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PHILIPPINE JURISPRUDENCE - FULL TEXT

The Lawphil Project - Arellano Law Foundation


G.R. No. 120077 October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., vs. NATIONAL
LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS

Republic of the Philippines


SUPREME COURT

FIRST DIVISION

G.R. No. 120077 October 13, 2000

THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND
MARCELO G. SANTOS, respondents.

PARDO, J.:

The case before the Court is a petition for certiorari1 to annul the following orders of the National
Labor Relations Commission (hereinafter referred to as "NLRC") for having been issued without or
with excess jurisdiction and with grave abuse of discretion:2

(1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution of August
28, 1992.4 The questioned order declared that the NLRC, not the Philippine Overseas
Employment Administration (hereinafter referred to as "POEA"), had jurisdiction over
private respondent's complaint;

(2) Decision of December 15, 1994.5 Directing petitioners to jointly and severally pay
private respondent twelve thousand and six hundred dollars (US$ 12,600.00)
representing salaries for the unexpired portion of his contract; three thousand six
hundred dollars (US$3,600.00) as extra four months salary for the two (2) year period of
his contract, three thousand six hundred dollars (US$3,600.00) as "14th month pay" or a
total of nineteen thousand and eight hundred dollars (US$19,800.00) or its peso
equivalent and attorney's fees amounting to ten percent (10%) of the total award; and

(3) Order of March 30, 1995.6 Denying the motion for reconsideration of the petitioners.

In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an
overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People's Republic
of China and later terminated due to retrenchment.

Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila
Hotel International Company, Limited (hereinafter referred to as "MHICL").

When the case was filed in 1990, MHC was still a government-owned and controlled corporation
duly organized and existing under the laws of the Philippines.

MHICL is a corporation duly organized and existing under the laws of Hong Kong.7 MHC is an
"incorporator" of MHICL, owning 50% of its capital stock.8

By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company Limited),
MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.

During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent
Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager,
Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended
by one Nestor Buenio, a friend of his.

Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly
salary and increased benefits. The position was slated to open on October 1, 1988.11

On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer.

On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in Manila, together with his passport and
two additional pictures for his visa to China.

On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30,
1988, under the pretext that he was needed at home to help with the family's piggery and poultry
business.

On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4,
1988) and notified them that he was going to arrive in Manila during the first week of July 1988.

The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years.12 It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a year.13

On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press.

On July 1, 1988, respondent Santos arrived in Manila.

On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace
Hotel.14

Subsequently, respondent Santos signed an amended "employment agreement" with the Palace
Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The
Vice President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the
employment agreement under the word "noted".

From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He
returned to China and reassumed his post on July 17, 1989.

On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten
note that respondent Santos be given one (1) month notice of his release from employment.

On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt
that his employment at the Palace Hotel print shop would be terminated due to business reverses
brought about by the political upheaval in China.15 We quote the letter:16

"After the unfortunate happenings in China and especially Beijing (referring to


Tiannamen Square incidents), our business has been severely affected. To reduce
expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this does
in no way reflect your past performance which we found up to our expectations."

"Should a turnaround in the business happen, we will contact you directly and give you
priority on future assignment."

On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and
paid all benefits due him, including his plane fare back to the Philippines.

On October 3, 1989, respondent Santos was repatriated to the Philippines.

On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt,
demanding full compensation pursuant to the employment agreement.

On November 11, 1989, Mr. Shmidt replied, to wit:17

His service with the Palace Hotel, Beijing was not abruptly terminated but we followed
the one-month notice clause and Mr. Santos received all benefits due him.

"For your information the Print Shop at the Palace Hotel is still not operational and with a
low business outlook, retrenchment in various departments of the hotel is going on which
is a normal management practice to control costs.

"When going through the latest performance ratings, please also be advised that his
performance was below average and a Chinese National who is doing his job now shows
a better approach.

"In closing, when Mr. Santos received the letter of notice, he hardly showed up for work
but still enjoyed free accommodation/laundry/meals up to the day of his departure."

On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration
Branch, National Capital Region, National Labor Relations Commission (NLRC). He prayed for an
award of nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual
damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney's fees
equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace
Hotel and Mr. Shmidt as respondents.

The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter.18

On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus:19

"WHEREFORE, judgment is hereby rendered:

"1. directing all the respondents to pay complainant jointly and severally;

"a) $20,820 US dollars or its equivalent in Philippine currency as unearned


salaries;

"b) P50,000.00 as moral damages;

"c) P40,000.00 as exemplary damages; and


"d) Ten (10) percent of the total award as attorney's fees.

"SO ORDERED."

On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had
jurisdiction over the case.

On August 28, 1992, the NLRC promulgated a resolution, stating:20

"WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for
want of jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA.

"SO ORDERED."

On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
resolution. He argued that the case was not cognizable by the POEA as he was not an "overseas
contract worker."21

On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor
Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was
retrenched or dismissed.22

On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him.23

Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital
Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera.24

On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that respondent
Santos was illegally dismissed from employment and recommended that he be paid actual
damages equivalent to his salaries for the unexpired portion of his contract.26

On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:27

"WHEREFORE, finding that the report and recommendations of Arbiter de Vera are
supported by substantial evidence, judgment is hereby rendered, directing the
respondents to jointly and severally pay complainant the following computed contractual
benefits: (1) US$12,600.00 as salaries for the unexpired portion of the parties' contract;
(2) US$3,600.00 as extra four (4) months salary for the two (2) years period (sic) of the
parties' contract; (3) US$3,600.00 as "14th month pay" for the aforesaid two (2) years
contract stipulated by the parties or a total of US$19,800.00 or its peso equivalent, plus
(4) attorney's fees of 10% of complainant's total award.

"SO ORDERED."

On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de
Vera's recommendation had no basis in law and in fact.28

On March 30, 1995, the NLRC denied the motion for reconsideration.29

Hence, this petition.30

On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the annulment of
the entry of judgment of the NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition.32

On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the
petition and its annexes, they can not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The Solicitor General prayed that he be excused from filing a
comment on behalf of the NLRC33

On April 30,1996, private respondent Santos filed his comment.34

On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the
NLRC to file its own comment to the petition.35

On January 7, 1997, the NLRC filed its comment.

The petition is meritorious.

I. Forum Non-Conveniens

The NLRC was a seriously inconvenient forum.

We note that the main aspects of the case transpired in two foreign jurisdictions and the case
involves purely foreign elements. The only link that the Philippines has with the case is that
respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not
all cases involving our citizens can be tried here.

The employment contract. � Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was
then employed. He was hired without the intervention of the POEA or any authorized recruitment
agency of the government.36

Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction
over the case if it chooses to do so provided: (1) that the Philippine court is one to which the
parties may conveniently resort to; (2) that the Philippine court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to
have power to enforce its decision.37 The conditions are unavailing in the case at bar.

Not Convenient. � We fail to see how the NLRC is a convenient forum given that all the incidents
of the case � from the time of recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace
Hotel and MHICL are not nationals of the Philippines. Neither .are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the
Philippines.

No power to determine applicable law. � Neither can an intelligent decision be made as to the
law governing the employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the place where the contract was
made).38

The employment contract was not perfected in the Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the
Palace Hotel in the People's Republic of China.

No power to determine the facts. � Neither can the NLRC determine the facts surrounding the
alleged illegal dismissal as all acts complained of took place in Beijing, People's Republic of
China. The NLRC was not in a position to determine whether the Tiannamen Square incident truly
adversely affected operations of the Palace Hotel as to justify respondent Santos' retrenchment.

Principle of effectiveness, no power to execute decision. � Even assuming that a proper decision
could be reached by the NLRC, such would not have any binding effect against the employer, the
Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not
even served with summons. Jurisdiction over its person was not acquired.

This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an
employment contract executed in a foreign country. If Santos were an "overseas contract worker",
a Philippine forum, specifically the POEA, not the NLRC, would protect him.39 He is not an
"overseas contract worker" a fact which he admits with conviction.40

Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's decision
cannot be sustained.

II. MHC Not Liable

Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that
MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity
cannot be held liable.

True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However,
this is not enough to pierce the veil of corporate fiction between MHICL and MHC.

Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate
fiction is used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is
done only when a corporation is a mere alter ego or business conduit of a person or another
corporation.

In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not
of itself a sufficient reason for disregarding the fiction of separate corporate personalities."

The tests in determining whether the corporate veil may be pierced are: First, the defendant must
have control or complete domination of the other corporation's finances, policy and business
practices with regard to the transaction attacked. There must be proof that the other corporation
had no separate mind, will or existence with respect the act complained of. Second, control must
be used by the defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty
must be the proximate cause of the injury or loss complained of. The absence of any of the
elements prevents the piercing of the corporate veil.43

It is basic that a corporation has a personality separate and distinct from those composing it as
well as from that of any other legal entity to which it may be related.44 Clear and convincing
evidence is needed to pierce the veil of corporate fiction.45 In this case, we find no evidence to
show that MHICL and MHC are one and the same entity.

III. MHICL not Liable

Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment
contract with the Palace Hotel. This fact fails to persuade us.

First, we note that the Vice President (Operations and Development) of MHICL, Miguel D.
Cergueda signed the employment contract as a mere witness. He merely signed under the word
"noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party would.46
In Sichangco v. Board of Commissioners of Immigration,47 the Court recognized that the term
"noted" means that the person so noting has merely taken cognizance of the existence of an act
or declaration, without exercising a judicious deliberation or rendering a decision on the matter.

Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the
document is that which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no recitals, after the parties (emphasis ours)."48 As opposed to a party
to a contract, a witness is simply one who, "being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness."49 One who "notes" something just makes a "brief written
statement"50 a memorandum or observation.

Second, and more importantly, there was no existing employer-employee relationship between
Santos and MHICL. In determining the existence of an employer-employee relationship, the
following elements are considered:51

"(1) the selection and engagement of the employee;

"(2) the payment of wages;

"(3) the power to dismiss; and

"(4) the power to control employee's conduct."

MHICL did not have and did not exercise any of the aforementioned powers. It did not select
respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by
his friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of
employment were negotiated and finalized through correspondence between respondent Santos,
Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace Hotel and not
MHICL. Neither did respondent Santos adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated
respondent Santos' services.

Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is no proof
that MHICL "supplied" respondent Santos or even referred him for employment to the Palace
Hotel.

Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same
entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to
pierce the corporate veil between MHICL and the Palace Hotel.

IV. Grave Abuse of Discretion

Considering that the NLRC was forum non-conveniens and considering further that no employer-
employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter
Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No.
00-02-01058-90.

Labor Arbiters have exclusive and original jurisdiction only over the following:53

"1. Unfair labor practice cases;

"2. Termination disputes;

"3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

"4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;

"5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and

"6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement."

In all these cases, an employer-employee relationship is an indispensable jurisdictional


requirement.

The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to
disputes arising from an employer-employee relationship which can be resolved by reference to
the Labor Code, or other labor statutes, or their collective bargaining agreements.54

"To determine which body has jurisdiction over the present controversy, we rely on the sound
judicial principle that jurisdiction over the subject matter is conferred by law and is determined by
the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the
claims asserted therein."55

The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His
failure to dismiss the case amounts to grave abuse of discretion.56

V. The Fallo

WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and
resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994
and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).

No costs.

SO ORDERED.

Davide, Jr., C .J ., Puno, Kapunan, Pardo and Ynares-Santiago, JJ ., concur.

Footnotes

1
Under Rule 65, Revised Rules of Court.

2
Rollo, pp. 2-6.

3
In NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90),
Commissioner Vicente S. E. Veloso, ponente, concurred in by Commissioners Edna
Bonto Perez and Alberto R. Quimpo.

4
Penned by Commissioner V. S. E. Veloso and concurred in by Commissioners
Bartolome S. Carale and Romeo B. Putong.

5
Penned by Commissioner V. S. E. Veloso and concurred in by Commissioners B. S.
Carale and A. R. Quimpo.

6
Ibid.

7
With principal office at 18094 Swire House Charter Road, Hongkong, as shown by its
Articles of Association dated May 23, 1986.

8
MHC represented by its President Victor Sison and the Philippine Agency Limited
represented by its Director, Cheung Kwoh-Nean are MHICL's incorporators (Rollo, p.
76).

9
The management agreement was terminated on April 1, 1990.

10
Rollo, p. 71.

11
Ibid., p. 65.

12
Ibid., p. 96.

13
Rollo, p. 65.

14
Ibid., p. 97.

15
Rollo, pp. 8-14.

16
Rollo, p. 66.

17
Ibid., pp. 66-67.

18
Rollo, p. 72.

19
Ibid., p. 126.

20
Rollo, p. 99.

21
Ibid., pp. 91-92.

22
Ibid., pp. 81-83.

23
Rollo, p. 52.

24
Ibid., p. 63.

25
Ibid.

26
Ibid., pp. 78-79.

27
Ibid., pp. 79-80.
28
Rollo, pp. 51-62.

29
Rollo, pp. 49-50.

30
Filed on May 22, 1995, Rollo, pp. 42-48. On October 7, 1997, we resolved to give due
course to the petition (Rollo, p. 217). Petitioners filed their memorandum on December 1,
1997. The petition involves pure questions of law; thus, we except this case from the
ruling in San Martin Funeral Homes vs. NLRC, 295 SCRA 494 [1998]. Rather than refer
the case to the Court of Appeals, whose decision would be appealable to the Supreme
Court, our ruling would finally put an end to the litigation.

31
Rollo, pp. 127-133.

32
Rollo, p. 140.

33
Rollo, pp. 148-149.

34
Rollo, pp. 156.

35
Rollo, p. 157.

36
Rollo, p. 82.

37
Communication Materials and Design, Inc. v. Court of Appeals, 260 SCRA 673, 695
(1996).

38
Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608, 618 (1998).

39
Eastern Shipping Lines, Inc. v. POEA, 170 SCRA 54, 57 (1989), There we stated that,
"the POEA shall have original and exclusive jurisdiction over all cases, including money
claims, involving employer-employee relationship arising out of or by virtue of any law or
contract involving Filipino workers for overseas employment, including seamen."

40
Rollo, pp. 91-92.

41
San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals, 296 SCRA 631,
649-650 (1998); Complex Electronics Employees Association v. NLRC, 310 SCRA 403,
417-418 (1999).

42
269 SCRA 15, 29-30 (1997).

43
Rufina Luy Lim v. Court of Appeals, G.R. No. 124715, January 24, 2000.

44
ARB Construction Co., Inc. v. Court of Appeals, G.R. No. 126554, May 31, 2000.

45
Laguio v. National Labor Relations Commission, 262 SCRA 715, 720-721 (1996); De
La Salle University v. De La Salle University Employees Association, G.R. Nos. 109002
and 110072, April 12, 2000.

46
Halili v. Court of Industrial Relations, 140 SCRA 73, 91 (1985).

47
94 SCRA 61, 69 (1979).
48
Black's Law Dictionary, Fifth Edition (1979), p. 1438.

