[59] If the foreign law is not properly pleaded or proved,
the presumption of identity or similarity of the foreign law to our own laws, otherwise
known as processual presumption, applies. Here, US law may have been properly pleaded but
it was not proved in the labor tribunals.
Having disposed of the issue on jurisdiction, we now rule on the first and third issues.
The Court of Appeals may review the factual findings of the NLRC in a Rule 65
petition.
CMI submits that the Court of Appeals overstepped the boundaries of the limited scope of
its certiorari jurisdiction when instead of ruling on the existence of grave abuse of
discretion, it proceeded to pass upon the legality and propriety of Basso's dismissal.
Moreover, CMI asserts that it was error on the part of the Court of Appeals to re-
evaluate the evidence and circumstances surrounding the dismissal of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions via a Petition
for Certiorari under Rule 65 of the Revised Rules of Court was settled in our decision
in St. Martin Funeral Home v. NLRC.[60] The general rule is that certiorari does not lie to
review errors of judgment of the trial court, as well as that of a quasi-judicial tribunal.
In certiorari proceedings, judicial review does not go as far as to examine and assess the
evidence of the parties and to weigh their probative value. [61] However, this rule admits of
exceptions. In Globe Telecom, Inc. v. Florendo-Flores,[62] we stated:
In the review of an NLRC decision through a special civil action for certiorari, resolution is
confined only to issues of jurisdiction and grave abuse of discretion on the part of the
labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower
courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally,
however, the Court is constrained to delve into factual matters where, as in the instant
case, the findings of the NLRC contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the
records of the case and re-examine the questioned findings. As a corollary, this Court is
clothed with ample authority to review matters, even if they are not assigned as errors in
their appeal, if it finds that their consideration is necessary to arrive at a just decision of
the case. The same principles are now necessarily adhered to and are applied by the Court
of Appeals in its expanded jurisdiction over labor cases elevated through a petition
for certiorari; thus, we see no error on its part when it made anew a factual determination
of the matters and on that basis reversed the ruling of the NLRC. [63] (Citations omitted.)
Thus, the Court of Appeals may grant the petition when the factual hidings complained of
are not supported by the evidence on record; when its necessary to prevent a substantial
wrong or to do substantial justice; when the findings of the NLRC contradict those of the
Labor Arbiter; and when necessary to arrive at a just decision of the case. [64] To make
these findings, the Court of Appeals necessarily has to look at the evidence and make its
own factual determination.[65]
Since the findings of the Labor Arbiter differ with that of the NLRC, we find that the
Court of Appeals correctly exercised its power to review the evidence and the records of
the illegal dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of CMI Managerial employees
enjoy security of tenure and the right of the management to dismiss must be balanced
against the managerial employee's right to security of tenure, which is not one of the
guaranties he gives up.[66]
In Apo Cement Corporation v. Baptisma,[67] we ruled that for an employer to validly dismiss
an employee on the ground of loss of trust and confidence under Article 282 (c) of the
Labor Code, the employer must observe the following guidelines: 1) loss of confidence
should not be simulated; 2) it should not be used as subterfuge for causes which are
improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and 4) it must be genuine, not a mere afterthought
to justify earlier action taken in bad faith. More importantly, it must be based on a willful
breach of trust and founded on clearly established facts.
We agree with the Court of Appeals that the dismissal of Basso was not founded on clearly
established facts and evidence sufficient to warrant dismissal from employment. While
proof beyond reasonable doubt is not required to establish loss of trust and confidence,
substantial evidence is required and on the employer rests the burden to establish it.
[68]
There must be some basis for the loss of trust, or that the employer has reasonable
ground to believe that the employee is responsible for misconduct, which renders him
unworthy of the trust and confidence demanded by his position. [69]
CMI alleges that Basso committed the following:
Basso delegated too much responsibility to the General Sales Agent and relied heavily
(1)
on its judgments.[70]
Basso excessively issued promotional tickets to his friends who had no direct business
(2)
with CMI.[71]
The advertising agency that CMI contracted had to deal directly with Guam because
(3) Basso was hardly available.[72] Mr. Schulz discovered that Basso exceeded the
advertising budget by $76,000.00 in 1994 and by $20,000.00 in 1995. [73]
Basso spent more time and attention to his personal businesses and was reputed to
(4)
own nightclubs in the Philippines.[74]
Basso used free tickets and advertising money to promote his personal business,
(5) [75]
such as a brochure that jointly advertised one of Basso's nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the above acts. CMI merely
submitted affidavits of its officers, without any other corroborating evidence. Basso, on
the other hand, had adequately explained his side. On the advertising agency and budget
issues raised by CMI, he explained that these were blatant lies as the advertising needs of
CMI were centralized in its Guam office and the Philippine office was not authorized to
deal with CMI's advertising agency, except on minor issues. [76] Basso further stated that
under CMI's existing policy, ninety percent (90%) of the advertising decisions were
delegated to the advertising firm of McCann-Ericsson in Japan and only ten percent (10%)
were left to the Philippine office.[77] Basso also denied the allegations of owning nightclubs
and promoting his personal businesses and explained that it was illegal for foreigners in the
Philippines to engage in retail trade in the first place.
