CONFLICT – FORUM NON CONVENIENS ‘10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December
t on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12,
G.R. No. 141536. February 26, 2001
GIL MIGUEL T. PUYAT, petitioner,
vs.
RON ZABARTE, respondent.
DECISION
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no genuine issue as to any material fact,
other than the amount of damages. If this verity is evident from the pleadings and the supporting
affidavits, depositions and admissions on file with the court, the moving party is entitled to such
remedy as a matter of course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the
August 31, 1999 Decision 1 of the Court of Appeals (CA), which affirmed the Regional Trial Court
(RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January 20, 2000 CA Resolution 2
which denied reconsideration.
The assailed CA Decision disposed as follows:
“WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED." 3
The Facts
The facts of this case, as narrated by the Court of Appeals, are as follows: 4
“It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to enforce
the money judgment rendered by the Superior Court for the State of California, County of Contra
Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with the following special and
affirmative defenses:
xxx xxx xxx
‘8) The Superior Court for the State of California, County of Contra Costa[,] did not properly
acquire jurisdiction over the subject matter of and over the persons involved in [C]ase #C21-
00265.
‘9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December 12,
1991 was obtained without the assistance of counsel for [petitioner] and without sufficient notice
to him and therefore, was rendered in clear violation of [petitioner’s] constitutional rights to
substantial and procedural due process.
1991 was procured by means of fraud or collusion or undue influence and/or based on a clear
mistake of fact and law.
‘11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12,
1991 is contrary to the laws, public policy and canons of morality obtaining in the Philippines and
the enforcement of such judgment in the Philippines would result in the unjust enrichment of
[respondent] at the expense of [petitioner] in this case.
‘12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12,
1991 is null and void and unenforceable in the Philippines.
‘13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in any
way liable, in fact and in law, to [respondent] in this case, as contained in [petitioner’s] ‘Answer
to Complaint’ in Case #C21-00265 dated April 1, 1991, Annex ‘B’ of [respondent’s] ‘Complaint’
dated December 6, 1993.
’14) [Respondent] is guilty of misrepresentation or falsification in the filing of his ‘Complaint’ in
this case dated December 6, 1993. Worse, [respondent] has no capacity to sue in the Philippines.
’15) Venue has been improperly laid in this case.’
(Record, pp. 42-44)
“On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under Rule 34 of the
Rules of Court alleging that the [A]nswer filed by [petitioner] failed to tender any genuine issue
as to the material facts. In his [O]pposition to [respondent’s] motion, [petitioner] demurred as
follows:
‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his ‘Answer
with Special and Affirmative Defenses’ dated March 16, 1994 [petitioner] has interposed that the
‘Judgment on Stipulations for Entry in Judgment’ is null and void, fraudulent, illegal and
unenforceable, the same having been obtained by means of fraud, collusion, undue influence
and/or clear mistake of fact and law. In addition, [he] has maintained that said ‘Judgment on
Stipulations for Entry in Judgment’ was obtained without the assistance of counsel for [petitioner]
and without sufficient notice to him and therefore, was rendered in violation of his constitutional
rights to substantial and procedural due process.’
“The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994 during which
[respondent] marked and submitted in evidence the following:
Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court of the State
of California[,] County of Contra Costa[,] signed by Hon. Ellen James, Judge of the Superior Court.
Exhibit ‘B’ - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen James, issued
by the Consulate General of the Republic of the Philippines.
 Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the sheriff/marshall,
County of Santa Clara, State of California.
Exhibit ‘D’ - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy, [M]emorandum
of [G]arnishee, [E]xemptions from [E]nforcement of [J]udgment.
Exhibit ‘F’ - Certification issued by the Secretary of State, State of California that Stephen Weir is
the duly elected, qualified and acting [c]ounty [c]lerk of the County of Contra Costa of the State
of California.
Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit of [E]xecution.
“On 6 April 1995, the court a quo issued an [O]rder granting [respondent’s] [M]otion for [S]ummary
[J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing affidavits, after
which the case would be deemed submitted for resolution (Record, pp. 152-153). [Petitioner] filed
a [M]otion for [R]econsideration of the aforesaid [O]rder and [respondent] filed [C]omment. On 30
June 1995, [petitioner] filed a [M]otion to [D]ismiss on the ground of lack of jurisdiction over the
subject matter of the case and forum-non-conveniens (Record, pp. 166-170). In his [O]pposition to
the [M]otion (Record, pp. 181-182) [respondent] contended that [petitioner could] no longer
question the jurisdiction of the lower court on the ground that [the latter’s] Answer had failed to
raise the issue of jurisdiction. [Petitioner] countered by asserting in his Reply that jurisdiction [could]
not be fixed by agreement of the parties. The lower court dismissed [his] [M]otion for
[R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.”
The RTC 5 eventually rendered its February 21, 1997 Decision, 6 which disposed as follows:
“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the following
amounts:
“1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 1991,
or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated
December 19, 1991;
“2. The amount of P30,000.00 as attorney’s fees;
“3. To pay the costs of suit.
“The claim for moral damages, not having been substantiated, it is hereby denied.” 7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing the
judgment that had become final and had, in fact, been partially executed. The CA also ruled that
summary judgment was proper, because petitioner had failed to tender any genuine issue of fact
and was merely maneuvering to delay the full effects of the judgment.
8 disposition of actions in which the pleadings raise only a legal issue, and not a genuine issue as to
Citing Ingenohl v. Olsen, the CA also rejected petitioner’s argument that the RTC should have
dismissed the action for the enforcement of a foreign judgment, on the ground of forum non
conveniens. It reasoned out that the recognition of the foreign judgment was based on comity,
reciprocity and res judicata.
Hence, this Petition. 9
Issue
In his Memorandum, petitioner submits this lone but all-embracing issue:
“Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed the
Order of the trial court granting respondent’s Motion for Summary Judgment and rendering
judgment against the petitioner.” 10
In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgment’s conformity to Philippine laws, public policy, canons of morality, and norms
against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.
This Court’s Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at bar,
arguing that his Answer allegedly raised genuine and material factual matters which he should have
been allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine issues of fact” raised by petitioner
are mere conclusions of law, or “propositions arrived at not by any process of natural reasoning
from a fact or a combination of facts stated but by the application of the artificial rules of law to the
facts pleaded.” 11
The RTC granted respondent’s Motion for Summary Judgment because petitioner, in his Answer,
admitted the existence of the Judgment on Stipulation for Entry in Judgment. Besides, he had
already paid $5,000 to respondent, as provided in the foreign judgment sought to be enforced. 12
Hence, the trial court ruled that, there being no genuine issue as to any material fact, the case should
properly be resolved through summary judgment. The CA affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural device for the prompt
any material fact. By genuine issue is meant a question of fact that calls for the presentation of
evidence. It should be distinguished from an issue that is sham, contrived, set in bad faith and
patently unsubstantial. 13
Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays.
When affidavits, depositions and admissions on file show that there are no genuine issues of fact to
be tried, the Rules allow a party to pierce the allegations in the pleadings and to obtain immediate
relief by way of summary judgment. In short, since the facts are not in dispute, the court is allowed