49
Ibid.

50
Supra, p. 956.

51
Philippine Airlines, Inc. v. NLRC, 263 SCRA 642, 654 (1996).

52
"(a) the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machinery, work premises, among others;
and "(b) the workers recruited and placed by such person are performing activities which
are directly related to the principal business of the employer." Asia Brewery, Inc. v.
NLRC, 259 SCRA 185, 189-190 (1996).

53
Labor Code of the Philippines, Article 217.

54
Coca Cola Bottlers Phils., Inc. v. Jose S. Roque, 308 SCRA 215, 220 (1999).

55
Marcina Saura v. Ramon Saura, Jr., 313 SCRA 465, 472 (1999).

56
Philippine Airlines, Inc. v. NLRC, supra, p. 657.

The Lawphil Project - Arellano Law Foundation

PHILIPPINE JURISPRUDENCE - FULL TEXT


The Lawphil Project - Arellano Law Foundation
G.R. No. 120135 March 31, 2003
BANK OF AMERICA NT & SA, ET AL. vs. COURT OF
APPEALS, ET AL.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 120135 March 31, 2003

BANK OF AMERICA NT & SA, BANK OF AMERICA INTERNATIONAL, LTD.,


petitioners,
vs.
COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR.,
and AURELIO K. LITONJUA, JR., respondents.

AUSTRIA-MARTINEZ, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the November 29, 1994 decision of the Court of Appeals1 and the April 28,
1995 resolution denying petitioners' motion for reconsideration.

The factual background of the case is as follows:

On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for
brevity) filed a Complaint2 before the Regional Trial Court of Pasig against the Bank
of America NT&SA and Bank of America International, Ltd. (defendant banks for
brevity) alleging that: they were engaged in the shipping business; they owned two
vessels: Don Aurelio and El Champion, through their wholly-owned corporations;
they deposited their revenues from said business together with other funds with the
branches of said banks in the United Kingdom and Hongkong up to 1979; with their
business doing well, the defendant banks induced them to increase the number of
their ships in operation, offering them easy loans to acquire said vessels;3
thereafter, the defendant banks acquired, through their (Litonjuas') corporations as
the borrowers: (a) El Carrier4; (b) El General5; (c) El Challenger6; and (d) El
Conqueror7; the vessels were registered in the names of their corporations; the
operation and the funds derived therefrom were placed under the complete and
exclusive control and disposition of the petitioners;8 and the possession the vessels
was also placed by defendant banks in the hands of persons selected and
designated by them (defendant banks).9

The Litonjuas claimed that defendant banks as trustees did not fully render an
account of all the income derived from the operation of the vessels as well as of the
proceeds of the subsequent foreclosure sale;10 because of the breach of their
fiduciary duties and/or negligence of the petitioners and/or the persons designated
by them in the operation of private respondents' six vessels, the revenues derived
from the operation of all the vessels declined drastically; the loans acquired for the
purchase of the four additional vessels then matured and remained unpaid,
prompting defendant banks to have all the six vessels, including the two vessels
originally owned by the private respondents, foreclosed and sold at public auction to
answer for the obligations incurred for and in behalf of the operation of the vessels;
they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten
percent (10%) of the acquisition cost of the four vessels and were left with the
unpaid balance of their loans with defendant banks.11 The Litonjuas prayed for the
accounting of the revenues derived in the operation of the six vessels and of the
proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners;
damages for breach of trust; exemplary damages and attorney's fees.12

Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and
lack of cause of action against them.13

On December 3, 1993, the trial court issued an Order denying the Motion to
Dismiss, thus:

"WHEREFORE, and in view of the foregoing consideration, the Motion to


Dismiss is hereby DENIED. The defendant is therefore, given a period of ten
(10) days to file its Answer to the complaint.

"SO ORDERED."14

Instead of filing an answer the defendant banks went to the Court of Appeals on a
"Petition for Review on Certiorari"15 which was aptly treated by the appellate court as
a petition for certiorari. They assailed the above-quoted order as well as the
subsequent denial of their Motion for Reconsideration.16 The appellate court
dismissed the petition and denied petitioners' Motion for Reconsideration.17

Hence, herein petition anchored on the following grounds:

"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE


FACT THAT THE SEPARATE PERSONALITIES OF THE PRIVATE
RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN
CORPORATIONS (THE REAL BORROWERS) CLEARLY SUPPORT,
BEYOND ANY DOUBT, THE PROPOSITION THAT THE PRIVATE
RESPONDENTS HAVE NO PERSONALITIES TO SUE.

"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT


WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT
MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO
FOLLOW IN DETERMINING WHETHER THE CHOICE OF FORUM
SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES
SURROUNDING THE INSTANT CASE, DISMISSAL OF THE COMPLAINT
ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.

"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL


JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF
FOREIGN ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF
THE COMPLAINT FILED BY THE PRIVATE RESPONDENT. COROLLARY
TO THIS, THE RESPONDENT COURT OF APPEALS FAILED TO
CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE GUILTY OF
FORUM SHOPPING." 18

As to the first assigned error: Petitioners argue that the borrowers and the
registered owners of the vessels are the foreign corporations and not private
respondents Litonjuas who are mere stockholders; and that the revenues derived
from the operations of all the vessels are deposited in the accounts of the
corporations. Hence, petitioners maintain that these foreign corporations are the
legal entities that have the personalities to sue and not herein private respondents;
that private respondents, being mere shareholders, have no claim on the vessels as
owners since they merely have an inchoate right to whatever may remain upon the
dissolution of the said foreign corporations and after all creditors have been fully
paid and satisfied;19 and that while private respondents may have allegedly spent
amounts equal to 10% of the acquisition costs of the vessels in question, their 10%
however represents their investments as stockholders in the foreign corporations.20

Anent the second assigned error, petitioners posit that while the application of the
principle of forum non conveniens is discretionary on the part of the Court, said
discretion is limited by the guidelines pertaining to the private as well as public
interest factors in determining whether plaintiffs' choice of forum should be
disturbed, as elucidated in Gulf Oil Corp. vs. Gilbert21 and Piper Aircraft Co. vs.
Reyno,22 to wit:

"Private interest factors include: (a) the relative ease of access to sources of
proof; (b) the availability of compulsory process for the attendance of
unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses;
or (d) all other practical problems that make trial of a case easy, expeditious
and inexpensive. Public interest factors include: (a) the administrative
difficulties flowing from court congestion; (b) the local interest in having
localized controversies decided at home; (c) the avoidance of unnecessary
problems in conflict of laws or in the application of foreign law; or (d) the
unfairness of burdening citizens in an unrelated forum with jury duty."23

In support of their claim that the local court is not the proper forum, petitioners
allege the following:

"i) The Bank of America Branches involved, as clearly mentioned in the


Complaint, are based in Hongkong and England. As such, the evidence and
the witnesses are not readily available in the Philippines;

"ii) The loan transactions were obtained, perfected, performed,


consummated and partially paid outside the Philippines;

"iii) The monies were advanced outside the Philippines. Furthermore, the
mortgaged vessels were part of an offshore fleet, not based in the
Philippines;

"iv) All the loans involved were granted to the Private Respondents' foreign
CORPORATIONS;

"v) The Restructuring Agreements were ALL governed by the laws of


England;

"vi) The subsequent sales of the mortgaged vessels and the application of
the sales proceeds occurred and transpired outside the Philippines, and the
deliveries of the sold mortgaged vessels were likewise made outside the
Philippines;

"vii) The revenues of the vessels and the proceeds of the sales of these
vessels were ALL deposited to the Accounts of the foreign
CORPORATIONS abroad; and

"viii) Bank of America International Ltd. is not licensed nor engaged in trade
or business in the Philippines."24

Petitioners argue further that the loan agreements, security documentation and all
subsequent restructuring agreements uniformly, unconditionally and expressly
provided that they will be governed by the laws of England;25 that Philippine Courts
would then have to apply English law in resolving whatever issues may be
presented to it in the event it recognizes and accepts herein case; that it would then
be imposing a significant and unnecessary expense and burden not only upon the
parties to the transaction but also to the local court. Petitioners insist that the
inconvenience and difficulty of applying English law with respect to a wholly foreign
transaction in a case pending in the Philippines may be avoided by its dismissal on
the ground of forum non conveniens. 26

Finally, petitioners claim that private respondents have already waived their alleged
causes of action in the case at bar for their refusal to contest the foreign civil cases
earlier filed by the petitioners against them in Hongkong and England, to wit:

"1.) Civil action in England in its High Court of Justice, Queen's Bench
Division Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN
TRANSPORT NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA.,
(c) EL CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g)
EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.

"2.) Civil action in England in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c)
EDUARDO KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN
LITONJUA.

"3.) Civil action in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d)
PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC.,
(g) AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO
KATIPUNAN LITONJUA.

"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No.
4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d)
PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC.,
(g) AURELIO KATIPUNAN LITONJUA, RJ., and (h) EDUARDO
KATIPUNAN LITONJUA."

and that private respondents' alleged cause of action is already barred by the
pendency of another action or by litis pendentia as shown above.27

On the other hand, private respondents contend that certain material facts and
pleadings are omitted and/or misrepresented in the present petition for certiorari;
that the prefatory statement failed to state that part of the security of the foreign
loans were mortgages on a 39-hectare piece of real estate located in the
Philippines;28 that while the complaint was filed only by the stockholders of the
corporate borrowers, the latter are wholly-owned by the private respondents who
are Filipinos and therefore under Philippine laws, aside from the said corporate
borrowers being but their alter-egos, they have interests of their own in the
vessels.29 Private respondents also argue that the dismissal by the Court of Appeals
of the petition for certiorari was justified because there was neither allegation nor
any showing whatsoever by the petitioners that they had no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law from the Order of the
trial judge denying their Motion to Dismiss; that the remedy available to the
petitioners after their Motion to Dismiss was denied was to file an Answer to the
complaint;30 that as upheld by the Court of Appeals, the decision of the trial court in
not applying the principle of forum non conveniens is in the lawful exercise of its
discretion.31 Finally, private respondents aver that the statement of petitioners that
the doctrine of res judicata also applies to foreign judgment is merely an opinion
advanced by them and not based on a categorical ruling of this Court;32 and that
herein private respondents did not actually participate in the proceedings in the
foreign courts.33

We deny the petition for lack of merit.

It is a well-settled rule that the order denying the motion to dismiss cannot be the
subject of petition for certiorari. Petitioners should have filed an answer to the
complaint, proceed to trial and await judgment before making an appeal. As
repeatedly held by this Court:

"An order denying a motion to dismiss is interlocutory and cannot be the


subject of the extraordinary petition for certiorari or mandamus. The remedy
of the aggrieved party is to file an answer and to interpose as defenses the
objections raised in his motion to dismiss, proceed to trial, and in case of an
adverse decision, to elevate the entire case by appeal in due course. xxx
Under certain situations, recourse to certiorari or mandamus is considered
appropriate, i.e., (a) when the trial court issued the order without or in
excess of jurisdiction; (b) where there is patent grave abuse of discretion by
the trial court; or (c) appeal would not prove to be a speedy and adequate
remedy as when an appeal would not promptly relieve a defendant from the
injurious effects of the patently mistaken order maintaining the plaintiff's
baseless action and compelling the defendant needlessly to go through a
protracted trial and clogging the court dockets by another futile case."34

Records show that the trial court acted within its jurisdiction when it issued the
assailed Order denying petitioners' motion to dismiss. Does the denial of the motion
to dismiss constitute a patent grave abuse of discretion? Would appeal, under the
circumstances, not prove to be a speedy and adequate remedy? We will resolve
said questions in conjunction with the issues raised by the parties.

First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss
the complaint on the ground that plaintiffs have no cause of action against
defendants since plaintiffs are merely stockholders of the corporations which are the
registered owners of the vessels and the borrowers of petitioners?

No. Petitioners' argument that private respondents, being mere stockholders of the
foreign corporations, have no personalities to sue, and therefore, the complaint
should be dismissed, is untenable. A case is dismissible for lack of personality to
sue upon proof that the plaintiff is not the real party-in-interest. Lack of personality to
sue can be used as a ground for a Motion to Dismiss based on the fact that the
complaint, on the face thereof, evidently states no cause of action.35 In San Lorenzo
Village Association, Inc. vs. Court of Appeals,36 this Court clarified that a complaint
states a cause of action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant in violation of said legal
right. If these elements are absent, the complaint becomes vulnerable to a motion to
dismiss on the ground of failure to state a cause of action.37 To emphasize, it is not
the lack or absence of cause of action that is a ground for dismissal of the complaint
but rather the fact that the complaint states no cause of action.38 "Failure to state a
cause of action" refers to the insufficiency of allegation in the pleading, unlike "lack
of cause of action" which refers to the insufficiency of factual basis for the action.
"Failure to state a cause of action" may be raised at the earliest stages of an action
through a motion to dismiss the complaint, while "lack of cause of action" may be
raised any time after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented.39

In the case at bar, the complaint contains the three elements of a cause of action. It
alleges that: (1) plaintiffs, herein private respondents, have the right to demand for
an accounting from defendants (herein petitioners), as trustees by reason of the
fiduciary relationship that was created between the parties involving the vessels in
question; (2) petitioners have the obligation, as trustees, to render such an
accounting; and (3) petitioners failed to do the same.

Petitioners insist that they do not have any obligation to the private respondents as
they are mere stockholders of the corporation; that the corporate entities have
juridical personalities separate and distinct from those of the private respondents.
Private respondents maintain that the corporations are wholly owned by them and
prior to the incorporation of such entities, they were clients of petitioners which
induced them to acquire loans from said petitioners to invest on the additional ships.

We agree with private respondents. As held in the San Lorenzo case,40

"xxx assuming that the allegation of facts constituting plaintiffs' cause of


action is not as clear and categorical as would otherwise be desired, any
uncertainty thereby arising should be so resolved as to enable a full inquiry
into the merits of the action."

As this Court has explained in the San Lorenzo case, such a course, would
preclude multiplicity of suits which the law abhors, and conduce to the definitive
determination and termination of the dispute. To do otherwise, that is, to abort the
action on account of the alleged fatal flaws of the complaint would obviously be
indecisive and would not end the controversy, since the institution of another action
upon a revised complaint would not be foreclosed.41

Second Issue. Should the complaint be dismissed on the ground of forum non-
conveniens?

No. The doctrine of forum non-conveniens, literally meaning 'the forum is


inconvenient', emerged in private international law to deter the practice of global
forum shopping,42 that is to prevent non-resident litigants from choosing the forum or
place wherein to bring their suit for malicious reasons, such as to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or
to select a more friendly venue. Under this doctrine, a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where it is not the most
"convenient" or available forum and the parties are not precluded from seeking
remedies elsewhere.43

Whether a suit should be entertained or dismissed on the basis of said doctrine


depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court.44 In the case of Communication Materials and Design,
Inc. vs. Court of Appeals,45 this Court held that "xxx [a Philippine Court may assume
jurisdiction over the case if it chooses to do so; provided, that the following
requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has
or is likely to have power to enforce its decision."46 Evidently, all these requisites are
present in the instant case.

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of


Appeals,47 that the doctrine of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does
not include said doctrine as a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine whether special
circumstances require the court's desistance; and that the propriety of dismissing a
case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense.48

Third issue. Are private respondents guilty of forum shopping because of the
pendency of foreign action?