Apart from these accusations, CMI likewise presented the findings of the audit team
headed by Mr. Stephen D. Goepfert, showing that "for the period of 1995 and 1996,
personal passes for Continental and other airline employees were noted ( sic) to be issued
for which no service charge was collected."[78] The audit cited the trip pass log of a total of
10 months. The trip log does not show, however, that Basso caused all the ticket issuances.
More, half of the trips in the log occurred from March to July of 1996, [79] a period beyond
the tenure of Basso. Basso was terminated effectively on January 31, 1996 as indicated in
the letter of Ms. Woodward.[80]
CMI also accused Basso of making "questionable overseas phone calls". Basso, however,
adequately explained in his Reply[81] that the phone calls to Italy and Portland, USA were
made for the purpose of looking for a technical maintenance personnel with US Federal
Aviation Authority qualifications, which CMI needed at that time. The calls to the US were
also made in connection with his functions as General Manager, such as inquiries on his tax
returns filed in Nevada. Biasso also explained that the phone lines [82] were open direct lines
that all personnel were free to use to make direct long distance calls. [83]
Finally, CMI alleged that Basso approved the disbursement of Php80,000.00 to cover the
transfer fee of the Manila Polo Club share from Mr. Kenneth Glover, the previous General
Manager, to him. CMI claimed that "nowhere in the said contract was it likewise indicated
that the Manila Polo Club share was part of the compensation package given by CMI to
Basso."[84] CMI's claims are not credible. Basso explained that the Manila Polo Club share
was offered to him as a bonus to entice him to leave his then employer, United Airlines. A
letter from Mr. Paul J. Casey, former president of Continental, supports Basso. [85] In the
letter, Mr. Casey explained:
As a signing bonus, and a perk to attract Mr. Basso to join Continental Airlines, he was
given the Manila Polo Club share and authorized to have the share re-issued in his name. In
addition to giving Mr. Basso the Manila Polo Club share, Continental agreed to pay the dues
for a period of three years and this was embodied in his contract with Continental. This
was all clone with my knowledge and approval.[86]
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual dues for membership in a club in
Manila that your immediate supervisor and I agree is of at least that value to Continental
through you in your role as our General Manager for the Philippines. [87]
Taken together, the above pieces of evidence suggest that the Manila Polo Club share was
part of Basso's compensation package and thus he validly used company funds to pay for
the transfer fees. If doubts exist between the evidence presented by the employer and
the employee, the scales of justice must be tilted in favor of the latter. [88]
Finally, CMI violated procedural due process in terminating Basso. In King of Kings
Transport, Inc. v. Mamac[89] we detailed the procedural due process steps in termination of
employment:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against
the employees. A general description of the charge will not suffice. Lastly, the notice
should specifically mention which company rules, if any, are violated and/or which among
the grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an opportunity to
come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment. (Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19, 1995 and March 14,
1996, respectively, are not one of the valid twin notices. Neither identified the alleged
acts that CMI now claims as bases for Basso's termination. Ms. Woodward's letter even
stressed that the original plan was to remove Basso as General Manager but with an offer
to make him consultant. It was inconsistent of CMI to declare Basso as unworthy of its
trust and confidence and, in the same breath, offer him the position of consultant. As the
Court of Appeals pointed out:
But mark well that Basso was clearly notified that the sole ground for his dismissal was the
exercise of the termination at will clause in the employment contract. The alleged loss of
trust and confidence claimed by Continental appears to be a mere afterthought belatedly
trotted out to save the day.[90]
Basso is entitled to separation pay and full backwages.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of eniority rights and other privileges,
and to his full backwages, inclusive of allowances and to his other benefits or their
monetary equivalent omputed from the time his compensation was withheld up to the time
of actual reinstatement.
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative. The payment
of separation pay is in addition to payment of backwages.[91] In the case of Basso,
reinstatement is no longer possible since he has already passed away. Thus, Basso's
separation pay with full backwages shall be paid to his heirs.