to decide the case summarily by applying the law to the material facts.
Petitioner contends that by allowing summary judgment, the two courts a quo prevented him from
presenting evidence to substantiate his claims. We do not agree. Summary judgment is based on
facts directly proven by affidavits, depositions or admissions. 14 In this case, the CA and the RTC both
merely ruled that trial was not necessary to resolve the case. Additionally and correctly, the RTC
specifically ordered petitioner to submit opposing affidavits to support his contentions that (1) the
Judgment on Stipulation for Entry in Judgment was procured on the basis of fraud, collusion, undue
influence, or a clear mistake of law or fact; and (2) that it was contrary to public policy or the canons
of morality. 15
Again, in its Order 16 dated November 29, 1995, the trial court clarified that the opposing affidavits
were “for [petitioner] to spell out the facts or circumstances [that] would constitute lack of
jurisdiction over the subject matter of and over the persons involved in Case No. C21-00265,” and
that would render the judgment therein null and void. In this light, petitioner’s contention that he
was not allowed to present evidence to substantiate his claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that there
must be no genuine issue as to any material fact, except for the amount of damages; and (b) that
the party presenting the motion for summary judgment must be entitled to a judgment as a matter
of law. 17 As mentioned earlier, petitioner admitted that a foreign judgment had been rendered
against him and in favor of respondent, and that he had paid $5,000 to the latter in partial
compliance therewith. Hence, respondent, as the party presenting the Motion for Summary
Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no genuine
issue, it relied instead on the finality of the foreign judgment which was, in fact, partially executed.
Hence, we shall show in the following discussion how the defenses presented by petitioner failed
to tender any genuine issue of fact, and why a full-blown trial was not necessary for the resolution
of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership interest,
was vested in the Securities and Exchange Commission, not in the Superior Court of California,
County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that
such law, if any, is similar to Philippine law. We base this conclusion on the presumption of identity
or similarity, also known as processual presumption. 18 The Complaint, 19 which respondent filed
with the trial court, was for the enforcement of a foreign judgment. He alleged therein that the
action of the foreign court was for the collection of a sum of money, breach of promissory notes,
and damages. 20
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and
Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters enumerated in
Section 5, PD 902-A, 21 prior to its latest amendment. If the foreign court did not really have
jurisdiction over the case, as petitioner claims, it would have been very easy for him to show this.
Since jurisdiction is determined by the allegations in a complaint, he only had to submit a copy of
the complaint filed with the foreign court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form of a Compromise Agreement,
cannot be executed without the parties being assisted by their chosen lawyers. The reason for this,
he points out, is to eliminate collusion, undue influence and/or improper exertion of ascendancy by
one party over the other. He alleges that he discharged his counsel during the proceedings, because
he felt that the latter was not properly attending to the case. The judge, however, did not allow him
to secure the services of another counsel. Insisting that petitioner settle the case with respondent,
the judge practically imposed the settlement agreement on him. In his Opposing Affidavit, petitioner
states:
“It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I discharged
him because I then felt that he was not properly attending to my case or was not competent enough
to represent my interest. I asked the Judge for time to secure another counsel but I was practically
discouraged from engaging one as the Judge was insistent that I settle the case at once with the
[respondent]. Being a foreigner and not a lawyer at that I did not know what to do. I felt helpless
and the Judge and [respondent’s] lawyer were the ones telling me what to do. Under ordinary
circumstances, their directives should have been taken with a grain of salt especially so [since
respondent’s] counsel, who was telling me what to do, had an interest adverse to mine. But
[because] time constraints and undue influence exerted by the Judge and [respondent’s] counsel
on me disturbed and seriously affected my freedom to act according to my best judgment and
belief. In point of fact, the terms of the settlement were practically imposed on me by the Judge
seconded all the time by [respondent’s] counsel. I was then helpless as I had no counsel to assist
me and the collusion between the Judge and [respondent’s] counsel was becoming more evident
by the way I was treated in the Superior Court of [t]he State of California. I signed the ‘Judgment on
Stipulation for Entry in Judgment’ without any lawyer assisting me at the time and without being
fully aware of its terms and stipulations.” 22
The manifestation of petitioner that the judge and the counsel for the opposing party had pressured
him would gain credibility only if he had not been given sufficient time to engage the services of a
new lawyer. Respondent’s Affidavit 23 dated May 23, 1994, clarified, however, that petitioner had
sufficient time, but he failed to retain a counsel. Having dismissed his lawyer as early as June 19,
1991, petitioner directly handled his own defense and negotiated a settlement with respondent and
his counsel in December 1991. Respondent also stated that petitioner, ignoring the judge’s
reminder of the importance of having a lawyer, argued that “he would be the one to settle the case
and pay” anyway. Eventually, the Compromise Agreement was presented in court and signed before
Judge Ellen James on January 3, 1992. Hence, petitioner’s rights to counsel and to due process were
not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment 2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum
because the judge made him shoulder all the liabilities in the case, even if there were two other shopping[,] merely to secure procedural advantages or to convey or harass the defendant;
defendants, G.S.P & Sons, Inc. and the Genesis Group.
3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket
We cannot exonerate petitioner from his obligation under the foreign judgment, even if there are may already be overcrowded;
other defendants who are not being held liable together with him. First, the foreign judgment itself
does not mention these other defendants, their participation or their liability to respondent. 4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained;
Second, petitioner’s undated Opposing Affidavit states: “[A]lthough myself and these entities were and
initially represented by Atty. Lawrence L. Severson of the Law Firm Kouns, Quinlivan & Severson, x
x x I discharged x x x said lawyer. Subsequently, I assumed the representation for myself and these
The difficulty of ascertaining foreign law.” 27
firms and this was allowed by the Superior Court of the State of California without any authorization
from G.G.P. & Sons, Inc. and the Genesis Group.” 24 Clearly, it was petitioner who chose to represent
the other defendants; hence, he cannot now be allowed to impugn a decision based on this ground. None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the present
action, there was no more need for material witnesses, no forum shopping or harassment of
petitioner, no inadequacy in the local machinery to enforce the foreign judgment, and no question
In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti does not
raised as to the application of any foreign law.
apply to this case. This doctrine contemplates payment when there is no duty to pay, and the person
who receives the payment has no right to receive it. 25 In this case, petitioner merely argues that the
other two defendants whom he represented were liable together with him. This is not a case of Authorities agree that the issue of whether a suit should be entertained or dismissed on the basis
unjust enrichment. of the above-mentioned principle depends largely upon the facts of each case and on the sound
discretion of the trial court. 28 Since the present action lodged in the RTC was for the enforcement
of a foreign judgment, there was no need to ascertain the rights and the obligations of the parties
We do not see, either, how the foreign judgment could be contrary to law, morals, public policy or
based on foreign laws or contracts. The parties needed only to perform their obligations under the
the canons of morality obtaining in the country. Petitioner owed money, and the judgment required
Compromise Agreement they had entered into. 1âwphi1.nêt
him to pay it. That is the long and the short of this case.