No. Forum shopping exists where the elements of litis pendentia are present and
where a final judgment in one case will amount to res judicata in the other.49
Parenthetically, for litis pendentia to be a ground for the dismissal of an action there
must be: (a) identity of the parties or at least such as to represent the same interest
in both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same acts; and (c) the identity in the two cases should be such that
the judgment which may be rendered in one would, regardless of which party is
successful, amount to res judicata in the other.50

In case at bar, not all the requirements for litis pendentia are present. While there
may be identity of parties, notwithstanding the presence of other respondents,51 as
well as the reversal in positions of plaintiffs and defendants52, still the other
requirements necessary for litis pendentia were not shown by petitioner. It merely
mentioned that civil cases were filed in Hongkong and England without however
showing the identity of rights asserted and the reliefs sought for as well as the
presence of the elements of res judicata should one of the cases be adjudged.

As the Court of Appeals aptly observed:

"xxx [T]he petitioners, by simply enumerating the civil actions instituted


abroad involving the parties herein xxx, failed to provide this Court with
relevant and clear specifications that would show the presence of the
above-quoted elements or requisites for res judicata. While it is true that the
petitioners in their motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad, did aver that "Copies
of the foreign judgments are hereto attached and made integral parts hereof
as Annexes 'B', 'C', 'D' and 'E'", they failed, wittingly or inadvertently, to
include a single foreign judgment in their pleadings submitted to this Court
as annexes to their petition. How then could We have been expected to rule
on this issue even if We were to hold that foreign judgments could be the
basis for the application of the aforementioned principle of res judicata?"53

Consequently, both courts correctly denied the dismissal of herein subject


complaint.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioners.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing and Callejo, Sr., JJ., concur.

Footnotes

1
In CA-G.R. SP No. 34382, entitled, "Bank of America NT&SA, Bank of
America International Ltd., Plaintiffs/Petitioners, versus, Hon. Manuel S.
Padolina, as Judge Regional Trial Court of Pasig, M.M., Branch 162 and
Eduardo Litonjua, Sr., et al., Defendants/Respondents".

2
Docketed as Civil Case No. 63181 and entitled, "Eduardo K. Lintonjua, Sr.
and Aurelio K. Litonjua, Jr., Plaintiffs, versus, Bank of America, National
Trust & Savings Corporation and Bank of America, Internaitonal Ltd.,
Defendants." p. 54, SC Rollo.
3
Id., at pp. 54-56.

4
Panamanian flag, registered owners Espriona Shipping Co., S.A.

5
Liberian flag, registered owners Liberia Transport Navigation S.A.

6
Panamanian flag, registered owners El Challenger S.A.

7
Panamanian flag, registered owners Eshley Compania Naviera S.A.

8
Rollo, p. 57.

9
Id., at 58.

10
Id., at p. 59.

11
Id., at p. 60.

12
Rollo, pp. 62-63.

13
Id., at p. 38.

14
Id., at pp. 24-25.

15
Rollo, pp. 71-98

16
Rollo, at p. 71-98.

17
Id., at pp. 48-50.

18
Rollo, p. 18.

19
Id., at p. 20.

20
Id., at p. 21.

21
330 US 501, 508 (1947), cited on page 14, Petition for Review.

22
454 US 235, 241 (1981), cited on page 14, Petition for Review.

23
Petition for Review, p. 14; Rollo, p. 24.

24
Rollo, pp. 24-25.

25
Rollo, p. 26, Petition for Review, 16.

26
Rollo, pp. 25-26.
27
Id., p. 248

28
Rollo, pp. 103-104.

29
Id., at pp. 104-105.

30
Id., at pp. 108-109.

31
Id., at p. 117.

32
Id., at p. 120.

33
Id., at p. 121.

34
Far East Bank and Trust Company vs. Court of Appeals and SMP, Inc.,
341 SCRA 485, 492 (2000).

35
Columbia Pictures Inc. vs. Court of Appeals, 261 SCRA 144, 162 (1996).

36
San Lorenzo Village Association, Inc. vs. Court of Appeals, 288 SCRA
115 (1998).

37
Id. at p. 128.

38
Ibid.

39
Dabuco et al., vs. Court of Appeals, (January 20, 2002).

40
Supra, at p. 128.

41
Ibid, at p. 128 (1998).

Jorge R. Coquia and Elizabeth Aguiling-Pangalangan, CONFLICTS OF


42

LAWS, pp. 40-41, 2000 Ed.

43
First Philippine International Bank vs. Court of Appeals, 252 SCRA 259,
281 (1996).

44
Hongkong and Shanghai Banking Corp. vs. Sherman, 176 SCRA 331, 339
(1989).

45
260 SCRA 673 (1996).

46
Id. at p. 695.

47
Philsec. Investment Corp. vs. Court of Appeals, 274 SCRA 102, 113
(1997), citing Hongkong and Shanghai Banking Corp. vs. Sherman, 176
SCRA 331 at 339 (1989).

48
Id. at p. 113.

49
R & M General Merchandise, Inc. vs. Court of Appeals and La Perla
Industries, Inc., G.R. No. 144189 (October 5, 2001).

50
Ibid.

51
Dasmarinas Vill. Assn. Inc., et al., vs. CA, 299 SCRA 598, 605 (1998).

52
Cokaliong Shipping Lines, Inc. vs. Amin, 260 SCRA 122, 125 (1996).

53
Rollo, p. 47; CA Decision, p. 14.

The Lawphil Project - Arellano Law Foundation

PHILIPPINE JURISPRUDENCE - FULL TEXT


The Lawphil Project - Arellano Law Foundation
G.R. No. 138322 October 2, 2001
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, vs. REDERICK A. RECIO

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 138322 October 2, 2001

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner,


vs.
REDERICK A. RECIO, respondents.

PANGANIBAN, J.:

A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such decree
is valid according to the national law of the foreigner. However, the divorce decree and the
governing personal law of the alien spouse who obtained the divorce must be proven. Our courts
do not take judicial notice of foreign laws and judgment; hence, like any other facts, both the
divorce decree and the national law of the alien must be alleged and proven according to our law
on evidence.

The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the
January 7, 1999 Decision1 and the March 24, 1999 Order2 of the Regional Trial Court of
Cabanatuan City, Branch 28, in Civil Case No. 3026-AF. The assailed Decision disposed as
follows:

"WHEREFORE, this Court declares the marriage between Grace J. Garcia and Rederick
A. Recio solemnized on January 12, 1994 at Cabanatuan City as dissolved and both
parties can now remarry under existing and applicable laws to any and/or both parties."3

The assailed Order denied reconsideration of the above-quoted Decision.

The Facts

Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in Malabon,
Rizal, on March 1, 1987.4 They lived together as husband and wife in Australia. On May 18, 1989,5
a decree of divorce, purportedly dissolving the marriage, was issued by an Australian family court.

On June 26, 1992, respondent became an Australian citizen, as shown by a "Certificate of


Australian Citizenship" issued by the Australian government.6 Petitioner � a Filipina � and
respondent were married on January 12, 1994 in Our Lady of Perpetual Help Church in
Cabanatuan City.7 In their application for a marriage license, respondent was declared as "single"
and "Filipino."8

Starting October 22, 1995, petitioner and respondent lived separately without prior judicial
dissolution of their marriage. While the two were still in Australia, their conjugal assets were
divided on May 16, 1996, in accordance with their Statutory Declarations secured in Australia.9

On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage10 in the court a
quo, on the ground of bigamy � respondent allegedly had a prior subsisting marriage at the time
he married her on January 12, 1994. She claimed that she learned of respondent's marriage to
Editha Samson only in November, 1997.

In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner his
prior marriage and its subsequent dissolution.11 He contended that his first marriage to an
Australian citizen had been validly dissolved by a divorce decree obtained in Australian in 1989;12
thus, he was legally capacitated to marry petitioner in 1994.1�wphi1.n�t

On July 7, 1998 � or about five years after the couple's wedding and while the suit for the
declaration of nullity was pending � respondent was able to secure a divorce decree from a
family court in Sydney, Australia because the "marriage ha[d] irretrievably broken down."13

Respondent prayed in his Answer that the Complained be dismissed on the ground that it stated
no cause of action.14 The Office of the Solicitor General agreed with respondent.15 The court
marked and admitted the documentary evidence of both parties.16 After they submitted their
respective memoranda, the case was submitted for resolution.17

Thereafter, the trial court rendered the assailed Decision and Order.

Ruling of the Trial Court

The trial court declared the marriage dissolved on the ground that the divorce issued in Australia
was valid and recognized in the Philippines. It deemed the marriage ended, but not on the basis of
any defect in an essential element of the marriage; that is, respondent's alleged lack of legal
capacity to remarry. Rather, it based its Decision on the divorce decree obtained by respondent.
The Australian divorce had ended the marriage; thus, there was no more martial union to nullify or
annual.

Hence, this Petition.18

Issues

Petitioner submits the following issues for our consideration:

"I

The trial court gravely erred in finding that the divorce decree obtained in Australia by the
respondent ipso facto terminated his first marriage to Editha Samson thereby
capacitating him to contract a second marriage with the petitioner.

"2

The failure of the respondent, who is now a naturalized Australian, to present a certificate
of legal capacity to marry constitutes absence of a substantial requisite voiding the
petitioner' marriage to the respondent.

"3

The trial court seriously erred in the application of Art. 26 of the Family Code in this case.

"4

The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52
and 53 of the Family Code as the applicable provisions in this case.

"5

The trial court gravely erred in pronouncing that the divorce gravely erred in pronouncing
that the divorce decree obtained by the respondent in Australia ipso facto capacitated the
parties to remarry, without first securing a recognition of the judgment granting the
divorce decree before our courts."19

The Petition raises five issues, but for purposes of this Decision, we shall concentrate on two
pivotal ones: (1) whether the divorce between respondent and Editha Samson was proven, and
(2) whether respondent was proven to be legally capacitated to marry petitioner. Because of our
ruling on these two, there is no more necessity to take up the rest.

The Court's Ruling

The Petition is partly meritorious.

First Issue:

Proving the Divorce Between Respondent and Editha Samson

Petitioner assails the trial court's recognition of the divorce between respondent and Editha
Samson. Citing Adong v. Cheong Seng Gee,20 petitioner argues that the divorce decree, like any
other foreign judgment, may be given recognition in this jurisdiction only upon proof of the
existence of (1) the foreign law allowing absolute divorce and (2) the alleged divorce decree itself.
She adds that respondent miserably failed to establish these elements.

Petitioner adds that, based on the first paragraph of Article 26 of the Family Code, marriages
solemnized abroad are governed by the law of the place where they were celebrated (the lex loci
celebrationist). In effect, the Code requires the presentation of the foreign law to show the
conformity of the marriage in question to the legal requirements of the place where the marriage
was performed.

At the outset, we lay the following basic legal principles as the take-off points for our discussion.
Philippine law does not provide for absolute divorce; hence, our courts cannot grant it.21 A
marriage between two Filipinos cannot be dissolved even by a divorce obtained abroad, because
of Articles 1522 and 1723 of the Civil Code.24 In mixed marriages involving a Filipino and a foreigner,
Article 2625 of the Family Code allows the former to contract a subsequent marriage in case the
divorce is "validly obtained abroad by the alien spouse capacitating him or her to remarry."26 A
divorce obtained abroad by a couple, who are both aliens, may be recognized in the Philippines,
provided it is consistent with their respective national laws.27

A comparison between marriage and divorce, as far as pleading and proof are concerned, can be
made. Van Dorn v. Romillo Jr. decrees that "aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid according to their national law."28 Therefore,
before a foreign divorce decree can be recognized by our courts, the party pleading it must prove
the divorce as a fact and demonstrate its conformity to the foreign law allowing it.29 Presentation
solely of the divorce decree is insufficient.

Divorce as a Question of Fact

Petitioner insists that before a divorce decree can be admitted in evidence, it must first comply
with the registration requirements under Articles 11, 13 and 52 of the Family Code. These articles
read as follows:

"ART. 11. Where a marriage license is required, each of the contracting parties shall file
separately a sworn application for such license with the proper local civil registrar which
shall specify the following:

xxx xxx xxx

"(5) If previously married, how, when and where the previous marriage was dissolved or
annulled;

xxx xxx xxx

"ART. 13. In case either of the contracting parties has been previously married, the
applicant shall be required to furnish, instead of the birth of baptismal certificate required
in the last preceding article, the death certificate of the deceased spouse or the judicial
decree of annulment or declaration of nullity of his or her previous marriage. x x x.

"ART. 52. The judgment of annulment or of absolute nullity of the marriage, the partition
and distribution of the properties of the spouses, and the delivery of the children's
presumptive legitimes shall be recorded in the appropriate civil registry and registries of
property; otherwise, the same shall not affect their persons."

Respondent, on the other hand, argues that the Australian divorce decree is a public document �
a written official act of an Australian family court. Therefore, it requires no further proof of its
authenticity and due execution.

Respondent is getting ahead of himself. Before a foreign judgment is given presumptive


evidentiary value, the document must first be presented and admitted in evidence.30 A divorce
obtained abroad is proven by the divorce decree itself. Indeed the best evidence of a judgment is
the judgment itself.31 The decree purports to be a written act or record of an act of an officially
body or tribunal of a foreign country.32

Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven
as a public or official record of a foreign country by either (1) an official publication or (2) a copy
thereof attested33 by the officer having legal custody of the document. If the record is not kept in
the Philippines, such copy must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in
which the record is kept and (b) authenticated by the seal of his office.34

The divorce decree between respondent and Editha Samson appears to be an authentic one
issued by an Australian family court.35 However, appearance is not sufficient; compliance with the
aforemetioned rules on evidence must be demonstrated.

Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was submitted in
evidence, counsel for petitioner objected, not to its admissibility, but only to the fact that it had not
been registered in the Local Civil Registry of Cabanatuan City.36 The trial court ruled that it was
admissible, subject to petitioner's qualification.37 Hence, it was admitted in evidence and accorded
weight by the judge. Indeed, petitioner's failure to object properly rendered the divorce decree
admissible as a written act of the Family Court of Sydney, Australia.38

Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary;
respondent was no longer bound by Philippine personal laws after he acquired Australian
citizenship in 1992.39 Naturalization is the legal act of adopting an alien and clothing him with the
political and civil rights belonging to a citizen.40 Naturalized citizens, freed from the protective cloak
of their former states, don the attires of their adoptive countries. By becoming an Australian,
respondent severed his allegiance to the Philippines and the vinculum juris that had tied him to
Philippine personal laws.

Burden of Proving Australian Law

Respondent contends that the burden to prove Australian divorce law falls upon petitioner,
because she is the party challenging the validity of a foreign judgment. He contends that petitioner
was satisfied with the original of the divorce decree and was cognizant of the marital laws of
Australia, because she had lived and worked in that country for quite a long time. Besides, the
Australian divorce law is allegedly known by Philippine courts: thus, judges may take judicial
notice of foreign laws in the exercise of sound discretion.