As to the computation of backwages, we agree with CMI that Basso was entitled to
backwages only up to the time he reached 65 years old, the compulsory retirement age
under the law.[92] This is our consistent ruling.[93] When Basso was illegally dismissed on
January 31, 1996, he was already 58 years old.[94] He turned 65 years old on October 2,
2002. Since backwages are granted on grounds of equity for earnings lost by an employee
due to his illegal dismissal,[95] Basso was entitled to backwages only for the period he could
have worked had he not been illegally dismissed, i.e. from January 31, 1996 to October 2,
2002.
WHEREFORE, premises considered, the Decision of the Court of Appeals dated May 23,
2006 and Resolution dated June 19, 2007 in the consolidated cases CA-G.R. SP No. 83938
and CA-G.R. SP No. 84281 are AFFIRMED, with MODIFICATION as to the award of
backwages. Petitioner Continental Micronesia, Inc. is hereby ordered to pay Respondent
Joseph Basso's heirs: 1) separation pay equivalent to one (1) month pay for every year of
service, and 2) full backwages from January 31, 1996, the date of his illegal dismissal, to
October 2, 2002, the date of his compulsory retirement age.
SO ORDERED.
G.R. No. L-2662 March 26, 1949
SHIGENORI KURODA, petitioner,
vs.
Major General RAFAEL JALANDONI, Brigadier General CALIXTO DUQUE, Colonel
MARGARITO TORALBA, Colonel IRENEO BUENCONSEJO, Colonel PEDRO TABUENA,
Major FEDERICO ARANAS, MELVILLE S. HUSSEY and ROBERT PORT, respondents.
Pedro Serran, Jose G. Lukban, and Liberato B. Cinco for petitioner.
Fred Ruiz Castro Federico Arenas Mariano Yengco, Jr., Ricardo A. Arcilla and S. Melville
Hussey for respondents.
MORAN, C.J.:
Shigenori Kuroda, formerly a Lieutenant-General of the Japanese Imperial Army and
Commanding General of the Japanese Imperial Forces in The Philippines during a period
covering 19433 and 19444 who is now charged before a military Commission convened by
the Chief of Staff of the Armed forces of the Philippines with having unlawfully
disregarded and failed "to discharge his duties as such command, permitting them to
commit brutal atrocities and other high crimes against noncombatant civilians and prisoners
of the Imperial Japanese Forces in violation of the laws and customs of war" — comes
before this Court seeking to establish the illegality of Executive Order No. 68 of the
President of the Philippines: to enjoin and prohibit respondents Melville S. Hussey and
Robert Port from participating in the prosecution of petitioner's case before the Military
Commission and to permanently prohibit respondents from proceeding with the case of
petitioners.
In support of his case petitioner tenders the following principal arguments.
First. — "That Executive Order No. 68 is illegal on the ground that it violates not only the
provision of our constitutional law but also our local laws to say nothing of the fact (that)
the Philippines is not a signatory nor an adherent to the Hague Convention on Rules and
Regulations covering Land Warfare and therefore petitioners is charged of 'crimes' not
based on law, national and international." Hence petitioner argues — "That in view off the
fact that this commission has been empanelled by virtue of an unconstitutional law an illegal
order this commission is without jurisdiction to try herein petitioner."
Second. — That the participation in the prosecution of the case against petitioner before
the Commission in behalf of the United State of America of attorneys Melville Hussey and
Robert Port who are not attorneys authorized by the Supreme Court to practice law in the
Philippines is a diminution of our personality as an independent state and their appointment
as prosecutor are a violation of our Constitution for the reason that they are not qualified
to practice law in the Philippines.
Third. — That Attorneys Hussey and Port have no personality as prosecution the United
State not being a party in interest in the case.
Executive Order No. 68, establishing a National War Crimes Office prescribing rule and
regulation governing the trial of accused war criminals, was issued by the President of the
Philippines on the 29th days of July, 1947 This Court holds that this order is valid and
constitutional. Article 2 of our Constitution provides in its section 3, that —
The Philippines renounces war as an instrument of national policy and adopts the
generally accepted principles of international law as part of the of the nation.
In accordance with the generally accepted principle of international law of the present day
including the Hague Convention the Geneva Convention and significant precedents of
international jurisprudence established by the United Nation all those person military or
civilian who have been guilty of planning preparing or waging a war of aggression and of the
commission of crimes and offenses consequential and incidental thereto in violation of the
laws and customs of war, of humanity and civilization are held accountable therefor.
Consequently in the promulgation and enforcement of Execution Order No. 68 the
President of the Philippines has acted in conformity with the generally accepted and
policies of international law which are part of the our Constitution.