In addition, the maneuverings of petitioner before the trial court reinforce our belief that his claims
are unfounded. Instead of filing opposing affidavits to support his affirmative defenses, he filed a
Motion for Reconsideration of the Order allowing summary judgment, as well as a Motion to Dismiss
the action on the ground of forum non conveniens. His opposing affidavits were filed only after the
Order of November 29, 1995 had denied both Motions. 26 Such actuation was considered by the trial
court as a dilatory ploy which justified the resolution of the action by summary judgment. According
to the CA, petitioner’s allegations sought to delay the full effects of the judgment; hence, summary
judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in personam
rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a right as
between the parties and their successors-in-interest by a subsequent title. 29
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- enjoys the
presumption that it is acting in the lawful exercise of its jurisdiction, and that it is regularly
performing its official duty. 30 Its judgment may, however, be assailed if there is evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. But precisely,
this possibility signals the need for a local trial court to exercise jurisdiction. Clearly, the application
of forum non coveniens is not called for.

The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the RTC
Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of
take jurisdiction over the enforcement case in order to invalidate the foreign judgment; yet, he
the foreign judgment on the principle of forum non conveniens. He claims that the trial court had
avers that the trial court should not exercise jurisdiction over the same case on the basis of forum
no jurisdiction, because the case involved partnership interest, and there was difficulty in
non conveniens. Not only do these defenses weaken each other, but they bolster the finding of the
ascertaining the applicable law in California. All the aspects of the transaction took place in a foreign
lower courts that he was merely maneuvering to avoid or delay payment of his obligation.
country, and respondent is not even Filipino.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED.
We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction is
Double costs against petitioner.
authorized by law, courts may nonetheless refuse to entertain a case for any of the following
practical reasons:
SO ORDERED.
“1) The belief that the matter can be better tried and decided elsewhere, either because the main
aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence
there;
CONFLICT – FORUM NON CONVENIENS
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.
CONFLICT – FORUM NON CONVENIENS
G.R. No. 154830 June 8, 2007
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG,
petitioners,
vs.
ANTONIO D. TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision1
of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution2 of
August 21, 2002 denying petitioners’ Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial
Court (RTC) of Makati City, a complaint for Sum of Money and Damages with Preliminary
Attachment against Pioneer International Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI),
Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig
(Klepzig).3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws
of Australia and is principally engaged in the ready-mix concrete and concrete aggregates business;
PPHI is the company established by PIL to own and hold the stocks of its operating company in the
Philippines; PCPI is the company established by PIL to undertake its business of ready-mix concrete,
concrete aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive
of the Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI;
Todaro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company
engaged in pre-mixed concrete and concrete aggregate production; he resigned from Betonval in
February 1996; in May 1996, PIL contacted Todaro and asked him if he was available to join them
in connection with their intention to establish a ready-mix concrete plant and other related
operations in the Philippines; Todaro informed PIL of his availability and interest to join them;
subsequently, PIL and Todaro came to an agreement wherein the former consented to engage the
services of the latter as a consultant for two to three months, after which, he would be employed
as the manager of PIL's ready-mix concrete operations should the company decide to invest in the
Philippines; subsequently, PIL started its operations in the Philippines; however, it refused to
comply with its undertaking to employ Todaro on a permanent basis.4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on
the grounds that the complaint states no cause of action, that the RTC has no jurisdiction over the
subject matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the
complaint should be dismissed on the basis of the doctrine of forum non conveniens.5
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners'
respective motions to dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus Motion7
for the reconsideration of the trial court's Order of January 4, 1999 but the trial court denied it via
its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October 31,
2000, the CA rendered its presently assailed Decision denying herein petitioners' Petition for
Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its Resolution dated
August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION
AGAINST PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY
BELIE THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE
RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH
LAW AND WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE
JURISDICTION OF THE TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY
SHOWS THAT IT IS AN ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND
HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL LABOR RELATIONS
COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM
NON CONVENIENS" AS A VALID GROUND FOR DISMISSING A COMPLAINT.10
In their first assigned error, petitioners contend that there was no perfected employment contract
between PIL and herein respondent. Petitioners assert that the annexes to respondent's complaint
show that PIL's offer was for respondent to be employed as the manager only of its pre-mixed
concrete operations and not as the company's managing director or CEO. Petitioners argue that
when respondent reiterated his intention to become the manager of PIL's overall business venture
in the Philippines, he, in effect did not accept PIL's offer of employment and instead made a counter-
offer, which, however, was not accepted by PIL. Petitioners also contend that under Article 1318 of
the Civil Code, one of the requisites for a contract to be perfected is the consent of the contracting
parties; that under Article 1319 of the same Code, consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract; that the offer
must be certain and the acceptance absolute; that a qualified acceptance constitutes a counter-
offer. Petitioners assert that since PIL did not accept respondent's counter-offer, there never was
any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of Articles
19 and 21 of the Civil Code is baseless because it was shown that there was no perfected
employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract,
petitioners contend that PCPI and PPHI, may not also be held liable because they are juridical
entities with personalities which are separate and distinct from PIL, even if they are subsidiary
corporations of the latter. Petitioners also aver that the annexes to respondent's complaint show
that the negotiations on the alleged employment contract took place between respondent and PIL
through its office in Hongkong. In other words, PCPI and PPHI were not privy to the negotiations
between PIL and respondent for the possible employment of the latter; and under Article 1311 of
the Civil Code, a contract is not binding upon and cannot be enforced against one who was not a
party to it even if he be aware of such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting
in his capacity as president of PCPI and PPHI and settled is the rule that an officer of a corporation
is not personally liable for acts done in the performance of his duties and within the bounds of the
authority conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held
liable, respondent still has no cause of action against Klepzig because PCPI and PPHI have
personalities which are separate and distinct from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims for
actual, moral and exemplary damages are solely premised on the alleged breach of employment
contract, the present case should be considered as falling within the exclusive jurisdiction of the
NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisidiction is authorized by law, courts may refuse
to entertain a case involving a foreign element where the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there and the plaintiff sought the forum merely to secure
procedural advantage or to annoy or harass the defendant. Petitioners also argue that one of the
factors in determining the most convenient forum for conflicts problem is the power of the court to
enforce its decision. Petitioners contend that since the majority of the defendants in the present
case are not residents of the Philippines, they are not subject to compulsory processes of the
Philippine court handling the case for purposes of requiring their attendance during trial. Even
assuming that they can be summoned, their appearance would entail excessive costs. Petitioners
further assert that there is no allegation in the complaint from which one can conclude that the
evidence to be presented during the trial can be better obtained in the Philippines. Moreover, the
events which led to the present controversy occurred outside the Philippines. Petitioners conclude
that based on the foregoing factual circumstances, the case should be dismissed under the principle
of forum non conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the
factual allegations in the complaint determine whether or not the complaint states a cause of
action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not based
on a contract of employment. Rather, it was based on petitioners' unwarranted breach of their
contractual obligation to employ respondent. This breach, respondent argues, gave rise to an action
for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the NLRC to
acquire jurisdiction, the claim for damages must have a reasonable causal connection with the
employer-employee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and petitioners as they
both agreed that the latter shall employ him to manage and operate their ready-mix concrete
operations in the Philippines. Even assuming that there was no perfected contract, respondent
contends that his complaint alleges an alternative cause of action which is based on the provisions
of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the question
of whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniens depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial judge, who is in the best position to determine whether special circumstances
require that the court desist from assuming jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission
by which a party violates a right of another. A cause of action exists if the following elements are
present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or
is created; (2) an obligation on the part of the named defendant to respect or not to violate such
right; and, (3) an act or omission on the part of such defendant violative of the right of the plaintiff
or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages.11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
The elementary test for failure to state a cause of action is whether the complaint alleges facts
which if true would justify the relief demanded. Stated otherwise, may the court render a valid
judgment upon the facts alleged therein? The inquiry is into the sufficiency, not the veracity of
the material allegations. If the allegations in the complaint furnish sufficient basis on which it can
be maintained, it should not be dismissed regardless of the defense that may be presented by
the defendants.13
Moreover, the complaint does not have to establish or allege facts proving the existence of a cause
of action at the outset; this will have to be done at the trial on the merits of the case. 14 To sustain a
motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does
not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or
uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of action, the
trial court correctly limited itself to examining the sufficiency of the allegations in the Complaint as
well as the annexes thereto. It is proscribed from inquiring into the truth of the allegations in the
Complaint or the authenticity of any of the documents referred or attached to the Complaint, since
these are deemed hypothetically admitted by the respondent.
This Court has reviewed respondent’s allegations in its Complaint. In a nutshell, respondent alleged
that herein petitioners reneged on their contractual obligation to employ him on a permanent basis.
This allegation is sufficient to constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between petitioners and respondent
is a matter which is not ripe for determination in the present case; rather, this issue must be taken
up during trial, considering that its resolution would necessarily entail an examination of the
veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as
defendants.
The Court does not agree with petitioners' contention that they were not privy to the negotiations
for respondent's possible employment. It is evident from paragraphs 24 to 28 of the Complaint16
that, on various occasions, Klepzig conducted negotiations with respondent regarding the latter's
possible employment. In fact, Annex "H"17 of the complaint shows that it was Klepzig who informed
respondent that his company was no longer interested in employing respondent. Hence, based on
the allegations in the Complaint and the annexes attached thereto, respondent has a cause of action
against herein petitioners.
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.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the
application of the doctrine of forum non conveniens are matters of defense, the merits of which
should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court
of Appeals are AFFIRMED.
Costs against petitioners.