We are not persuaded. The burden of proof lies with "the party who alleges the existence of a fact
or thing necessary in the prosecution or defense of an action."41 In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those are denied by the answer;
and defendants have the burden of proving the material allegations in their answer when they
introduce new matters.42 Since the divorce was a defense raised by respondent, the burden of
proving the pertinent Australian law validating it falls squarely upon him.

It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws.43 Like
any other facts, they must be alleged and proved. Australian marital laws are not among those
matters that judges are supposed to know by reason of their judicial function.44 The power of
judicial notice must be exercised with caution, and every reasonable doubt upon the subject
should be resolved in the negative.

Second Issue:

Respondent's Legal Capacity to Remarry


Petitioner contends that, in view of the insufficient proof of the divorce, respondent was legally
incapacitated to marry her in 1994.

Hence, she concludes that their marriage was void ab initio.

Respondent replies that the Australian divorce decree, which was validly admitted in evidence,
adequately established his legal capacity to marry under Australian law.

Respondent's contention is untenable. In its strict legal sense, divorce means the legal dissolution
of a lawful union for a cause arising after marriage. But divorces are of different types. The two
basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited divorce or a mensa et
thoro. The first kind terminates the marriage, while the second suspends it and leaves the bond in
full force.45 There is no showing in the case at bar which type of divorce was procured by
respondent.

Respondent presented a decree nisi or an interlocutory decree � a conditional or provisional


judgment of divorce. It is in effect the same as a separation from bed and board, although an
absolute divorce may follow after the lapse of the prescribed period during which no reconciliation
is effected.46

Even after the divorce becomes absolute, the court may under some foreign statutes and
practices, still restrict remarriage. Under some other jurisdictions, remarriage may be limited by
statute; thus, the guilty party in a divorce which was granted on the ground of adultery may be
prohibited from remarrying again. The court may allow a remarriage only after proof of good
behavior.47

On its face, the herein Australian divorce decree contains a restriction that reads:

"1. A party to a marriage who marries again before this decree becomes absolute (unless
the other party has died) commits the offence of bigamy."48

This quotation bolsters our contention that the divorce obtained by respondent may have been
restricted. It did not absolutely establish his legal capacity to remarry according to his national law.
Hence, we find no basis for the ruling of the trial court, which erroneously assumed that the
Australian divorce ipso facto restored respondent's capacity to remarry despite the paucity of
evidence on this matter.

We also reject the claim of respondent that the divorce decree raises a disputable presumption or
presumptive evidence as to his civil status based on Section 48, Rule 3949 of the Rules of Court,
for the simple reason that no proof has been presented on the legal effects of the divorce decree
obtained under Australian laws.

Significance of the Certificate of Legal Capacity

Petitioner argues that the certificate of legal capacity required by Article 21 of the Family Code
was not submitted together with the application for a marriage license. According to her, its
absence is proof that respondent did not have legal capacity to remarry.

We clarify. To repeat, the legal capacity to contract marriage is determined by the national law of
the party concerned. The certificate mentioned in Article 21 of the Family Code would have been
sufficient to establish the legal capacity of respondent, had he duly presented it in court. A duly
authenticated and admitted certificate is prima facie evidence of legal capacity to marry on the
part of the alien applicant for a marriage license.50

As it is, however, there is absolutely no evidence that proves respondent's legal capacity to marry
petitioner. A review of the records before this Court shows that only the following exhibits were
presented before the lower court: (1) for petitioner: (a) Exhibit "A" � Complaint;51 (b) Exhibit "B" �
Certificate of Marriage Between Rederick A. Recto (Filipino-Australian) and Grace J. Garcia
(Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija;52 (c) Exhibit "C" � Certificate of
Marriage Between Rederick A. Recio (Filipino) and Editha D. Samson (Australian) on March 1,
1987 in Malabon, Metro Manila;53 (d) Exhibit "D" � Office of the City Registrar of Cabanatuan City
Certification that no information of annulment between Rederick A. Recto and Editha D. Samson
was in its records;54 and (e) Exhibit "E" � Certificate of Australian Citizenship of Rederick A.
Recto;55 (2) for respondent: (Exhibit "1" � Amended Answer;56 (b) Exhibit "S" � Family Law Act
1975 Decree Nisi of Dissolution of Marriage in the Family Court of Australia;57 (c) Exhibit "3" �
Certificate of Australian Citizenship of Rederick A. Recto;58 (d) Exhibit "4" � Decree Nisi of
Dissolution of Marriage in the Family Court of Australia Certificate;59 and Exhibit "5" � Statutory
Declaration of the Legal Separation Between Rederick A. Recto and Grace J. Garcia Recio since
October 22, 1995.60

Based on the above records, we cannot conclude that respondent, who was then a naturalized
Australian citizen, was legally capacitated to marry petitioner on January 12, 1994. We agree with
petitioner's contention that the court a quo erred in finding that the divorce decree ipso facto
clothed respondent with the legal capacity to remarry without requiring him to adduce sufficient
evidence to show the Australian personal law governing his status; or at the very least, to prove
his legal capacity to contract the second marriage.

Neither can we grant petitioner's prayer to declare her marriage to respondent null and void on the
ground of bigamy. After all, it may turn out that under Australian law, he was really capacitated to
marry petitioner as a direct result of the divorce decree. Hence, we believe that the most judicious
course is to remand this case to the trial court to receive evidence, if any, which show petitioner's
legal capacity to marry petitioner. Failing in that, then the court a quo may declare a nullity of the
parties' marriage on the ground of bigamy, there being already in evidence two existing marriage
certificates, which were both obtained in the Philippines, one in Malabon, Metro Manila dated
March 1, 1987 and the other, in Cabanatuan City dated January 12, 1994.

WHEREFORE, in the interest of orderly procedure and substantial justice, we REMAND the case
to the court a quo for the purpose of receiving evidence which conclusively show respondent's
legal capacity to marry petitioner; and failing in that, of declaring the parties' marriage void on the
ground of bigamy, as above discussed. No costs.

SO ORDERED.

Melo, Puno, Vitug, and Sandoval-Gutierrez, JJ., concur.

Footnotes

1
Penned by Judge Feliciano V. Buenaventura; rollo, pp. 7-9.

2
Rollo, p. 10.

3
Ibid, p. 9.

4
Rollo, p. 37.

5
Ibid., p. 47.

6
Id., p. 44.

7
Id., p. 36.
8
Annex "I"; temporary rollo, p. 9.

9
The couple secured an Australian "Statutory Declaration" of their legal separation and
division of conjugal assets. See Annexes "3" and "4" of Respondent's Comment; rollo, p.
48.

10
Id., pp. 33-35.

11
Id., p. 39.

12
Amended Answer, p. 2; rollo, p. 39.

13
Id., pp. 77-78.

14
Id., p. 43.

15
Rollo, pp. 48-51.

16
TSN, December 16, 1998, pp. 1-8; records, pp. 172-179.

17
RTC Order of December 16, 1998; ibid., p. 203.

18
The case was deemed submitted for decision on January 11, 2000, upon this Court's
receipt of the Memorandum for petitioner, signed by Atty. Olivia Velasco-Jacoba. The
Memorandum for respondent, signed by Atty. Gloria V. Gomez of Gomez and
Associates, had been filed on December 10, 1999.

19
Petitioner's Memorandum, pp. 8-9; rollo, pp. 242-243.

20
43 Phil. 43, 49, March 3, 1922.

21
Ruben F. Balane, "Family Courts and Significant Jurisprudence in Family Law,"
Journal of the Integrated Bar of the Philippines, 1st & 2nd Quarters, 2001, Vol. XXVII, No.
1, p. 25.

22
"ART. 15. Laws relating to family rights and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though living
abroad."

23
"ART. 17. The forms and solemnities of contracts, wills, and other public instruments
shall be governed by the laws of the country in which they are executed.

xxx xxx xxx

"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."

Tenchaves v. Escano 15 SCRA 355, 362, November 29, 1965; Barretto Gonzalez v.
25

Gonzales, 58 Phil. 67, 71-72, March 7, 1933.

"Art. 26. All marriages solemnized outside the Philippines in accordance with the laws in
force in the country where they were solemnized, and valid there as such, shall also be
valid in this country, except those prohibited under Articles 35(1), (4), (5), and (6), 36, 37,
and 38. (71a).

"Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her
to remarry, the Filipino spouse shall have capacity to remarry under Philippine law." (As
amended by EO 227, prom. July 27, 1987).

26
Cf. Van Dorn v. Romillo Jr., 139 SCRA 139, 143-144, October 8, 1985; and Pilapil v.
Ibay-Somera, 174 SCRA 653, 663, June 30, 1989. 1�wphi1.n�t

27
Van Dorn v. Romillo Jr., supra.

28
Ibid., p. 143.

29
For a detailed discussion of Van Dorn, see Salonga, Private International Law, 1995
ed. pp. 295-300. See also Jose C. Vitug, Compendium of Civil Law and Jurisprudence,
1993 ed., p. 16;

30
"SEC. 19. Classes of documents. � For the purpose of their presentation in evidence,
documents are either public or private.

"Public documents are:

"(a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether in the Philippines, or of a foreign
country.

xxx xxx x x x."

31
Burr W. Jones, Commentaries on the Law of Evidence in Civil Cases, Vol. IV, 1926
ed., p. 3511; �3, Rule 130 of the Rules on Evidence provides that "when the subject of
inquiry is the contents of a document, no evidence shall be admissible other than the
original document itself."

32
"SEC. 19. Classes of documents. � For the purpose of their presentation in evidence,
documents are either public or private.

Public documents are:

"(a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether in the Philippines, or of a foreign
country.

xxx xxx x x x."

33
"Sec. 25. What attestation of copy must state. � Whenever a copy of a document or
record is attested for the purpose of 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."

34
"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."

See also Asiavest Ltd. v. Court of Appeals, 296 SCRA 539, 550-551, September 25,
1998; Pacific Asia Overseas Shipping Corp. v. National Labor Relations Commission,
161 SCRA 122, 133-134, May 6, 1988.

35
The transcript of stenographic notes states that the original copies of the divorce
decrees were presented in court (TSN, December 16, 1998, p. 5; records, p. 176), but
only photocopies of the same documents were attached to the records (Records, Index
of Exhibit, p. 1.).

36
TSN, December 15, 1998, p. 7; records, p. 178.

37
TSN, December 16, 1998, p. 7; records, p. 178.

People v. Yatco, 97 Phil. 941, 945, November 28, 1955; Marella v. Reyes, 12 Phil. 1, 3,
38

November 10, 1908; People v. Diaz, 271 SCRA 504, 516, April 18, 1997; De la Torre v.
Court of Appeals, 294 SCRA 196, 203-204, August 14, 1998, Maunlad Savings & Loan
Asso., Inc. v. Court of Appeals, GR No. 114942, November 27, 2000, pp. 8-9.

39
Art. 15, Civil Code.

Joaquin Bernas, The 1987 Constitution of the Republic of the Philippines: A


40

Commentary, 1996 ed., p. 566.

41
Ricardo J. Francisco, Evidence: Rules of Court in the Philippines, second edition, p.
382.

42
Ibid., p. 384.

43
Wildvalley Shipping Co., Ltd. v. Court of Appeals, GR No. 119602, October 56, 2000,
p. 7.

44
Francisco, p. 29, citing De los Angeles v. Cabahug, 106 839, December 29, 1959.

45
274 CJS, 15-17, �1.

46
Ibid., p. 611-613, �161.

47
27A CJS, 625, �162.

48
Rollo, p. 36.

49
"SEC. 48. Effect of foreign judgments or final orders. � The effect of a judgment or
final order of a tribunal of a foreign country, having jurisdiction to render the judgment or
final order is as follows:

xxx xxx xxx


"(b) In case of a judgment or final order against a person, the judgment or final
order 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."

50
In passing, we note that the absence of the said certificate is merely an irregularity in
complying with the formal requirement for procuring a marriage license. Under Article 4
of the Family Code, an irregularity will not affect the validity of a marriage celebrated on
the basis of a marriage license issued without that certificate. (Vitug, Compendium, pp.
120-126); Sempio-Diy, Handbook on the Family Code of the Philippines, 197 reprint, p.
17; Rufus Rodriguez, The Family Code of the Philippines Annotated, 1990 ed., p. 42;
Melencio Sta. Maria Jr., Persons and Family Relations Law, 1999 ed., p. 146.).

51
Records, pp. 1-3.

52
Ibid., p. 4.

53
Id., p. 5.

54
Id., p. 180.

55
Id., pp. 170-171.

26
Id., pp. 84-89.

57
Id., pp. 181-182.

58
Id., pp. 40-41.

59
Id., pp. 183.

60
Id., pp. 184-187.

The Lawphil Project - Arellano Law Foundation


PHILIPPINE JURISPRUDENCE - FULL TEXT
The Lawphil Project - Arellano Law Foundation
G.R. No. L-104776 December 5, 1994
BIENVENIDO M. CADALIN, ET AL. vs. PHIL. OVERSEAS EMPLOYMENT
ADMINISTRATION'S ADMIN., ET AL.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

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

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


of 1,767 NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A.
DEL MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR, NATIONAL
LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERS CORPORATION, respondents.

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

BIENVENIDO M. CADALIN, ET AL., petitioners,


vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL,
INC. and/or ASIA INTERNATIONAL BUILDERS CORPORATION, respondents.