The promulgation of said executive order is an exercise by the President of his power as
Commander in chief of all our armed forces as upheld by this Court in the case of
Yamashita vs. Styer (L-129, 42 Off. Gaz., 664) 1 when we said —
War is not ended simply because hostilities have ceased. After cessation of
armed hostilities incident of war may remain pending which should be disposed of
as in time of war. An importance incident to a conduct of war is the adoption of
measure by the military command not only to repel and defeat the enemies but to
seize and subject to disciplinary measure those enemies who in their attempt to
thwart or impede our military effort have violated the law of war. ( Ex
parte Quirin 317 U.S., 1; 63 Sup. Ct., 2.) Indeed the power to create a military
commission for the trial and punishment of war criminals is an aspect of waging
war. And in the language of a writer a military commission has jurisdiction so long
as a technical state of war continues. This includes the period of an armistice or
military occupation up to the effective of a treaty of peace and may extend
beyond by treaty agreement. (Cowles Trial of War Criminals by Military
Tribunals, America Bar Association Journal June, 1944.)
Consequently, the President as Commander in Chief is fully empowered to consummate this
unfinished aspect of war namely the trial and punishment of war criminal through the
issuance and enforcement of Executive Order No. 68.
Petitioner argues that respondent Military Commission has no Jurisdiction to try petitioner
for acts committed in violation of the Hague Convention and the Geneva Convention
because the Philippines is not a signatory to the first and signed the second only in 1947. It
cannot be denied that the rules and regulation of the Hague and Geneva conventions form,
part of and are wholly based on the generally accepted principals of international law. In
facts these rules and principles were accepted by the two belligerent nation the United
State and Japan who were signatories to the two Convention, Such rule and principles
therefore form part of the law of our nation even if the Philippines was not a signatory to
the conventions embodying them for our Constitution has been deliberately general and
extensive in its scope and is not confined to the recognition of rule and principle of
international law as continued inn treaties to which our government may have been or shall
be a signatory.
Furthermore when the crimes charged against petitioner were allegedly committed the
Philippines was under the sovereignty of United States and thus we were equally bound
together with the United States and with Japan to the right and obligation contained in
the treaties between the belligerent countries. These rights and obligation were not
erased by our assumption of full sovereignty. If at all our emergency as a free state
entitles us to enforce the right on our own of trying and punishing those who committed
crimes against crimes against our people. In this connection it is well to remember what we
have said in the case of Laurel vs. Misa (76 Phil., 372):
. . . The change of our form government from Commonwealth to Republic does not
affect the prosecution of those charged with the crime of treason committed
during then Commonwealth because it is an offense against the same sovereign
people. . . .
By the same token war crimes committed against our people and our government while we
were a Commonwealth are triable and punishable by our present Republic.
Petitioner challenges the participation of two American attorneys namely Melville S.
Hussey and Robert Port in the prosecution of his case on the ground that said attorney's
are not qualified to practice law in Philippines in accordance with our Rules of court and the
appointment of said attorneys as prosecutors is violative of our national sovereignty.
In the first place respondent Military Commission is a special military tribunal governed by
a special law and not by the Rules of court which govern ordinary civil court. It has already
been shown that Executive Order No. 68 which provides for the organization of such
military commission is a valid and constitutional law. There is nothing in said executive
order which requires that counsel appearing before said commission must be attorneys
qualified to practice law in the Philippines in accordance with the Rules of Court. In facts it
is common in military tribunals that counsel for the parties are usually military personnel
who are neither attorneys nor even possessed of legal training.
Secondly the appointment of the two American attorneys is not violative of our nation
sovereignty. It is only fair and proper that United States, which has submitted the
vindication of crimes against her government and her people to a tribunal of our nation
should be allowed representation in the trial of those very crimes. If there has been any
relinquishment of sovereignty it has not been by our government but by the United State
Government which has yielded to us the trial and punishment of her enemies. The least
that we could do in the spirit of comity is to allow them representation in said trials.
Alleging that the United State is not a party in interest in the case petitioner challenges
the personality of attorneys Hussey and Port as prosecutors. It is of common knowledge
that the United State and its people have been equally if not more greatly aggrieved by
the crimes with which petitioner stands charged before the Military Commission. It can be
considered a privilege for our Republic that a leader nation should submit the vindication of
the honor of its citizens and its government to a military tribunal of our country.
The Military Commission having been convened by virtue of a valid law with jurisdiction
over the crimes charged which fall under the provisions of Executive Order No. 68, and
having said petitioner in its custody, this Court will not interfere with the due process of
such Military commission.
For all the foregoing the petition is denied with costs de oficio.