As to the question of jurisdiction, this Court has consistently held that where no employer-employee
SO ORDERED.
relationship exists between the parties and no issue is involved which may be resolved by reference
to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional
Trial Court that has jurisdiction.18 In the present case, no employer-employee relationship exists
between petitioners and respondent. In fact, in his complaint, private respondent is not seeking any
relief under the Labor Code, but seeks payment of damages on account of petitioners' alleged
breach of their obligation under their agreement to employ him. It is settled that an action for
breach of contractual obligation is intrinsically a civil dispute.19 In the alternative, respondent seeks
redress on the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that
the present action is within the realm of civil law, and jurisdiction over it belongs to the regular
courts.20

With respect to the applicability of the principle of forum non conveniens in the present case, this
Court's ruling in Bank of America NT & SA v. Court of Appeals21 is instructive, to wit:

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, 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.

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. In
the case of Communication Materials and Design, Inc. vs. Court of Appeals, 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."

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, 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
CONFLICT – FORUM NON CONVENIENS
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure which seeks the reversal of the Decision1 and Resolution2 of the Court of Appeals in CA-
G.R. SP No. 67001 and the dismissal of the civil case filed by respondent against petitioner with the
trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing
under the laws of the State of Connecticut, United States of America, and respondent Stockton W.
Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired respondent as its
representative to negotiate the sale of services in several government projects in the Philippines for
an agreed remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a
service contract with the Republic of the Philippines on behalf of BMSI for the dredging of rivers
affected by the Mt. Pinatubo eruption and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations
Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and
Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of
employment contract.4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered
judgment ordering BMSI and RUST to pay respondent’s money claims.5 Upon appeal by BMSI, the
NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s complaint on the
ground of lack of jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a
Resolution dated 26 November 1997. The Resolution became final and executory on 09 November
1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before
the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil Case No. 1192-
BG, named as defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST,
the two corporations impleaded in the earlier labor case. The complaint essentially reiterated the
allegations in the labor case that BMSI verbally employed respondent to negotiate the sale of
services in government projects and that respondent was not paid the commissions due him from
the Pinatubo dredging project which he secured on behalf of BMSI. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and functioned as one company.
Answer,8
In its petitioner alleged that contrary to respondent’s claim, it was a foreign corporation
duly licensed to do business in the Philippines and denied entering into any arrangement with
respondent or paying the latter any sum of money. Petitioner also denied combining with BMSI and
RUST for the purpose of assuming the alleged obligation of the said companies. 9 Petitioner also
referred to the NLRC decision which disclosed that per the written agreement between respondent
and BMSI and RUST, denominated as "Special Sales Representative Agreement," the rights and
obligations of the parties shall be governed by the laws of the State of Connecticut. 10 Petitioner
sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non
conveniens and prayed for damages by way of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative
Defenses and for Summary Judgment12 seeking the dismissal of the complaint on grounds of forum
non conveniens and failure to state a cause of action. Respondent opposed the same. Pending the
resolution of the omnibus motion, the deposition of Walter Browning was taken before the
Philippine Consulate General in Chicago.13
In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The trial court
held that the factual allegations in the complaint, assuming the same to be admitted, were sufficient
for the trial court to render a valid judgment thereon. It also ruled that the principle of forum non
conveniens was inapplicable because the trial court could enforce judgment on petitioner, it being
a foreign corporation licensed to do business in the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion. Thus, it
filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari
and a writ of injunction to set aside the twin orders of the trial court dated 13 September 2000 and
31 July 2001 and to enjoin the trial court from conducting further proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the petition for
certiorari for lack of merit. It also denied petitioner’s motion for reconsideration in the assailed
Resolution issued on 10 March 2004.22
The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner’s omnibus motion, it found the evidence presented by petitioner, that is, the deposition
of Walter Browning, insufficient for purposes of determining whether the complaint failed to state
a cause of action. The appellate court also stated that it could not rule one way or the other on the
issue of whether the corporations, including petitioner, named as defendants in the case had indeed
merged together based solely on the evidence presented by respondent. Thus, it held that the issue
should be threshed out during trial.23 Moreover, the appellate court deferred to the discretion of
the trial court when the latter decided not to desist from assuming jurisdiction on the ground of the
inapplicability of the principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT
FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT ON
THE GROUND OF FORUM NON CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law
Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty.
Rogelio Karagdag, had severed relations with the law firm even before the filing of the instant
petition and that it could no longer find the whereabouts of Atty. Karagdag or of respondent despite
diligent efforts. In a Resolution25 dated 20 November 2006, the Court resolved to dispense with the
filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI included a valid
choice of law clause, that is, that the contract shall be governed by the laws of the State of
Connecticut. It also mentions the presence of foreign elements in the dispute – namely, the parties
and witnesses involved are American corporations and citizens and the evidence to be presented is
located outside the Philippines – that renders our local courts inconvenient forums. Petitioner
theorizes that the foreign elements of the dispute necessitate the immediate application of the
doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in judicial
resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and
enforcement of judgments. Thus, in the instances27 where the Court held that the local judicial
machinery was adequate to resolve controversies with a foreign element, the following requisites
had to be proved: (1) that the Philippine Court is one to which the parties may conveniently resort;
(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 the power to enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine
court and where the court has jurisdiction over the subject matter, the parties and the res, it may
or can proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties
point to a foreign forum. This is an exercise of sovereign prerogative of the country where the case
is filed.29
Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the
law30 and by the material allegations in the complaint, irrespective of whether or not the plaintiff is
entitled to recover all or some of the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an
action for damages arising from an alleged breach of contract. Undoubtedly, the nature of the action
and the amount of damages prayed are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent
(as party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person
of petitioner (as party defendant) was acquired by its voluntary appearance in court.32
That the subject contract included a stipulation that the same shall be governed by the laws of the
State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for
that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two
distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
choice of law asks the further question whether the application of a substantive law which will
determine the merits of the case is fair to both parties. 33 The choice of law stipulation will become
relevant only when the substantive issues of the instant case develop, that is, after hearing on the
merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws 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.34 Petitioner’s averments of the foreign
elements in the instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case
No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non conveniens
requires a factual determination; hence, it is more properly considered as a matter of defense.
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.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion
that it can assume jurisdiction over the dispute notwithstanding its foreign elements. In the same
manner, the Court defers to the sound discretion of the lower courts because their findings are
binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action
against petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the
pleading.36 As a general rule, the elementary test for failure to state a cause of action is whether
the complaint alleges facts which if true would justify the relief demanded.37
The complaint alleged that petitioner had combined with BMSI and RUST to function as one
company. Petitioner contends that the deposition of Walter Browning rebutted this allegation. On
this score, the resolution of the Court of Appeals is instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well as other documents
produced in the hearing shows that these evidence aliunde are not quite sufficient for us to mete
a ruling that the complaint fails to state a cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that
Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant
Rust International in the Makar Port Project in General Santos City, after Rust International ceased
to exist after being absorbed by REC. Other documents already submitted in evidence are likewise
meager to preponderantly conclude that Raytheon International, Inc., Rust International[,] Inc. and
Brand Marine Service, Inc. have combined into one company, so much so that Raytheon
International, Inc., the surviving company (if at all) may be held liable for the obligation of BMSI to
respondent Rouzie for unpaid commissions. Neither these documents clearly speak otherwise. 38
As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST
merged together requires the presentation of further evidence, which only a full-blown trial on the
merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
CONFLICT – FORUM NON CONVENIENS
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.
CONFLICT – ASSUME JURIS AND APPLY FOREIGN LAW presented for probate on June 8, 1929, to the clerk of Randolph Country, State of West Virginia, in
vacation, and was duly proven by the oaths of Dana Wamsley and Joseph L. MAdden, the subscribing
G.R. No. L-32636 March 17, 1930 witnesses thereto , and ordered to be recorded and filed. It was shown by another document that,
in vacation, on June 8, 1929, the clerk of court of Randolph Country, West Virginia, appointed Claude
W. Maxwell as administrator, cum testamento annexo, of the estate of Edward Randolph Hix,
In the matter Estate of Edward Randolph Hix, deceased.
deceased. In this connection, it is to be noted that the application for the probate of the will in the
A.W. FLUEMER, petitioner-appellant,
Philippines was filed on February 20, 1929, while the proceedings in West Virginia appear to have
vs.
been initiated on June 8, 1929. These facts are strongly indicative of an intention to make the
ANNIE COUSHING HIX, oppositor-appellee.
Philippines the principal administration and West Virginia the ancillary administration. However this
may be, no attempt has been made to comply with Civil Procedure, for no hearing on the question
MALCOLM, J.: of the allowance of a will said to have been proved and allowed in West Virginia has been requested.
There is no showing that the deceased left any property at any place other than the Philippine
The special administrator of the estate of Edward Randolph Hix appeals from a decision of Judge of Islands and no contention that he left any in West Virginia.
First Instance Tuason denying the probate of the document alleged to by the last will and testament
of the deceased. Appellee is not authorized to carry on this appeal. We think, however, that the Reference has been made by the parties to a divorce purported to have been awarded Edward
appellant, who appears to have been the moving party in these proceedings, was a "person Randolph Hix from Annie Cousins Hix on October 8, 1925, in the State of West specific
interested in the allowance or disallowance of a will by a Court of First Instance," and so should be pronouncements on the validity or validity of this alleged divorce.
permitted to appeal to the Supreme Court from the disallowance of the will (Code of Civil Procedure,
sec. 781, as amended; Villanueva vs. De Leon [1925], 42 Phil., 780).
For all of the foregoing, the judgment appealed from will be affirmed, with the costs of this instance
against the appellant.
It is theory of the petitioner that the alleged will was executed in Elkins, West Virginia, on November
3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of West Verginia Code,
Annotated, by Hogg, Charles E., vol. 2, 1914, p. 1690, and as certified to by the Director of the
National Library. But this was far from a compliance with the law. The laws of a foreign jurisdiction
do not prove themselves in our courts. the courts of the Philippine Islands are not authorized to
take American Union. Such laws must be proved as facts. (In re Estate of Johnson [1918], 39 Phil.,
156.) Here the requirements of the law were not met. There was no was printed or published under
the authority of the State of West Virginia, as provided in section 300 of the Code of Civil Procedure.
Nor was the extract from the law attested by the certificate of the officer having charge of the
original, under the sale of the State of West Virginia, as provided in section 301 of the Code of Civil
Procedure. No evidence was introduced to show that the extract from the laws of West Virginia was
in force at the time the alleged will was executed.