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

ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT INTERNATIONAL,


INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M.
AMUL, DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA,
SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN,
ROMEO ACUPAN, BENJAMIN ALEJANDRE, WILFREDO D. ALIGADO, MARTIN AMISTAD,
JR., ROLANDO B. AMUL, AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE ARLITA,
HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO, FALCONERO BANAAG,
RAMON BARBOSA, FELIX BARCENA, FERNANDO BAS, MARIO BATACLAN, ROBERTO S.
BATICA, ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO,
FELIX M. BOBIER, DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO,
GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE CAILAO,
IRENEO CANDOR, JOSE CASTILLO, MANUEL CASTILLO, REMAR CASTROJERES,
REYNALDO CAYAS, ROMEO CECILIO, TEODULO CREUS, BAYANI DAYRIT, RICARDO
DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO DE GUZMAN, ONOFRE DE RAMA,
IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON, ANTONIO S. DOMINGUEZ,
GILBERT EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR., EDUARTE ERIDAO,
ELADIO ESCOTOTO, JOHN ESGUERRA, EDUARDO ESPIRITU, ERNESTO ESPIRITU,
RODOLFO ESPIRITU, NESTOR M. ESTEVA, BENJAMIN ESTRADA, VALERIO
EVANGELISTA, OLIGARIO FRANCISCO, JESUS GABAWAN, ROLANDO GARCIA, ANGEL
GUDA, PACITO HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO
JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U. LIRIO LORETO
LONTOC, ISRAEL LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN,
LEOVIGILDO MARCIAL, NOEL MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ,
RENATO MELO, FRANCIS MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY,
CRESENCIANO MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR
RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R. OLIVARES, PEDRO
ORBISTA, JR., RICARDO ORDONEZ, ERNIE PANCHO, JOSE PANCHO, GORGONIO P.
PARALA, MODESTO PINPIN, JUANITO PAREA, ROMEO I. PATAG, FRANCISCO PINPIN,
LEONARDO POBLETE, JAIME POLLOS, DOMINGO PONDALIS, EUGENIO RAMIREZ,
LUCIEN M. RESPALL, GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C. REYES,
RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G. RICAZA, RODELIO RIETA, JR.,
BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES, JOSE ROBLEZA,
QUIRINO RONQUILLO, AVELINO M. ROQUE, MENANDRO L. SABINO, PEDRO SALGATAR,
EDGARDO SALONGA, NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR.,
GABRIEL SANTOS, JUANITO SANTOS, PAQUITO SOLANTE, CONRADO A. SOLIS, JR.,
RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC, MENANDRO TEMPROSA,
BIENVENIDO S. TOLENTINO, BENEDICTO TORRES, MAXIMIANO TORRES, FRANCISCO G.
TRIAS, SERGIO A. URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN
VICTORIA, GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES,
DOMINGO VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO
VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO,
FRANCISCO ZARA, ROGELIO AALAGOS, NICANOR B. ABAD, ANDRES ABANES,
REYNALDO ABANES, EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO, CELSO
S. ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO, RODRIGO G. ABUBO, JOSE B.
ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN ACTA, EUGENIO C.
ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO ACUPAN, MANUEL P.
ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO, MANUEL P. AGUINALDO, DANTE
AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO, JR., CONRADO ALCANTARA,
LAMBERTO Q. ALCANTARA, MARIANITO J. ALCANTARA, BENCIO ALDOVER, EULALIO V.
ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L. ALEJANDRO, MAXIMINO
ALEJANDRO, ALBERTO ALMENAR, ARNALDO ALONZO, AMADO ALORIA, CAMILO
ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS AMORES,
BERNARD P. ANCHETA, TIMOTEO O. ANCHETA, JEOFREY ANI, ELINO P. ANTILLON,
ARMANDRO B. ANTIPONO, LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P.
APILADO, FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR
AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O. ARATEA,
ARTURO V. ARAULLO, PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO
ARCIAGA, JOSE AREVALO, JUANTO AREVALO, RAMON AREVALO, RODOLFO AREVALO,
EULALIO ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO ASUNCION,
ARTEMIO M. ASUNCION, EDGARDO ASUNCION, REXY M. ASUNCION, VICENTE AURELIO,
ANGEL AUSTRIA, RICARDO P. AVERILLA, JR., VIRGILIO AVILA, BARTOLOME AXALAN,
ALFREDO BABILONIA, FELIMON BACAL, JOSE L. BACANI, ROMULO R. BALBIERAN,
VICENTE BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O. BARBA,
BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS, VIVENCIO C. BAUAN,
GAUDENCIO S. BAUTISTA, LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO
BAUTISTA, RUPERTO B. BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS
R. BAYA, WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN,
EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO BENSAN, IRENEO BERGONIO,
ISABELO BERMUDEZ, ROLANDO I. BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN,
ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL, JR., FRANCISCO BICOL,
ROGELIO BICOL, ROMULO L. BICOL, ROGELIO BILLIONES, TEOFILO N. BITO, FERNANDO
BLANCO, AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S. BOOC, JAMES R. BORJA,
WILFREDO BRACEROS, ANGELES C. BRECINO, EURECLYDON G. BRIONES, AMADO
BRUGE, PABLITO BUDILLO, ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA,
GUILLERMO BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO BUTIONG, JR.,
HONESTO P. CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN, MOISES
CABATAY, HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C. CAGAYAT, ROGELIO L.
CALAGOS, REYNALDO V. CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA,
RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO, ROBERTO CAMANA,
FLORANTE C. CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS, EPIFANIO A.
CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON, MENANDRO M. CASTAÑEDA,
BENIGNO A. CASTILLO, CORNELIO L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO
CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P. CASTILLO, SESINANDO
CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE
CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO
CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B.
CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION, TERESITO
CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR CORONADO,
ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M.
CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES,
SR., CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA
CRUZ, AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ,
ROBERTO P. CRUZ, TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA,
FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY,
NICASIO DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO
DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO,
CELERINO DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON,
JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL
ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS REYES,
ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ,
GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA,
BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN
DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE, GODOFREDO E.
EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION,
EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL
ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU,
EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN
ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO,
ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO,
PORFIRIO FALQUEZA, WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO
FERRER, MISAEL M. FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES,
EDGARDO C. FLORES, BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO,
ROLANDO FRANCISCO, VALERIANO FRANCISCO, RODOLFO GABAWAN, ESMERALDO
GAHUTAN, CESAR C. GALANG, SANTIAGO N. GALOSO, GABRIEL GAMBOA, BERNARDO
GANDAMON, JUAN GANZON, ANDRES GARCIA, JR., ARMANDO M. GARCIA, EUGENIO
GARCIA, MARCELO L. GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA,
PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G.
GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA, RAYMUNDO
GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D. GUANIO, MARTIN
V. GUERRERO, JR., ALEXIS GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J.
GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H. HABANA,
RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO D. HILADO, JUSTO HILAPO,
ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO,
MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA,
ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES,
GENEROSO IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN,
BIENVENIDO JAVIER, ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS,
CARLOS A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON,
FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO S. JOCSON, PEDRO B. JOLOYA,
ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING,
EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B.
LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC, RODRIGO
LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN,
EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO LAXAMANA, DANIEL R. LAZARO,
ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE LEMOS, JR., PEDRO G. DE LEON,
MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING, RENATO LISING,
WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA,
CARLITO M. LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M.
LOPEZ, BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA, DANTE
LUAGE, ANTONIO M. LUALHATI, EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI,
SEBASTIAN LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE
LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO MACALINO,
RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V. MACARAIG, RODOLFO V.
MACARAIG, BENJAMIN MACATANGAY, HERMOGENES MACATANGAY, RODEL
MACATANGAY, ROMULO MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P.
MADRID, EDELBERTO G. MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT,
ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO MAGPANTAY, RICARDO C.
MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S. MAGSINO,
ANTONIO MAGTIBAY, VICTOR V. MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO,
RICARDO MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI, MANUEL MANALILI,
ANGELO MANALO, AGUILES L. MANALO, LEOPOLDO MANGAHAS, BAYANI MANIGBAS,
ROLANDO C. MANIMTIM, DANIEL MANONSON, ERNESTO F. MANUEL, EDUARDO
MANZANO, RICARDO N. MAPA, RAMON MAPILE, ROBERTO C. MARANA, NEMESIO
MARASIGAN, WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO,
JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A. MARQUEZ, RICARDO MARTINEZ,
DIEGO MASICAMPO, AURELIO MATABERDE, RENATO MATILLA, VICTORIANO MATILLA,
VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE,
REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO MENDOZA, JR., CLARO MENDOZA,
TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED, RICARDO
MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR MINIMO, BENJAMIN
MIRANDA, FELIXBERTO D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO,
GENEROSO MONTON, RENATO MORADA, RICARDO MORADA, RODOLFO MORADA,
ROLANDO M. MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU
A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ, ERNESTO
NAPALAN, MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE,
PACIFICO D. NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE,
ALFREDO NEPUMUCENO, HERBERT G. NG, FLORENCIO NICOLAS, ERNESTO C. NINON,
AVELINO NUQUI, NEMESIO D. OBA, DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E.
OCAMPO, ANTONIO B. OCCIANO, REYNALDO P. OCSON, BENJAMIN ODESA, ANGEL
OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S.
ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS, VIRGILIO PA-A, DAVID PAALAN,
JESUS N. PACHECO, ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO
PAGSISIHAN, RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA,
QUINCIANO PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO
PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR., JOSE V.
PASION, ANGELITO M. PENA, DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO M.
PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO
E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO, FLORENTINO DEL
PILAR, DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN,
ARTURO POBLETE, DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO
PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO, ALEJANDRO
PUNIO, FEDERICO QUIMAN, ALFREDO L. QUINTO, ROMEO QUINTOS, EDUARDO W.
RACABO, RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA,
FERNANDO A. RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.
RAMIREZ, ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO
RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D. RAYMUNDO,
ERNESTO E. RECOLASO, ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA,
JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA, REDENTOR C. REY,
ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO R. REYES, GREGORIO B. REYES,
JOSE A. REYES, JOSE C. REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO F.
RICO, FERNANDO M. RICO, EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN
ROBLES, RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R.
RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS
RONQUILLO, ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO,
RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO DEL ROSARIO,
GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO, VIRGILIO L. ROSARIO, CARLITO
SALVADOR, JOSE SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA,
GERONIMO M. SANCHA, ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P.
SANTIAGO, JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS,
EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S. SERQUINA,
DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG, FAUSTINO D. SILANG,
RODOLFO B. DE SILOS, ANICETO G. SILVA, EDGARDO M. SILVA, ROLANDO C.
SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO, JOSELITO C. SOLANTE,
CARLITO SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M.
SOLIS, EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA, FELIMON
SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P. TALUSIK, FERMIN
TARUC, JR., LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL
TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO
DE TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO UMALI, SIMPLICIO
UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON VALDERAMA, NILO
VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE VERA,
WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA,
FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P. VIDALLO, SABINO N.
VIERNEZ, JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES,
CEFERINO VILLAGERA, ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO
VILLANUEVA, LEONARDO M. VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR,
JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA,
FERDINAND VIVO, ROBERTO YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA,
respondents.

Gerardo A. Del Mundo and Associates for petitioners.

Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for BRII/AIBC.

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

QUIASON, J.:

The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine Overseas
Employment Administration's Administrator, et. al.," was filed under Rule 65 of the Revised Rules
of Court:

(1) to modify the Resolution dated September 2, 1991 of the National Labor
Relations Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to render a new
decision: (i) declaring private respondents as in default; (ii) declaring the said
labor cases as a class suit; (iii) ordering Asia International Builders Corporation
(AIBC) and Brown and Root International Inc. (BRII) to pay the claims of the
1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro
guilty of forum-shopping; and (v) dismissing POEA Case No. L-86-05-460; and

(3) to reverse the Resolution dated March 24, 1992 of NLRC, denying the
motion for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp.
8-288).

The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National
Labor Relations Commission, et. al.," was filed under Rule 65 of the Revised Rules of Court:

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


Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the
Labor Code of the Philippines instead of the ten-year prescriptive period under
the Civil Code of the Philippines; and (ii) denied the
"three-hour daily average" formula in the computation of petitioners' overtime
pay; and

(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the
motion for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp.
8-25; 26-220).

The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al., v.
National Labor Relations Commission, et. al." was filed under Rule 65 of the Revised Rules of
Court:

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


Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and

(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied
the motions for reconsideration of AIBC and BRII (Rollo, pp. 2-59; 61-230).

The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA in four
labor cases: (1) awarded monetary benefits only to 149 claimants and (2) directed Labor Arbiter
Fatima J. Franco to conduct hearings and to receive evidence on the claims dismissed by the
POEA for lack of substantial evidence or proof of employment.

Consolidation of Cases

G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R. Nos.
104911-14 were raffled to the Second Division. In the Resolution dated July 26, 1993, the Second
Division referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos. 104911-14, Rollo, p. 895).

In the Resolution dated September 29, 1993, the Third Division granted the motion filed in G.R.
Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and 105029-32, which
were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos.
105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the First
Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R. Nos.
104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p. 1562).

On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their
own behalf and on behalf of 728 other overseas contract workers (OCWs) instituted a class suit by
filing an "Amended Complaint" with the Philippine Overseas Employment Administration (POEA)
for money claims arising from their recruitment by AIBC and employment by BRII (POEA Case
No. L-84-06-555). The claimants were represented by Atty. Gerardo del Mundo.

BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction;
while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and
deploy Filipino workers for overseas employment on behalf of its foreign principals.

The amended complaint principally sought the payment of the unexpired portion of the
employment contracts, which was terminated prematurely, and secondarily, the payment of the
interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid benefits; area
wage and salary differential pay; fringe benefits; refund of SSS and premium not remitted to the
SSS; refund of withholding tax not remitted to the BIR; penalties for committing prohibited
practices; as well as the suspension of the license of AIBC and the accreditation of BRII (G.R. No.
104776, Rollo, pp. 13-14).

At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was given,
together with BRII, up to July 5, 1984 to file its answer.

On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the claimants to file
a bill of particulars within ten days from receipt of the order and the movants to file their answers
within ten days from receipt of the bill of particulars. The POEA Administrator also scheduled a
pre-trial conference on July 25, 1984.

On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23,
1984, AIBC filed a "Motion to Strike Out of the Records", the "Complaint" and the "Compliance
and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder and Comments,"
averring, among other matters, the failure of AIBC and BRII to file their answers and to attend the
pre-trial conference on July 25, 1984. The claimants alleged that AIBC and BRII had waived their
right to present evidence and had defaulted by failing to file their answers and to attend the pre-
trial conference.

On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the Records"
filed by AIBC but required the claimants to correct the deficiencies in the complaint pointed out in
the order.

On October 10, 1984, claimants asked for time within which to comply with the Order of October
2, 1984 and filed an "Urgent Manifestation," praying that the POEA Administrator direct the parties
to submit simultaneously their position papers, after which the case should be deemed submitted
for decision. On the same day, Atty. Florante de Castro filed another complaint for the same
money claims and benefits in behalf of several claimants, some of whom were also claimants in
POEA Case No. L-84-06-555 (POEA Case No. 85-10-779).

On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2, 1984 and
an "Urgent Manifestation," praying that the POEA direct the parties to submit simultaneously their
position papers after which the case would be deemed submitted for decision. On the same day,
AIBC asked for time to file its comment on the "Compliance" and "Urgent Manifestation" of
claimants. On November 6, 1984, it filed a second motion for extension of time to file the
comment.

On November 8, 1984, the POEA Administrator informed AIBC that its motion for extension of
time was granted.

On November 14, 1984, claimants filed an opposition to the motions for extension of time and
asked that AIBC and BRII be declared in default for failure to file their answers.

On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs, that
claimants should be ordered to amend their complaint.

On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file
their answers within ten days from receipt of the order.

On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said order of
the POEA Administrator. Claimants opposed the appeal, claiming that it was dilatory and praying
that AIBC and BRII be declared in default.

On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position Paper" dated
March 24, 1985, adding new demands: namely, the payment of overtime pay, extra night work
pay, annual leave differential pay, leave indemnity pay, retirement and savings benefits and their
share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA
Administrator directed AIBC to file its answer to the amended complaint (G.R. No. 104776, Rollo,
p. 20).

On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the same day,
the POEA issued an order directing AIBC and BRII to file their answers to the "Amended
Complaint," otherwise, they would be deemed to have waived their right to present evidence and
the case would be resolved on the basis of complainant's evidence.

On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and Motion
for Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants opposed the
motions.

On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to file
their answers in POEA Case No. L-84-06-555.

On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for the
issuance of a writ of injunction. On September 19, 1985, NLRC enjoined the POEA Administrator
from hearing the labor cases and suspended the period for the filing of the answers of AIBC and
BRII.

On September 19, 1985, claimants asked the POEA Administrator to include additional claimants
in the case and to investigate alleged wrongdoings of BRII, AIBC and their respective lawyers.

On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-
85-10-777) against AIBC and BRII with the POEA, demanding monetary claims similar to those
subject of POEA Case No. L-84-06-555. In the same month, Solomon Reyes also filed his own
complaint (POEA Case No. L-85-10-779) against AIBC and BRII.