In addition, the due execution of the will was not established. The only evidence on this point is to
be found in the testimony of the petitioner. Aside from this, there was nothing to indicate that the
will was acknowledged by the testator in the presence of two competent witnesses, of that these
witnesses subscribed the will in the presence of the testator and of each other as the law of West
Virginia seems to require. On the supposition that the witnesses to the will reside without the
Philippine Islands, it would then the duty of the petitioner to prove execution by some other means
(Code of Civil Procedure, sec. 633.)

It was also necessary for the petitioner to prove that the testator had his domicile in West Virginia
and not establish this fact consisted of the recitals in the CATHY will and the testimony of the
petitioner. Also in beginning administration proceedings orginally in the Philippine Islands, the
petitioner violated his own theory by attempting to have the principal administration in the
Philippine Islands.

While the appeal pending submission in this court, the attorney for the appellant presented an
unverified petition asking the court to accept as part of the evidence the documents attached to
the petition. One of these documents discloses that a paper writing purporting to be the was
CONFLICT – ASSUME JURIS AND APPLY FOREIGN LAW
G.R. No. L-12105 January 30, 1960
TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee,
vs.
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, oppositors-
appellants.
LABRADOR, J.:
Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose, presiding,
dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and Edward Bohanan to
the project of partition submitted by the executor and approving the said project.
On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted
to probate a last will and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila.
In the said order, the court made the following findings:
According to the evidence of the opponents the testator was born in Nebraska and therefore a
citizen of that state, or at least a citizen of California where some of his properties are located.
This contention in untenable. Notwithstanding the long residence of the decedent in the
Philippines, his stay here was merely temporary, and he continued and remained to be a citizen
of the United States and of the state of his pertinent residence to spend the rest of his days in
that state. His permanent residence or domicile in the United States depended upon his personal
intent or desire, and he selected Nevada as his homicide and therefore at the time of his death,
he was a citizen of that state. Nobody can choose his domicile or permanent residence for him.
That is his exclusive personal right.
Wherefore, the court finds that the testator C. O. Bohanan was at the time of his death a citizen
of the United States and of the State of Nevada and declares that his will and testament, Exhibit
A, is fully in accordance with the laws of the state of Nevada and admits the same to probate.
Accordingly, the Philippine Trust Company, named as the executor of the will, is hereby appointed
to such executor and upon the filing of a bond in the sum of P10,000.00, let letters testamentary
be issued and after taking the prescribed oath, it may enter upon the execution and performance
of its trust. (pp. 26-27, R.O.A.).
It does not appear that the order granting probate was ever questions on appeal. The executor filed
a project of partition dated January 24, 1956, making, in accordance with the provisions of the will,
the following adjudications: (1) one-half of the residuary estate, to the Farmers and Merchants
National Bank of Los Angeles, California, U.S.A. in trust only for the benefit of testator's grandson
Edward George Bohanan, which consists of several mining companies; (2) the other half of the
residuary estate to the testator's brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share
and share alike. This consist in the same amount of cash and of shares of mining stock similar to
those given to testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert
Bohana, and his daughter, Mary Lydia Bohanan, to be paid in three yearly installments; (4) legacies
to Clara Daen, in the amount of P10,000.00; Katherine Woodward, P2,000; Beulah Fox, P4,000; and
Elizabeth Hastings, P2,000;
It will be seen from the above that out of the total estate (after deducting administration expenses)
of P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of all shares of stock
of several mining companies and to his brother and sister the same amount. To his children he gave
a legacy of only P6,000 each, or a total of P12,000.
The wife Magadalena C. Bohanan and her two children question the validity of the testamentary
provisions disposing of the estate in the manner above indicated, claiming that they have been
deprived of the legitimate that the laws of the form concede to them.
The first question refers to the share that the wife of the testator, Magdalena C. Bohanan, should
be entitled to received. The will has not given her any share in the estate left by the testator. It is
argued that it was error for the trial court to have recognized the Reno divorce secured by the
testator from his Filipino wife Magdalena C. Bohanan, and that said divorce should be declared a
nullity in this jurisdiction, citing the case of Querubin vs. Querubin, 87 Phil., 124, 47 Off. Gaz., (Sup,
12) 315, Cousins Hiz vs. Fluemer, 55 Phil., 852, Ramirez vs. Gmur, 42 Phil., 855 and Gorayeb vs.
Hashim, 50 Phil., 22. The court below refused to recognize the claim of the widow on the ground
that the laws of Nevada, of which the deceased was a citizen, allow him to dispose of all of his
properties without requiring him to leave any portion of his estate to his wife. Section 9905 of
Nevada Compiled Laws of 1925 provides:
Every person over the age of eighteen years, of sound mind, may, by last will, dispose of all his or
her estate, real and personal, the same being chargeable with the payment of the testator's
debts.
Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the
testator's estafa had already been passed upon adversely against her in an order dated June 19,
1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become final, as Magdalena
C. Bohanan does not appear to have appealed therefrom to question its validity. On December 16,
1953, the said former wife filed a motion to withdraw the sum of P20,000 from the funds of the
estate, chargeable against her share in the conjugal property, (See pp. 294-297, Vol. I, Record, Court
of First Instance), and the court in its said error found that there exists no community property
owned by the decedent and his former wife at the time the decree of divorce was issued. As already
and Magdalena C. Bohanan may no longer question the fact contained therein, i.e. that there was
no community property acquired by the testator and Magdalena C. Bohanan during their
converture.
Moreover, the court below had found that the testator and Magdalena C. Bohanan were married
on January 30, 1909, and that divorce was granted to him on May 20, 1922; that sometime in 1925,
Magdalena C. Bohanan married Carl Aaron and this marriage was subsisting at the time of the death
of the testator. Since no right to share in the inheritance in favor of a divorced wife exists in the
State of Nevada and since the court below had already found that there was no conjugal property
between the testator and Magdalena C. Bohanan, the latter can now have no longer claim to pay
portion of the estate left by the testator.
The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had
received legacies in the amount of P6,000 each only, and, therefore, have not been given their
shares in the estate which, in accordance with the laws of the forum, should be two-thirds of the
estate left by the testator. Is the failure old the testator to give his children two-thirds of the estate
left by him at the time of his death, in accordance with the laws of the forum valid?
The old Civil Code, which is applicable to this case because the testator died in 1944, expressly
provides that successional rights to personal property are to be earned by the national law of the
person whose succession is in question. Says the law on this point:

Nevertheless, legal and testamentary successions, in respect to the order of succession as well as
to the extent of the successional rights and the intrinsic validity of their provisions, shall be
regulated by the national law of the person whose succession is in question, whatever may be
the nature of the property and the country in which it is found. (par. 2, Art. 10, old Civil Code,
which is the same as par. 2 Art. 16, new Civil Code.)

In the proceedings for the probate of the will, it was found out and it was decided that the testator
was a citizen of the State of Nevada because he had selected this as his domicile and his permanent
residence. (See Decision dated April 24, 1950, supra). So the question at issue is whether the
estementary dispositions, especially hose for the children which are short of the legitime given them
by the Civil Code of the Philippines, are valid. It is not disputed that the laws of Nevada allow a
testator to dispose of all his properties by will (Sec. 9905, Complied Nevada Laws of 1925, supra). It
does not appear that at time of the hearing of the project of partition, the above-quoted provision
was introduced in evidence, as it was the executor's duly to do. The law of Nevada, being a foreign
law can only be proved in our courts in the form and manner provided for by our Rules, which are
as follows:

SEC. 41. Proof of public or official record. — An official record or an entry therein, when admissible
for any purpose, may be evidenced by an official publication thereof or by a copy tested by the
officer having the legal custody of he 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. . . . (Rule 123).

We have, however, consulted the records of the case in the court below and we have found that
during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of
P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws. was
introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See pp. 77-79, VOL. II, and
t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws presented by the counsel for the
executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23,
1950 before Judge Rafael Amparo (se Records, Court of First Instance, Vol. 1).

In addition, the other appellants, children of the testator, do not dispute the above-quoted
provision of the laws of the State of Nevada. Under all the above circumstances, we are constrained
to hold that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of
1925, can be taken judicial notice of by us, without proof of such law having been offered at the
hearing of the project of partition.

As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are
to be governed by the national law of the testator, and as it has been decided and it is not disputed
that the national law of the testator is that of the State of Nevada, already indicated above, which
allows a testator to dispose of all his property according to his will, as in the case at bar, the order
of the court approving the project of partition made in accordance with the testamentary
provisions, must be, as it is hereby affirmed, with costs against appellants.
CONFLICT – CHOICE OF LAW – CHARACTERIZATION – RENVOI
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, SOBRANG DAMING PARTIES KAYA BINURA KO NA
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).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their own
behalf and on behalf of 728 other overseas contract workers (OCWs) instituted a class suit by filing
an "Amended Complaint" with the Philippine Overseas Employment Administration (POEA) for
money claims arising from their recruitment by AIBC and employment by BRII (POEA Case No. L-84-
06-555). The claimants were represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction;
while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and deploy
Filipino workers for overseas employment on behalf of its foreign principals.
The amended complaint principally sought the payment of the unexpired portion of the
employment contracts, which was terminated prematurely, and secondarily, the payment of the
interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid benefits; area
wage and salary differential pay; fringe benefits; refund of SSS and premium not remitted to the
SSS; refund of withholding tax not remitted to the BIR; penalties for committing prohibited
practices; as well as the suspension of the license of AIBC and the accreditation of BRII (G.R. No.
104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was given, together
with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the claimants to file a
bill of particulars within ten days from receipt of the order and the movants to file their answers
within ten days from receipt of the bill of particulars. The POEA Administrator also scheduled a pre-
trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23, 1984,
AIBC filed a "Motion to Strike Out of the Records", the "Complaint" and the "Compliance and
Manifestation." On July 25, 1984, the claimants filed their "Rejoinder and Comments," averring,
among other matters, the failure of AIBC and BRII to file their answers and to attend the pre-trial
conference on July 25, 1984. The claimants alleged that AIBC and BRII had waived their right to
present evidence and had defaulted by failing to file their answers and to attend the pre-trial
conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the Records" filed
by AIBC but required the claimants to correct the deficiencies in the complaint pointed out in the
order.
On October 10, 1984, claimants asked for time within which to comply with the Order of October 2,
1984 and filed an "Urgent Manifestation," praying that the POEA Administrator direct the parties to
submit simultaneously their position papers, after which the case should be deemed submitted for
decision. On the same day, Atty. Florante de Castro filed another complaint for the same money
claims and benefits in behalf of several claimants, some of whom were also claimants in POEA Case
No. L-84-06-555 (POEA Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2, 1984 and
an "Urgent Manifestation," praying that the POEA direct the parties to submit simultaneously their
position papers after which the case would be deemed submitted for decision. On the same day,
AIBC asked for time to file its comment on the "Compliance" and "Urgent Manifestation" of
claimants. On November 6, 1984, it filed a second motion for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its motion for extension of time
was granted.
On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked
that AIBC and BRII be declared in default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs, that
claimants should be ordered to amend their complaint.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their
answers within ten days from receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said order of the
POEA Administrator. Claimants opposed the appeal, claiming that it was dilatory and praying that
AIBC and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position Paper" dated
March 24, 1985, adding new demands: namely, the payment of overtime pay, extra night work pay,
annual leave differential pay, leave indemnity pay, retirement and savings benefits and their share
of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA Administrator
directed AIBC to file its answer to the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the same day, the
POEA issued an order directing AIBC and BRII to file their answers to the "Amended Complaint,"
otherwise, they would be deemed to have waived their right to present evidence and the case
would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and Motion for
Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to file their
answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for the
issuance of a writ of injunction. On September 19, 1985, NLRC enjoined the POEA Administrator
from hearing the labor cases and suspended the period for the filing of the answers of AIBC and
BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional claimants in
the case and to investigate alleged wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-85-10-
777) against AIBC and BRII with the POEA, demanding monetary claims similar to those subject of
POEA Case No. L-84-06-555. In the same month, Solomon Reyes also filed his own complaint (POEA
Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the substitution
of the original counsel of record and the cancellation of the special powers of attorney given the
original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce attorney's
lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-460) in
behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and
September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA Administrator, it is not amiss to
mention that two cases were filed in the Supreme Court by the claimants, namely — G.R. No. 72132
on September 26, 1985 and Administrative Case No. 2858 on March 18, 1986. On May 13, 1987, the
Supreme Court issued a resolution in Administrative Case No. 2858 directing the POEA
Administrator to resolve the issues raised in the motions and oppositions filed in POEA Cases Nos.
L-84-06-555 and L-86-05-460 and to decide the labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order dated
September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC to answer the
amended complaint in POEA Case No. L-84-06-555. In a resolution dated November 9, 1987, we
dismissed the petition by informing AIBC that all its technical objections may properly be resolved
in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on September 22, 1988 by
claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator and several NLRC
Commissioners. The Ombudsman merely referred the complaint to the Secretary of Labor and
Employment with a request for the early disposition of POEA Case No. L-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 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
The facts as found by the NLRC are as follows: 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.
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 & xxx xxx xxx
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 10. VACATION/SICK LEAVE BENEFITS
Emirates and Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia.
a) After one (1) year of continuous service and/or satisfactory completion of contract, employee
Having been officially processed as overseas contract workers by the Philippine Government, all shall be entitled to 12-days vacation leave with pay. This shall be computed at the basic wage
the individual complainants signed standard overseas employment contracts (Records, Vols. 25- rate. Fractions of a year's service will be computed on a pro-rata basis.
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 b) Sick leave of 15-days shall be granted to the employee for every year of service for non-work
contracts invariably contained the following relevant terms and conditions. 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.
PART B —
11. BONUS
(1) Employment Position Classification :—————————
(Code) :————————— A bonus of 20% (for offshore work) of gross income will be accrued and payable only upon
satisfactory completion of this contract.
(2) Company Employment Status :—————————
(3) Date of Employment to Commence on :————————— 12. OFFDAY PAY
(4) Basic Working Hours Per Week :—————————
(5) Basic Working Hours Per Month :—————————
The seventh day of the week shall be observed as a day of rest with 8 hours regular pay. If work
(6) Basic Hourly Rate :—————————
is performed on this day, all hours work shall be paid at the premium rate. However, this offday
(7) Overtime Rate Per Hour :—————————
pay provision is applicable only when the laws of the Host Country require payments for rest day.
(8) Projected Period of Service
(Subject to C(1) of this [sic]) :—————————
Months and/or In the State of Bahrain, where some of the individual complainants were deployed, His Majesty
Job Completion 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
xxx xxx xxx
claims of the complainants-appellants are as follows (italics supplied only for emphasis):