On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the
substitution of the original counsel of record and the cancellation of the special powers of attorney
given the original counsel.

On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce attorney's
lien.

On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-460)
in behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.

On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and
September 18, 1985 by AIBC and BRII.

In narrating the proceedings of the labor cases before the POEA Administrator, it is not amiss to
mention that two cases were filed in the Supreme Court by the claimants, namely � G.R. No.
72132 on September 26, 1985 and Administrative Case No. 2858 on March 18, 1986. On May 13,
1987, the Supreme Court issued a resolution in Administrative Case No. 2858 directing the POEA
Administrator to resolve the issues raised in the motions and oppositions filed in POEA Cases
Nos. L-84-06-555 and L-86-05-460 and to decide the labor cases with deliberate dispatch.

AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order dated
September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC to answer the
amended complaint in POEA Case No. L-84-06-555. In a resolution dated November 9, 1987, we
dismissed the petition by informing AIBC that all its technical objections may properly be resolved
in the hearings before the POEA.

Complaints were also filed before the Ombudsman. The first was filed on September 22, 1988 by
claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator and several
NLRC Commissioners. The Ombudsman merely referred the complaint to the Secretary of Labor
and Employment with a request for the early disposition of POEA Case No. L-84-06-555. The
second was filed on April 28, 1989 by claimants Emigdio P. Bautista and Rolando R. Lobeta
charging AIBC and BRII for violation of labor and social legislations. The third was filed by Jose R.
Santos, Maximino N. Talibsao and Amado B. Bruce denouncing AIBC and BRII of violations of
labor laws.

On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution dated
December 12, 1986.

On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for suspension of
the period for filing an answer or motion for extension of time to file the same until the resolution of
its motion for reconsideration of the order of the NLRC dismissing the two appeals. On April 28,
1987, NLRC en banc denied the motion for reconsideration.

At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the same
hearing, the parties were given a period of 15 days from said date within which to submit their
respective position papers. On June 24, 1987 claimants filed their "Urgent Motion to Strike Out
Answer," alleging that the answer was filed out of time. On June 29, 1987, claimants filed their
"Supplement to Urgent Manifestational Motion" to comply with the POEA Order of June 19, 1987.
On February 24, 1988, AIBC and BRII submitted their position paper. On March 4, 1988,
claimants filed their "Ex-Parte Motion to Expunge from the Records" the position paper of AIBC
and BRII, claiming that it was filed out of time.

On September 1, 1988, the claimants represented by Atty. De Castro filed their memorandum in
POEA Case No. L-86-05-460. On September 6, 1988, AIBC and BRII submitted their
Supplemental Memorandum. On September 12, 1988, BRII filed its "Reply to Complainant's
Memorandum." On October 26, 1988, claimants submitted their "Ex-Parte Manifestational Motion
and Counter-Supplemental Motion," together with 446 individual contracts of employments and
service records. On October 27, 1988, AIBC and BRII filed a "Consolidated Reply."

On January 30, 1989, the POEA Administrator rendered his decision in POEA Case No. L-84-06-
555 and the other consolidated cases, which awarded the amount of $824,652.44 in favor of only
324 complainants.

On February 10, 1989, claimants submitted their "Appeal Memorandum For Partial Appeal" from
the decision of the POEA. On the same day, AIBC also filed its motion for reconsideration and/or
appeal in addition to the "Notice of Appeal" filed earlier on February 6, 1989 by another counsel
for AIBC.

On February 17, 1989, claimants filed their "Answer to Appeal," praying for the dismissal of the
appeal of AIBC and BRII.

On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal Memorandum,"
together with their "newly discovered evidence" consisting of payroll records.

On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating among other
matters that there were only 728 named claimants. On April 20, 1989, the claimants filed their
"Counter-Manifestation," alleging that there were 1,767 of them.

On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision dated
January 30, 1989 on the grounds that BRII had failed to appeal on time and AIBC had not posted
the supersedeas bond in the amount of $824,652.44.

On December 23, 1989, claimants filed another motion to resolve the labor cases.

On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the 1,767
claimants be awarded their monetary claims for failure of private respondents to file their answers
within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:

WHEREFORE, premises considered, the Decision of the POEA in these


consolidated cases is modified to the extent and in accordance with the
following dispositions:

1. The claims of the 94 complainants identified and listed in


Annex "A" hereof are dismissed for having prescribed;

2. Respondents AIBC and Brown & Root are hereby ordered,


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

3. The awards given by the POEA to the 19 complainants


classified and listed in Annex "C" hereof, who appear to have
worked elsewhere than in Bahrain are hereby set aside.

4. All claims other than those indicated in Annex "B", including


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

In addition, this Commission, in the exercise of its powers and authority under
Article 218(c) of the Labor Code, as amended by R.A. 6715, hereby directs
Labor Arbiter Fatima J. Franco of this Commission to summon parties, conduct
hearings and receive evidence, as expeditiously as possible, and thereafter
submit a written report to this Commission (First Division) of the proceedings
taken, regarding the claims of the following:

(a) complainants identified and listed in Annex "D" attached


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

(b) complainants identified and listed in Annex "E" attached


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

On November 27, 1991, claimant Amado S. Tolentino and 12


co-claimants, who were former clients of Atty. Del Mundo, filed a petition for certiorari with the
Supreme Court (G.R. Nos. 120741-44). The petition was dismissed in a resolution dated January
27, 1992.

Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were filed.
The first, by the claimants represented by Atty. Del Mundo; the second, by the claimants
represented by Atty. De Castro; and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.

Hence, these petitions filed by the claimants represented by Atty. Del Mundo (G.R. No. 104776),
the claimants represented by Atty. De Castro (G.R. Nos. 104911-14) and by AIBC and BRII (G.R.
Nos. 105029-32).

II

Compromise Agreements

Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have
submitted, from time to time, compromise agreements for our approval and jointly moved for the
dismissal of their respective petitions insofar as the claimants-parties to the compromise
agreements were concerned (See Annex A for list of claimants who signed quitclaims).

Thus the following manifestations that the parties had arrived at a compromise agreement and the
corresponding motions for the approval of the agreements were filed by the parties and approved
by the Court:

1) Joint Manifestation and Motion involving claimant Emigdio Abarquez and 47


co-claimants dated September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263-
406; G.R. Nos. 105029-32, Rollo, pp.
470-615);

2) Joint Manifestation and Motion involving petitioner Bienvenido Cadalin and


82 co-petitioners dated September 3, 1992 (G.R. No. 104776, Rollo, pp. 364-
507);

3) Joint Manifestation and Motion involving claimant Jose


M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos. 105029-32,
Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-626; G.R. Nos. 104911-14,
Rollo, pp. 407-516);

4) Joint Manifestation and Motion involving claimant Antonio T. Anglo and 17


co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713; G.R. Nos.
104911-14, Rollo, pp. 530-590);

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

6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista and


4 co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-
746; G.R. No. 104776, Rollo, pp. 1815-1829);

7) Joint Manifestation and Motion involving claimants Palconeri Banaag and 5


co-claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703;
G.R. Nos. 104911-14, Rollo, pp. 655-675);

8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15


other co-claimants dated May 4, 1993 (G.R. Nos. 105029-32, Rollo, pp. 906-
956; G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp.
1773-1814);

9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-


claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829);

10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and 36
co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190;
G.R. Nos. 104911-14, Rollo, pp. 748-864; G.R. No. 104776, Rollo, pp. 1066-
1183);

11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo and 19
co-claimants dated July 22, 1993 (G.R. No. 104776, Rollo, pp. 1173-1235; G.R.
Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-14, Rollo, pp. 896-
959);

12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2
co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254; G.R.
Nos. 104911-14, Rollo, pp. 972-984);

13) Joint Manifestation and Motion involving claimant Dante C. Aceres and 37
co-claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp. 1257-1375;
G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp.
1280-1397);

14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-
claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);

15) Joint Manifestation and Motion involving Domingo B. Solano and six co-
claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R.
Nos. 104911-14).

III

The facts as found by the NLRC are as follows:

We have taken painstaking efforts to sift over the more than fifty volumes now
comprising the records of these cases. From the records, it appears that the
complainants-appellants allege that they were recruited by respondent-appellant
AIBC for its accredited foreign principal, Brown & Root, on various dates from
1975 to 1983. They were all deployed at various projects undertaken by Brown
& Root in several countries in the Middle East, such as Saudi Arabia, Libya,
United Arab Emirates and Bahrain, as well as in Southeast Asia, in Indonesia
and Malaysia.

Having been officially processed as overseas contract workers by the Philippine


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

PART B �

(1) Employment Position Classification :���������


(Code) :���������

(2) Company Employment Status :���������


(3) Date of Employment to Commence on :���������
(4) Basic Working Hours Per Week :���������
(5) Basic Working Hours Per Month :���������
(6) Basic Hourly Rate :���������
(7) Overtime Rate Per Hour :���������
(8) Projected Period of Service
(Subject to C(1) of this [sic]) :���������
Months and/or
Job Completion

xxx xxx xxx

3. HOURS OF WORK AND COMPENSATION

a) The Employee is employed at the hourly rate and overtime rate as set out in
Part B of this Document.

b) The hours of work shall be those set forth by the Employer, and Employer
may, at his sole option, change or adjust such hours as maybe deemed
necessary from time to time.

4. TERMINATION

a) Notwithstanding any other terms and conditions of this agreement, the


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

xxx xxx xxx

10. VACATION/SICK LEAVE BENEFITS

a) After one (1) year of continuous service and/or satisfactory completion of


contract, employee shall be entitled to 12-days vacation leave with pay. This
shall be computed at the basic wage rate. Fractions of a year's service will be
computed on a pro-rata basis.

b) Sick leave of 15-days shall be granted to the employee for every year of
service for non-work connected injuries or illness. If the employee failed to avail
of such leave benefits, the same shall be forfeited at the end of the year in
which said sick leave is granted.

11. BONUS

A bonus of 20% (for offshore work) of gross income will be accrued and payable
only upon satisfactory completion of this contract.

12. OFFDAY PAY

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

In the State of Bahrain, where some of the individual complainants were


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

Art. 79: . . . A worker shall receive payment for each extra


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

Art. 80: Friday shall be deemed to be a weekly day of rest on


full pay.

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


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

Art. 81: . . . When conditions of work require the worker to


work on any official holiday, he shall be paid an additional
sum equivalent to 150% of his normal wage.

Art. 84: Every worker who has completed one year's


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

A worker shall be entitled to such leave upon a quantum


meruit in respect of the proportion of his service in that year.

Art. 107: A contract of employment made for a period of


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

Art. 111: . . . the employer concerned shall pay to such


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

All the individual complainants-appellants have already been


repatriated to the Philippines at the time of the filing of these
cases (R.R. No. 104776, Rollo, pp. 59-65).

IV

The issues raised before and resolved by the NLRC were:

First: � Whether or not complainants are entitled to the benefits provided by


Amiri Decree No. 23 of Bahrain;

(a) Whether or not the complainants who have worked in


Bahrain are entitled to the above-mentioned benefits.

(b) Whether or not Art. 44 of the same Decree (allegedly


prescribing a more favorable treatment of alien employees)
bars complainants from enjoying its benefits.

Second: � Assuming that Amiri Decree No. 23 of Bahrain is applicable in these


cases, whether or not complainants' claim for the benefits provided therein have
prescribed.

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

Fourth: � Whether or not the proceedings conducted by the POEA, as well as


the decision that is the subject of these appeals, conformed with the
requirements of due process;

(a) Whether or not the respondent-appellant was denied its


right to due process;

(b) Whether or not the admission of evidence by the POEA


after these cases were submitted for decision was valid;

(c) Whether or not the POEA acquired jurisdiction over Brown


& Root International, Inc.;

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


substantial evidence;

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


formula presented by the complainants-appellants are
supported by substantial evidence;

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

Fifth: � Whether or not the POEA erred in holding respondents AIBC and
Brown & Root jointly are severally liable for the judgment awards despite the
alleged finding that the former was the employer of the complainants;
(a) Whether or not the POEA has acquired jurisdiction over
Brown & Root;

(b) Whether or not the undisputed fact that AIBC was a


licensed construction contractor precludes a finding that
Brown & Root is liable for complainants claims.

Sixth: � Whether or not the POEA Administrator's failure to hold respondents in


default constitutes a reversible error.

Seventh: � Whether or not the POEA Administrator erred in dismissing the


following claims:

a. Unexpired portion of contract;

b. Interest earnings of Travel and Reserve Fund;

c. Retirement and Savings Plan benefits;

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


pay;

e. Area Differential Pay;

f. Accrued interests on all the unpaid benefits;

g. Salary differential pay;

h. Wage differential pay;

i. Refund of SSS premiums not remitted to SSS;

j. Refund of withholding tax not remitted to BIR;

k. Fringe benefits under B & R's "A Summary of Employee


Benefits" (Annex "Q" of Amended Complaint);

l. Moral and exemplary damages;

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


award;

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


to recruit of AIBC and the accreditation of B & R issued by
POEA;

o. Penalty for violations of Article 34 (prohibited practices), not


excluding reportorial requirements thereof.

Eighth: � Whether or not the POEA Administrator erred in not dismissing


POEA Case No. (L) 86-65-460 on the ground of multiplicity of suits (G.R. Nos.
104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence
governing the pleading and proof of a foreign law and admitted in evidence a simple copy of the
Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector). NLRC invoked Article
221 of the Labor Code of the Philippines, vesting on the Commission ample discretion to use
every and all reasonable means to ascertain the facts in each case without regard to the
technicalities of law or procedure. NLRC agreed with the POEA Administrator that the Amiri
Decree No. 23, being more favorable and beneficial to the workers, should form part of the
overseas employment contract of the complainants.

NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who worked in
Bahrain, and set aside awards of the POEA Administrator in favor of the claimants, who worked
elsewhere.

On the second issue, NLRC ruled that the prescriptive period for the filing of the claims of the
complainants was three years, as provided in Article 291 of the Labor Code of the Philippines, and
not ten years as provided in Article 1144 of the Civil Code of the Philippines nor one year as
provided in the Amiri Decree No. 23 of 1976.

On the third issue, NLRC agreed with the POEA Administrator that the labor cases cannot be
treated as a class suit for the simple reason that not all the complainants worked in Bahrain and
therefore, the subject matter of the action, the claims arising from the Bahrain law, is not of
common or general interest to all the complainants.

On the fourth issue, NLRC found at least three infractions of the cardinal rules of administrative
due process: namely, (1) the failure of the POEA Administrator to consider the evidence
presented by AIBC and BRII; (2) some findings of fact were not supported by substantial
evidence; and (3) some of the evidence upon which the decision was based were not disclosed to
AIBC and BRII during the hearing.

On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and AIBC are
solidarily liable for the claims of the complainants and held that BRII was the actual employer of
the complainants, or at the very least, the indirect employer, with AIBC as the labor contractor.

NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator through the
summons served on AIBC, its local agent.

On the sixth issue, NLRC held that the POEA Administrator was correct in denying the Motion to
Declare AIBC in default.

On the seventh issue, which involved other money claims not based on the Amiri Decree No. 23,
NLRC ruled:

(1) that the POEA Administrator has no jurisdiction over the claims for refund of
the SSS premiums and refund of withholding taxes and the claimants should file
their claims for said refund with the appropriate government agencies;

(2) the claimants failed to establish that they are entitled to the claims which are
not based on the overseas employment contracts nor the Amiri Decree No. 23
of 1976;

(3) that the POEA Administrator has no jurisdiction over claims for moral and
exemplary damages and nonetheless, the basis for granting said damages was
not established;

(4) that the claims for salaries corresponding to the unexpired portion of their
contract may be allowed if filed within the three-year prescriptive period;

(5) that the allegation that complainants were prematurely repatriated prior to
the expiration of their overseas contract was not established; and

(6) that the POEA Administrator has no jurisdiction over the complaint for the
suspension or cancellation of the AIBC's recruitment license and the
cancellation of the accreditation of BRII.

NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460 should
have been dismissed on the ground that the claimants in said case were also claimants in POEA
Case No. (L) 84-06-555. Instead of dismissing POEA Case No. (L) 86-65-460, the POEA just
resolved the corresponding claims in POEA Case No. (L) 84-06-555. In other words, the POEA
did not pass upon the same claims twice.

G.R. No. 104776

Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:

(1) that they were deprived by NLRC and the POEA of their right to a speedy
disposition of their cases as guaranteed by Section 16, Article III of the 1987
Constitution. The POEA Administrator allowed private respondents to file their
answers in two years (on June 19, 1987) after the filing of the original complaint
(on April 2, 1985) and NLRC, in total disregard of its own rules, affirmed the
action of the POEA Administrator;

(2) that NLRC and the POEA Administrator should have declared AIBC and
BRII in default and should have rendered summary judgment on the basis of the
pleadings and evidence submitted by claimants;

(3) the NLRC and POEA Administrator erred in not holding that the labor cases
filed by AIBC and BRII cannot be considered a class suit;

(4) that the prescriptive period for the filing of the claims is ten years; and

(5) that NLRC and the POEA Administrator should have dismissed POEA Case
No. L-86-05-460, the case filed by Atty. Florante de Castro (Rollo, pp. 31-40).

AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:

(1) that they were not responsible for the delay in the disposition of the labor
cases, considering the great difficulty of getting all the records of the more than
1,500 claimants, the piece-meal filing of the complaints and the addition of
hundreds of new claimants by petitioners;

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

(3) that the claimants failed to refute NLRC's finding that


there was no common or general interest in the subject matter of the
controversy � which was the applicability of the Amiri Decree No. 23. Likewise,
the nature of the claims varied, some being based on salaries pertaining to the
unexpired portion of the contracts while others being for pure money claims.
Each claimant demanded separate claims peculiar only to himself and
depending upon the particular circumstances obtaining in his case;

(4) that the prescriptive period for filing the claims is that prescribed by Article
291 of the Labor Code of the Philippines (three years) and not the one
prescribed by Article 1144 of the Civil Code of the Philippines (ten years); and

(5) that they are not concerned with the issue of whether POEA Case No. L-86-
05-460 should be dismissed, this being a private quarrel between the two labor
lawyers (Rollo, pp. 292-305).

Attorney's Lien

On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint manifestations
and motions of AIBC and BRII dated September 2 and 11, 1992, claiming that all the claimants
who entered into the compromise agreements subject of said manifestations and motions were his
clients and that Atty. Florante M. de Castro had no right to represent them in said agreements. He
also claimed that the claimants were paid less than the award given them by NLRC; that Atty. De
Castro collected additional attorney's fees on top of the 25% which he was entitled to receive; and
that the consent of the claimants to the compromise agreements and quitclaims were procured by
fraud (G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated November 23, 1992, the
Court denied the motion to strike out the Joint Manifestations and Motions dated September 2 and
11, 1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).

On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's Lien,"
alleging that the claimants who entered into compromise agreements with AIBC and BRII with the
assistance of Atty. De Castro, had all signed a retainer agreement with his law firm (G.R. No.
104776, Rollo, pp. 623-624; 838-1535).

Contempt of Court

On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De Castro
and Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and 16 of the Code of
Professional Responsibility. The said lawyers allegedly misled this Court, by making it appear that
the claimants who entered into the compromise agreements were represented by Atty. De Castro,
when in fact they were represented by Atty. Del Mundo (G.R. No. 104776, Rollo, pp. 1560-1614).

On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro for
unethical practices and moved for the voiding of the quitclaims submitted by some of the
claimants.

G.R. Nos. 104911-14

The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the grounds that NLRC
gravely abused its discretion when it: (1) applied the three-year prescriptive period under the
Labor Code of the Philippines; and (2) it denied the claimant's formula based on an average
overtime pay of three hours a day (Rollo, pp. 18-22).

The claimants argue that said method was proposed by BRII itself during the negotiation for an
amicable settlement of their money claims in Bahrain as shown in the Memorandum dated April
16, 1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the
prescriptive period in the Labor Code of the Philippines, a special law, prevails over that provided
in the Civil Code of the Philippines, a general law.

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

G.R. Nos. 105029-32

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion when it: (1)
enforced the provisions of the Amiri Decree No. 23 of 1976 and not the terms of the employment
contracts; (2) granted claims for holiday, overtime and leave indemnity pay and other benefits, on
evidence admitted in contravention of petitioner's constitutional right to due process; and (3)
ordered the POEA Administrator to hold new hearings for the 683 claimants whose claims had
been dismissed for lack of proof by the POEA Administrator or NLRC itself. Lastly, they allege that
assuming that the Amiri Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply
the one-year prescription provided in said law (Rollo, pp. 29-30).

VI

G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32

All the petitions raise the common issue of prescription although they disagreed as to the time that
should be embraced within the prescriptive period.

To the POEA Administrator, the prescriptive period was ten years, applying Article 1144 of the
Civil Code of the Philippines. NLRC believed otherwise, fixing the prescriptive period at three
years as provided in Article 291 of the Labor Code of the Philippines.

The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds, insisted
that NLRC erred in ruling that the prescriptive period applicable to the claims was three years,
instead of ten years, as found by the POEA Administrator.

The Solicitor General expressed his personal view that the prescriptive period was one year as
prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of NLRC that Article
291 of the Labor Code of the Philippines was the operative law.

The POEA Administrator held the view that:

These money claims (under Article 291 of the Labor Code) refer to those arising
from the employer's violation of the employee's right as provided by the Labor
Code.

In the instant case, what the respondents violated are not the rights of the
workers as provided by the Labor Code, but the provisions of the Amiri Decree
No. 23 issued in Bahrain, which ipso facto amended the worker's contracts of
employment. Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It was only after
June 30, 1983, four months after the brown builders brought a suit against B &
R in Bahrain for this same claim, when respondent AIBC's contracts have
undergone amendments in Bahrain for the new hires/renewals (Respondent's
Exhibit 7).

Hence, premises considered, the applicable law of prescription to this instant


case is Article 1144 of the Civil Code of the Philippines, which provides:

Art. 1144. The following actions may be brought within ten


years from the time the cause of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

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

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

The Labor Code provides that "all money claims arising from employer-
employee relations . . . shall be filed within three years from the time the cause
of action accrued; otherwise they shall be forever barred" (Art. 291, Labor Code,
as amended). This three-year prescriptive period shall be the one applied here
and which should be reckoned from the date of repatriation of each individual
complainant, considering the fact that the case is having (sic) filed in this
country. We do not agree with the POEA Administrator that this three-year
prescriptive period applies only to money claims specifically recoverable under
the Philippine Labor Code. Article 291 gives no such indication. Likewise, We
can not consider complainants' cause/s of action to have accrued from a
violation of their employment contracts. There was no violation; the claims arise
from the benefits of the law of the country where they worked. (G.R. No.
104776, Rollo, pp.
90-91).

Anent the applicability of the one-year prescriptive period as provided by the Amiri Decree No. 23
of 1976, NLRC opined that the applicability of said law was one of characterization, i.e., whether
to characterize the foreign law on prescription or statute of limitation as "substantive" or
"procedural." NLRC cited the decision in Bournias v. Atlantic Maritime Company (220 F. 2d. 152,
2d Cir. [1955], where the issue was the applicability of the Panama Labor Code in a case filed in
the State of New York for claims arising from said Code. In said case, the claims would have
prescribed under the Panamanian Law but not under the Statute of Limitations of New York. The
U.S. Circuit Court of Appeals held that the Panamanian Law was procedural as it was not
"specifically intended to be substantive," hence, the prescriptive period provided in the law of the
forum should apply. The Court observed:

. . . And where, as here, we are dealing with a statute of limitations of a foreign


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

The court further noted:


xxx xxx xxx

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

Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the
Philippines, which was applied by NLRC, refers only to claims "arising from the employer's
violation of the employee's right as provided by the Labor Code." They assert that their claims are
based on the violation of their employment contracts, as amended by the Amiri Decree No. 23 of
1976 and therefore the claims may be brought within ten years as provided by Article 1144 of the
Civil Code of the Philippines (Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA 244
(1976).

AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree
No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law," which is Section
48 of the Code of Civil Procedure and that where such kind of law exists, it takes precedence over
the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

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

Money claims-all money claims arising from employer-employee relations


accruing during the effectivity of this Code shall be filed within three (3) years
from the time the cause of action accrued, otherwise they shall be forever
barred.

xxx xxx xxx

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

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

Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933) provides:

Any action to enforce any cause of action under this Act shall be commenced
within three years after the cause of action accrued otherwise such action shall
be forever barred, . . . .

The court further explained:

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

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

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

VII

G.R. No. 104776

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

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

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

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

However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition of
cases" is a relative term. Just like the constitutional guarantee of "speedy trial" accorded to the
accused in all criminal proceedings, "speedy disposition of cases" is a flexible concept. It is
consistent with delays and depends upon the circumstances of each case. What the Constitution
prohibits are unreasonable, arbitrary and oppressive delays which render rights nugatory.

Caballero laid down the factors that may be taken into consideration in determining whether or not
the right to a "speedy disposition of cases" has been violated, thus:

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

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

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

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

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

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

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

1. Unexpired portion of contract;

2. Interest earnings of Travel and Fund;

3. Retirement and Savings Plan benefit;

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

5. Area Differential pay;

6. Accrued Interest of all the unpaid benefits;

7. Salary differential pay;

8. Wage Differential pay;

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

10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue


(B.I.R.);

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

12. Moral and Exemplary Damages;

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

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

15. Penalty for violation of Article 34 (Prohibited practices) not excluding


reportorial requirements thereof (NLRC Resolution, September 2, 1991, pp. 18-
19; G.R. No. 104776, Rollo, pp. 73-74).

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

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

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

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

NLRC blamed the parties and their lawyers for the delay in terminating the proceedings, thus:

These cases could have been spared the long and arduous route towards
resolution had the parties and their counsel been more interested in pursuing
the truth and the merits of the claims rather than exhibiting a fanatical reliance
on technicalities. Parties and counsel have made these cases a litigation of
emotion. The intransigence of parties and counsel is remarkable. As late as last
month, this Commission made a last and final attempt to bring the counsel of all
the parties (this Commission issued a special order directing respondent Brown
& Root's resident agent/s to appear) to come to a more conciliatory stance.
Even this failed (Rollo,
p. 58).

The squabble between the lawyers of claimants added to the delay in the disposition of the cases,
to the lament of NLRC, which complained:

It is very evident from the records that the protagonists in these consolidated
cases appear to be not only the individual complainants, on the one hand, and
AIBC and Brown & Root, on the other hand. The two lawyers for the
complainants, Atty. Gerardo Del Mundo and Atty. Florante De Castro, have yet
to settle the right of representation, each one persistently claiming to appear in
behalf of most of the complainants. As a result, there are two appeals by the
complainants. Attempts by this Commission to resolve counsels' conflicting
claims of their respective authority to represent the complainants prove futile.
The bickerings by these two counsels are reflected in their pleadings. In the
charges and countercharges of falsification of documents and signatures, and in
the disbarment proceedings by one against the other. All these have, to a large
extent, abetted in confounding the issues raised in these cases, jumble the
presentation of evidence, and even derailed the prospects of an amicable
settlement. It would not be far-fetched to imagine that both counsel, unwittingly,
perhaps, painted a rainbow for the complainants, with the proverbial pot of gold
at its end containing more than US$100 million, the aggregate of the claims in
these cases. It is, likewise, not improbable that their misplaced zeal and
exuberance caused them to throw all caution to the wind in the matter of
elementary rules of procedure and evidence (Rollo, pp. 58-59).

Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem created
by this situation is that if one of the two petitions is dismissed, then the parties and the public
respondents would not know which claim of which petitioner was dismissed and which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class suit" because "all
the named complainants have similar money claims and similar rights sought irrespective of
whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya or in any part of the
Middle East" (Rollo, pp. 35-38).

A class suit is proper where the subject matter of the controversy is one of common or general
interest to many and the parties are so numerous that it is impracticable to bring them all before
the court (Revised Rules of Court, Rule 3, Sec. 12).

While all the claims are for benefits granted under the Bahrain Law, many of the claimants worked
outside Bahrain. Some of the claimants were deployed in Indonesia and Malaysia under different
terms and conditions of employment.

NLRC and the POEA Administrator are correct in their stance that inasmuch as the first
requirement of a class suit is not present (common or general interest based on the Amiri Decree
of the State of Bahrain), it is only logical that only those who worked in Bahrain shall be entitled to
file their claims in a class suit.

While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for
employee's benefits), there is no common question of law or fact. While some claims are based
on the Amiri Law of Bahrain, many of the claimants never worked in that country, but were
deployed elsewhere. Thus, each claimant is interested only in his own demand and not in the
claims of the other employees of defendants. The named claimants have a special or particular
interest in specific benefits completely different from the benefits in which the other named
claimants and those included as members of a "class" are claiming (Berses v. Villanueva, 25 Phil.
473 [1913]). It appears that each claimant is only interested in collecting his own claims. A
claimants has no concern in protecting the interests of the other claimants as shown by the fact,
that hundreds of them have abandoned their co-claimants and have entered into separate
compromise settlements of their respective claims. A principle basic to the concept of "class suit"
is that plaintiffs brought on the record must fairly represent and protect the interests of the others
(Dimayuga v. Court of Industrial Relations, 101 Phil. 590 [1957]). For this matter, the claimants
who worked in Bahrain can not be allowed to sue in a class suit in a judicial proceeding. The most
that can be accorded to them under the Rules of Court is to be allowed to join as plaintiffs in one
complaint (Revised Rules of Court, Rule 3, Sec. 6).

The Court is extra-cautious in allowing class suits because they are the exceptions to the
condition sine qua non, requiring the joinder of all indispensable parties.

In an improperly instituted class suit, there would be no problem if the decision secured is
favorable to the plaintiffs. The problem arises when the decision is adverse to them, in which case
the others who were impleaded by their self-appointed representatives, would surely claim denial
of due process.

C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC should
have declared Atty. Florante De Castro guilty of "forum shopping, ambulance chasing activities,
falsification, duplicity and other unprofessional activities" and his appearances as counsel for
some of the claimants as illegal (Rollo, pp. 38-40).