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.
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.

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
. . . 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.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to a speedy disposition of their
cases as guaranteed by Section 16, Article III of the 1987 Constitution. The POEA Administrator
allowed private respondents to file their answers in two years (on June 19, 1987) after the filing
of the original complaint (on April 2, 1985) and NLRC, in total disregard of its own rules, affirmed
the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in default and
should have rendered summary judgment on the basis of the pleadings and evidence submitted
by claimants;
(3) the NLRC and POEA Administrator erred in not holding that the labor cases filed by AIBC and
BRII cannot be considered a class suit;
 (4) that the prescriptive period for the filing of the claims is ten years; and
(5) that NLRC and the POEA Administrator should have dismissed POEA Case No. L-86-05-460, the
case filed by Atty. Florante de Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of the labor cases, considering
the great difficulty of getting all the records of the more than 1,500 claimants, the piece-meal
filing of the complaints and the addition of hundreds of new claimants by petitioners;
(2) that considering the number of complaints and claimants, it was impossible to prepare the
answers within the ten-day period provided in the NLRC Rules, that when the motion to declare
AIBC in default was filed on July 19, 1987, said party had already filed its answer, and that
considering the staggering amount of the claims (more than US$50,000,000.00) and the
complicated issues raised by the parties, the ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that there was no common or general
interest in the subject matter of the controversy — which was the applicability of the Amiri
Decree No. 23. Likewise, the nature of the claims varied, some being based on salaries pertaining
to the unexpired portion of the contracts while others being for pure money claims. Each claimant
demanded separate claims peculiar only to himself and depending upon the particular
circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that prescribed by Article 291 of the Labor
Code of the Philippines (three years) and not the one prescribed by Article 1144 of the Civil Code
of the Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA Case No. L-86-05-460 should be
dismissed, this being a private quarrel between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint manifestations
and motions of AIBC and BRII dated September 2 and 11, 1992, claiming that all the claimants who
entered into the compromise agreements subject of said manifestations and motions were his
clients and that Atty. Florante M. de Castro had no right to represent them in said agreements. He
also claimed that the claimants were paid less than the award given them by NLRC; that Atty. De
Castro collected additional attorney's fees on top of the 25% which he was entitled to receive; and
that the consent of the claimants to the compromise agreements and quitclaims were procured by
fraud (G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated November 23, 1992, the Court
denied the motion to strike out the Joint Manifestations and Motions dated September 2 and 11,
1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's Lien,"
alleging that the claimants who entered into compromise agreements with AIBC and BRII with the
assistance of Atty. De Castro, had all signed a retainer agreement with his law firm (G.R. No. 104776,
Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De Castro and
Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and 16 of the Code of
Professional Responsibility. The said lawyers allegedly misled this Court, by making it appear that
the claimants who entered into the compromise agreements were represented by Atty. De Castro,
when in fact they were represented by Atty. Del Mundo (G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro for unethical
practices and moved for the voiding of the quitclaims submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the grounds that NLRC
gravely abused its discretion when it: (1) applied the three-year prescriptive period under the Labor
Code of the Philippines; and (2) it denied the claimant's formula based on an average overtime pay
of three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the negotiation for an
amicable settlement of their money claims in Bahrain as shown in the Memorandum dated April 16,
1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the prescriptive
period in the Labor Code of the Philippines, a special law, prevails over that provided in the Civil
Code of the Philippines, a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of computing the
overtime pay, BRII and AIBC claimed that they were not bound by what appeared therein, because
such memorandum was proposed by a subordinate Bahrain official and there was no showing that
it was approved by the Bahrain Minister of Labor. Likewise, they claimed that the averaging method
was discussed in the course of the negotiation for the amicable settlement of the dispute and any
offer made by a party therein could not be used as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion when it: (1)
enforced the provisions of the Amiri Decree No. 23 of 1976 and not the terms of the employment
contracts; (2) granted claims for holiday, overtime and leave indemnity pay and other benefits, on
evidence admitted in contravention of petitioner's constitutional right to due process; and (3)
ordered the POEA Administrator to hold new hearings for the 683 claimants whose claims had been
dismissed for lack of proof by the POEA Administrator or NLRC itself. Lastly, they allege that
assuming that the Amiri Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply
the one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed as to the time that
should be embraced within the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article 1144 of the Civil
Code of the Philippines. NLRC believed otherwise, fixing the prescriptive period at three years as
provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds, insisted that
NLRC erred in ruling that the prescriptive period applicable to the claims was three years, instead
of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period was one year as
prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of NLRC that Article 291
of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to those arising from the
employer's violation of the employee's right as provided by the Labor Code.
In the instant case, what the respondents violated are not the rights of the workers as provided
by the Labor Code, but the provisions of the Amiri Decree No. 23 issued in Bahrain, which ipso
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 of Court, Rule 138, Sec. 37). The statement of the claim for the charging lien of Atty. Del Mundo
that each claimant is only interested in collecting his own claims. A claimants has no concern in should have been filed with the administrative agency that rendered and executed the judgment.
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 Contempt of Court
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
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty. Katz Tierra
Relations, 101 Phil. 590 [1957]). For this matter, the claimants who worked in Bahrain can not be
for violation of the Code of Professional Responsibility should be filed in a separate and appropriate
allowed to sue in a class suit in a judicial proceeding. The most that can be accorded to them under
proceeding.
the Rules of Court is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule
3, Sec. 6).
G.R. No. 104911-14
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. 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
In an improperly instituted class suit, there would be no problem if the decision secured is favorable
and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).
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. Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16, 1983, which
in pertinent part states:
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, After the perusal of the memorandum of the Vice President and the Area Manager, Middle East,
falsification, duplicity and other unprofessional activities" and his appearances as counsel for some of Brown & Root Co. and the Summary of the compensation offered by the Company to the
of the claimants as illegal (Rollo, pp. 38-40). 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
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the practice
complaint filed by the employees on 14/2/83 where they have claimed as hereinabove stated,
of some parties of filing multiple petitions and complaints involving the same issues, with the result
sample of the Service Contract executed between one of the employees and the company
that the courts or agencies have to resolve the same issues. Said Rule, however, applies only to
through its agent in (sic) Philippines, Asia International Builders Corporation where it has been
petitions filed with the Supreme Court and the Court of Appeals. It is entitled "Additional
provided for 48 hours of work per week and an annual leave of 12 days and an overtime wage of
Requirements For Petitions Filed with the Supreme Court and the Court of Appeals To Prevent
1 & 1/4 of the normal hourly wage.
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. xxx xxx xxx

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.
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 . . . .