The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the
practice of some parties of filing multiple petitions and complaints involving the same issues, with
the result that the courts or agencies have to resolve the same issues. Said Rule, however,
applies only to petitions filed with the Supreme Court and the Court of Appeals. It is entitled
"Additional Requirements For Petitions Filed with the Supreme Court and the Court of Appeals To
Prevent Forum Shopping or Multiple Filing of Petitioners and Complainants." The first sentence of
the circular expressly states that said circular applies to an governs the filing of petitions in the
Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum shopping rule
to the lower courts and administrative agencies, said circular took effect only on April 1, 1994.

POEA and NLRC could not have entertained the complaint for unethical conduct against Atty. De
Castro because NLRC and POEA have no jurisdiction to investigate charges of unethical conduct
of lawyers.

Attorney's Lien

The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed by Atty.
Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services rendered in favor
of the claimants (G.R. No. 104776, Rollo, pp. 841-844).

A statement of a claim for a charging lien shall be filed with the court or administrative agency
which renders and executes the money judgment secured by the lawyer for his clients. The lawyer
shall cause written notice thereof to be delivered to his clients and to the adverse party (Revised
Rules of Court, Rule 138, Sec. 37). The statement of the claim for the charging lien of Atty. Del
Mundo should have been filed with the administrative agency that rendered and executed the
judgment.

Contempt of Court

The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty. Katz Tierra
for violation of the Code of Professional Responsibility should be filed in a separate and
appropriate proceeding.

G.R. No. 104911-14

Claimants charge NLRC with grave abuse of discretion in not accepting their formula of "Three
Hours Average Daily Overtime" in computing the overtime payments. They claim that it was BRII
itself which proposed the formula during the negotiations for the settlement of their claims in
Bahrain and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).

Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16, 1983,
which in pertinent part states:

After the perusal of the memorandum of the Vice President and the Area
Manager, Middle East, of Brown & Root Co. and the Summary of the
compensation offered by the Company to the employees in respect of the
difference of pay of the wages of the overtime and the difference of vacation
leave and the perusal of the documents attached thereto i.e., minutes of the
meetings between the Representative of the employees and the management
of the Company, the complaint filed by the employees on 14/2/83 where they
have claimed as hereinabove stated, sample of the Service Contract executed
between one of the employees and the company through its agent in (sic)
Philippines, Asia International Builders Corporation where it has been provided
for 48 hours of work per week and an annual leave of 12 days and an overtime
wage of 1 & 1/4 of the normal hourly wage.

xxx xxx xxx

The Company in its computation reached the following averages:

A. 1. The average duration of the actual service of the employee is 35 months


for the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is US$2.69 . . . .

3. The average hours for the overtime is 3 hours plus in all public holidays and
weekends.

4. Payment of US$8.72 per months (sic) of service as compensation for the


difference of the wages of the overtime done for each Philippino (sic)
employee . . . (Rollo, p.22).

BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a
subordinate official in the Bahrain Department of Labor; (2) that there was no showing that the
Bahrain Minister of Labor had approved said memorandum; and (3) that the offer was made in the
course of the negotiation for an amicable settlement of the claims and therefore it was not
admissible in evidence to prove that anything is due to the claimants.

While said document was presented to the POEA without observing the rule on presenting official
documents of a foreign government as provided in Section 24, Rule 132 of the 1989 Revised
Rules on Evidence, it can be admitted in evidence in proceedings before an administrative body.
The opposing parties have a copy of the said memorandum, and they could easily verify its
authenticity and accuracy.

The admissibility of the offer of compromise made by BRII as contained in the memorandum is
another matter. Under Section 27, Rule 130 of the 1989 Revised Rules on Evidence, an offer to
settle a claim is not an admission that anything is due.

Said Rule provides:

Offer of compromise not admissible. � In civil cases, an offer of compromise is


not an admission of any liability, and is not admissible in evidence against the
offeror.

This Rule is not only a rule of procedure to avoid the cluttering of the record with unwanted
evidence but a statement of public policy. There is great public interest in having the protagonists
settle their differences amicable before these ripen into litigation. Every effort must be taken to
encourage them to arrive at a settlement. The submission of offers and counter-offers in the
negotiation table is a step in the right direction. But to bind a party to his offers, as what claimants
would make this Court do, would defeat the salutary purpose of the Rule.

G.R. Nos. 105029-32

A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits than those
stipulated in the overseas-employment contracts of the claimants. It was of the belief that "where
the laws of the host country are more favorable and beneficial to the workers, then the laws of the
host country shall form part of the overseas employment contract." It quoted with approval the
observation of the POEA Administrator that ". . . in labor proceedings, all doubts in the
implementation of the provisions of the Labor Code and its implementing regulations shall be
resolved in favor of labor" (Rollo, pp. 90-94).

AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to enforce the
overseas-employment contracts, which became the law of the parties. They contend that the
principle that a law is deemed to be a part of a contract applies only to provisions of Philippine law
in relation to contracts executed in the Philippines.

The overseas-employment contracts, which were prepared by AIBC and BRII themselves,
provided that the laws of the host country became applicable to said contracts if they offer terms
and conditions more favorable that those stipulated therein. It was stipulated in said contracts that:

The Employee agrees that while in the employ of the Employer, he will not
engage in any other business or occupation, nor seek employment with anyone
other than the Employer; that he shall devote his entire time and attention and
his best energies, and abilities to the performance of such duties as may be
assigned to him by the Employer; that he shall at all times be subject to the
direction and control of the Employer; and that the benefits provided to
Employee hereunder are substituted for and in lieu of all other benefits provided
by any applicable law, provided of course, that total remuneration and benefits
do not fall below that of the host country regulation or custom, it being
understood that should applicable laws establish that fringe benefits, or other
such benefits additional to the compensation herein agreed cannot be waived,
Employee agrees that such compensation will be adjusted downward so that
the total compensation hereunder, plus the non-waivable benefits shall be
equivalent to the compensation herein agreed (Rollo, pp. 352-353).

The overseas-employment contracts could have been drafted more felicitously. While a part
thereof provides that the compensation to the employee may be "adjusted downward so that the
total computation (thereunder) plus the non-waivable benefits shall be equivalent to the
compensation" therein agreed, another part of the same provision categorically states "that total
remuneration and benefits do not fall below that of the host country regulation and custom."

Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and
BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93
SCRA 257 [1979]).

Article 1377 of the Civil Code of the Philippines provides:

The interpretation of obscure words or stipulations in a contract shall not favor


the party who caused the obscurity.

Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared
form containing the stipulations of the employment contract and the employees merely "take it or
leave it." The presumption is that there was an imposition by one party against the other and that
the employees signed the contracts out of necessity that reduced their bargaining power
(Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).

Applying the said legal precepts, we read the overseas-employment contracts in question as
adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.

The parties to a contract may select the law by which it is to be governed (Cheshire, Private
International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a "system" to
regulate the relations of the parties, including questions of their capacity to enter into the contract,
the formalities to be observed by them, matters of performance, and so forth (16 Am Jur 2d,
150-161).

Instead of adopting the entire mass of the foreign law, the parties may just agree that specific
provisions of a foreign statute shall be deemed incorporated into their contract "as a set of terms."
By such reference to the provisions of the foreign law, the contract does not become a foreign
contract to be governed by the foreign law. The said law does not operate as a statute but as a set
of contractual terms deemed written in the contract (Anton, Private International Law, 197 [1967];
Dicey and Morris, The Conflict of Laws, 702-703, [8th ed.]).

A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law in
Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]). Such party
expectation is protected by giving effect to the parties' own choice of the applicable law (Fricke v.
Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must, however, bear some
relationship to the parties or their transaction (Scoles and Hayes, Conflict of Law 644-647 [1982]).
There is no question that the contracts sought to be enforced by claimants have a direct
connection with the Bahrain law because the services were rendered in that country.

In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management Co. and the late husband of the private
respondent, expressly provided that in the event of illness or injury to the employee arising out of
and in the course of his employment and not due to his own misconduct, "compensation shall be
paid to employee in accordance with and subject to the limitation of the Workmen's Compensation
Act of the Republic of the Philippines or the Worker's Insurance Act of registry of the vessel,
whichever is greater." Since the laws of Singapore, the place of registry of the vessel in which the
late husband of private respondent served at the time of his death, granted a better compensation
package, we applied said foreign law in preference to the terms of the contract.

The case of Bagong Filipinas Overseas Corporation v. National Labor Relations Commission, 135
SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the facts of the cases at bench.
The issue in that case was whether the amount of the death compensation of a Filipino seaman
should be determined under the shipboard employment contract executed in the Philippines or the
Hongkong law. Holding that the shipboard employment contract was controlling, the court
differentiated said case from Norse Management Co. in that in the latter case there was an
express stipulation in the employment contract that the foreign law would be applicable if it
afforded greater compensation.

B. AIBC and BRII claim that they were denied by NLRC of their right to due process when said
administrative agency granted Friday-pay differential, holiday-pay differential, annual-leave
differential and leave indemnity pay to the claimants listed in Annex B of the Resolution. At first,
NLRC reversed the resolution of the POEA Administrator granting these benefits on a finding that
the POEA Administrator failed to consider the evidence presented by AIBC and BRII, that some
findings of fact of the POEA Administrator were not supported by the evidence, and that some of
the evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But instead of
remanding the case to the POEA Administrator for a new hearing, which means further delay in
the termination of the case, NLRC decided to pass upon the validity of the claims itself. It is this
procedure that AIBC and BRII complain of as being irregular and a "reversible error."

They pointed out that NLRC took into consideration evidence submitted on appeal, the same
evidence which NLRC found to have been "unilaterally submitted by the claimants and not
disclosed to the adverse parties" (Rollo, pp. 37-39).

NLRC noted that so many pieces of evidentiary matters were submitted to the POEA administrator
by the claimants after the cases were deemed submitted for resolution and which were taken
cognizance of by the POEA Administrator in resolving the cases. While AIBC and BRII had no
opportunity to refute said evidence of the claimants before the POEA Administrator, they had all
the opportunity to rebut said evidence and to present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves were able to
present before NLRC additional evidence which they failed to present before the POEA
Administrator.

Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard
to technicalities of law or procedure, all in the interest of due process."

In deciding to resolve the validity of certain claims on the basis of the evidence of both parties
submitted before the POEA Administrator and NLRC, the latter considered that it was not
expedient to remand the cases to the POEA Administrator for that would only prolong the already
protracted legal controversies.

Even the Supreme Court has decided appealed cases on the merits instead of remanding them to
the trial court for the reception of evidence, where the same can be readily determined from the
uncontroverted facts on record (Development Bank of the Philippines v. Intermediate Appellate
Court, 190 SCRA 653 [1990]; Pagdonsalan v. National Labor Relations Commission, 127 SCRA
463 [1984]).

C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution dated
September 2, 1991 whose claims had been denied by the POEA Administrator "for lack of proof"
and for 69 claimants listed in Annex E of the same Resolution, whose claims had been found by
NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).

NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines, which empowers it
"[to] conduct investigation for the determination of a question, matter or controversy, within its
jurisdiction, . . . ."

It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to remand a
case involving claims which had already been dismissed because such provision contemplates
only situations where there is still a question or controversy to be resolved (Rollo, pp. 41-42).

A principle well embedded in Administrative Law is that the technical rules of procedure and
evidence do not apply to the proceedings conducted by administrative agencies (First Asian
Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld Publishing House,
Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the Labor Code of
the Philippines and is now the bedrock of proceedings before NLRC.

Notwithstanding the non-applicability of technical rules of procedure and evidence in


administrative proceedings, there are cardinal rules which must be observed by the hearing
officers in order to comply with the due process requirements of the Constitution. These cardinal
rules are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).

VIII

The three petitions were filed under Rule 65 of the Revised Rules of Court on the grounds that
NLRC had committed grave abuse of discretion amounting to lack of jurisdiction in issuing the
questioned orders. We find no such abuse of discretion.

WHEREFORE, all the three petitions are DISMISSED.

SO ORDERED.

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

ANNEX A

LIST OF CLAIMANTS WHO SIGNED QUITCLAIMS

Bienvenido Cadalin Ardon Ello


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

The Lawphil Project - Arellano Law Foundation

PHILIPPINE JURISPRUDENCE - FULL TEXT


The Lawphil Project - Arellano Law Foundation
G.R. No. 110263 July 20, 2001
ASIAVEST MERCHANT BANKERS (M) BERHAD, vs. COURT
OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 110263 July 20, 2001

ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner,


vs.
COURT OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.

DELEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of


Appeals dated May 19,1993 in CA-G.R. CY No. 35871 affirming the Decision2 dated
October 14,1991 of the Regional Trial Court of Pasig, Metro Manila, Branch 168 in
Civil Case No. 56368 which dismissed the complaint of petitioner Asiavest Merchant
Bankers (M) Berhad for the enforcement of the money of the judgment of the High
Court of Malaysia in Kuala Lumpur against private respondent Philippine National
Construction Corporation. 1�wphi1.n�t

The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized


under the laws of Malaysia while private respondent Philippine National
Construction Corporation is a corporation duly incorporated and existing under
Philippine laws.

It appears that sometime in 1983, petitioner initiated a suit for collection against
private respondent, then known as Construction and Development Corporation of
the Philippines, before the High Court of Malaya in Kuala Lumpur entitled "Asiavest
Merchant Bankers (M) Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and
Development Corporation of the Philippines."3

Petitioner sought to recover the indemnity of the performance bond it had put up in
favor of private respondent to guarantee the completion of the Felda Project and the
nonpayment of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion
of Paloh Hanai and Kuantan By Pass; Project.

On September 13, 1985, the High Court of Malaya (Commercial Division) rendered
judgment in favor of the petitioner and against the private respondent which is also
designated therein as the "2nd Defendant. "

The judgment reads in full:

SUIT NO. C638 of 1983


Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendant
2. Construction & Development Corporation of the
Philippines

JUDGMENT

The 2nd Defendant having entered appearance herein and the Court having under
Order 14, rule 3 ordered that judgment as hereinafter provided be entered for the
Plaintiffs against the 2nd Defendant.

IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of
$5, 108,290.23 (Ringgit Five million one hundred and eight thousand two hundred
and ninety and Sen twenty-three) together with interest at the rate of 12% per
annum on

(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the
date of payment; and

(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the
date of payment; and $350.00 (Ringgit Three Hundred and Fifty)
costs.

Dated the 13th day of September, 1985.

Senior Assistant Registrar, High Court, Kuala Lumpur

This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building,
No.4, Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed.
(VP/Ong/81194.7/83)4

On the same day, September 13, 1985, the High Court of Malaya issued an Order
directing the private respondent (also designated therein as the "2nd Defendant") to
pay petitioner interest on the sums covered by the said Judgment, thus:

SUIT NO. C638 of 1983


Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendants
2. Construction & Development Corporation of the
Philippines
BEFORE THE SENIOR ASSISTANT REGISTRAR
CIK SUSILA S. PARAM THIS 13th DAY OF IN
SEPTEMBER 1985 CHAMBERS

ORDER

Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this