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

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
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.
CONFLICT – CHOICE OF LAW – CHARACTERIZATION – RENVOI
G.R. No. 172342 July 13, 2009
LWV CONSTRUCTION CORPORATION, Petitioner,
vs.
MARCELO B. DUPO, Respondent.
DECISION
QUISUMBING, J.:
Petitioner LWV Construction Corporation appeals the Decision 1 dated December 6, 2005 of the
Court of Appeals in CA-G.R. SP No. 76843 and its Resolution2 dated April 12, 2006, denying the
motion for reconsideration. The Court of Appeals had ruled that under Article 87 of the Saudi Labor
and Workmen Law (Saudi Labor Law), respondent Marcelo Dupo is entitled to a service award or
longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent as Civil
Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-Mojil
Group/Establishment (MMG). On February 26, 1992, respondent signed his first overseas
employment contract, renewable after one year. It was renewed five times on the following dates:
May 10, 1993, November 16, 1994, January 22, 1996, April 14, 1997, and March 26, 1998. All were
fixed-period contracts for one year. The sixth and last contract stated that respondent’s
employment starts upon reporting to work and ends when he leaves the work site. Respondent left
Saudi Arabia on April 30, 1999 and arrived in the Philippines on May 1, 1999.
On May 28, 1999, respondent informed MMG, through the petitioner, that he needs to extend his
vacation because his son was hospitalized. He also sought a promotion with salary adjustment. 3 In
reply, MMG informed respondent that his promotion is subject to management’s review; that his
services are still needed; that he was issued a plane ticket for his return flight to Saudi Arabia on
May 31, 1999; and that his decision regarding his employment must be made within seven days,
otherwise, MMG "will be compelled to cancel [his] slot."4
On July 6, 1999, respondent resigned. In his letter to MMG, he also stated:
xxxx
I am aware that I still have to do a final settlement with the company and hope that during my more
than seven (7) [years] services, as the Saudi Law stated, I am entitled for a long service award. 5
(Emphasis supplied.)
xxxx
According to respondent, when he followed up his claim for long service award on December 7,
2000, petitioner informed him that MMG did not respond.6
On December 11, 2000, respondent filed a complaint 7 for payment of service award against
petitioner before the National Labor Relations Commission (NLRC), Regional Arbitration Branch,
Cordillera Administrative Region, Baguio City. In support of his claim, respondent averred in his
position paper that:
xxxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5) years in a company
within the jurisdiction of Saudi Arabia, is entitled to the so-called long service award which is known
to others as longevity pay of at least one half month pay for every year of service. In excess of five
years an employee is entitled to one month pay for every year of service. In both cases inclusive of
all benefits and allowances.
This benefit was offered to complainant before he went on vacation, hence, this was engrained in
his mind. He reconstructed the computation of his long service award or longevity pay and he
arrived at the following computation exactly the same with the amount he was previously offered
[which is US$12,640.33].8 (Emphasis supplied.)
xxxx
Respondent said that he did not grab the offer for he intended to return after his vacation.
For its part, petitioner offered payment and prescription as defenses. Petitioner maintained that
MMG "pays its workers their Service Award or Severance Pay every conclusion of their Labor
Contracts pursuant to Article 87 of the [Saudi Labor Law]." Under Article 87, "payment of the award
is at the end or termination of the Labor Contract concluded for a specific period." Based on the
payroll,9 respondent was already paid his service award or severance pay for his latest (sixth)
employment contract.
Petitioner added that under Article 1310 of the Saudi Labor Law, the action to enforce payment of
the service award must be filed within one year from the termination of a labor contract for a
specific period. Respondent’s six contracts ended when he left Saudi Arabia on the following dates:
April 15, 1993, June 8, 1994, December 18, 1995, March 21, 1997, March 16, 1998 and April 30,
1999. Petitioner concluded that the one-year prescriptive period had lapsed because respondent
filed his complaint on December 11, 2000 or one year and seven months after his sixth contract
ended.11
In his June 18, 2001 Decision,12 the Labor Arbiter ordered petitioner to pay respondent longevity
pay of US$12,640.33 or ₱648,562.69 and attorney’s fees of ₱64,856.27 or a total of ₱713,418.96.13
The Labor Arbiter ruled that respondent’s seven-year employment with MMG had sufficiently
oriented him on the benefits given to workers; that petitioner was unable to convincingly refute
respondent’s claim that MMG offered him longevity pay before he went on vacation on May 1,
1999; and that respondent’s claim was not barred by prescription since his claim on July 6, 1999,
made a month after his cause of action accrued, interrupted the prescriptive period under the Saudi
Labor Law until his claim was categorically denied.
Petitioner appealed. However, the NLRC dismissed the appeal and affirmed the Labor Arbiter’s
decision.14 The NLRC ruled that respondent is entitled to longevity pay which is different from
severance pay.
Aggrieved, petitioner brought the case to the Court of Appeals through a petition for certiorari
under Rule 65 of the Rules of Court. The Court of Appeals denied the petition and affirmed the NLRC.
The Court of Appeals ruled that service award is the same as longevity pay, and that the severance
pay received by respondent cannot be equated with service award. The dispositive portion of the
Court of Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack or in (sic) excess of jurisdiction
on the part of public respondent NLRC, the petition is denied. The NLRC decision dated November
29, 2002 as well as and (sic) its January 31, 2003 Resolution are hereby AFFIRMED in toto.
SO ORDERED.15
After its motion for reconsideration was denied, petitioner filed the instant petition raising the
following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING NO GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF PUBLIC
RESPONDENT NATIONAL LABOR RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE SERVICE
AWARD OF THE RESPONDENT [HAS] NOT PRESCRIBED WHEN HIS COMPLAINT WAS FILED ON
DECEMBER 11, 2000.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING IN THE CASE AT BAR
[ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE NO. 7 OF
THE SAUDI LABOR AND WORKMEN LAW TO SUPPORT ITS FINDING THAT THE BASIS OF THE
SERVICE AWARD IS LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN EMPLOYEE. 16
Essentially, the issue is whether the Court of Appeals erred in ruling that respondent is entitled to a
service award or longevity pay of US$12,640.33 under the provisions of the Saudi Labor Law. Related
to this issue are petitioner’s defenses of payment and prescription.
Petitioner points out that the Labor Arbiter awarded longevity pay although the Saudi Labor Law
grants no such benefit, and the NLRC confused longevity pay and service award. Petitioner
maintains that the benefit granted by Article 87 of the Saudi Labor Law is service award which was
already paid by MMG each time respondent’s contract ended.
Petitioner insists that prescription barred respondent’s claim for service award as the complaint was
filed one year and seven months after the sixth contract ended. Petitioner alleges that the Court of
Appeals erred in ruling that respondent’s July 6, 1999 claim interrupted the running of the
prescriptive period. Such ruling is contrary to Article 13 of the Saudi Labor Law which provides that
no case or claim relating to any of the rights provided for under said law shall be heard after the
lapse of 12 months from the date of the termination of the contract.
Respondent counters that he is entitled to longevity pay under the provisions of the Saudi Labor
Law and quotes extensively the decision of the Court of Appeals. He points out that petitioner has
not refuted the Labor Arbiter’s finding that MMG offered him longevity pay of US$12,640.33 before
his one-month vacation in the Philippines in 1999. Thus, he "submits that such offer indeed exists"
as he sees no reason for MMG to offer the benefit if no law grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals. We find that
respondent’s service award under Article 87 of the Saudi Labor Law has already been paid. Our
computation will show that the severance pay received by respondent was his service award.
Article 87 clearly grants a service award. It reads:
Article 87
Where the term of a labor contract concluded for a specified period comes to an end or where the
employer cancels a contract of unspecified period, the employer shall pay to the workman an award
for the period of his service to be computed on the basis of half a month’s pay for each of the first
five years and one month’s pay for each of the subsequent years. The last rate of pay shall be taken
as basis for the computation of the award. For fractions of a year, the workman shall be entitled to
an award which is proportionate to his service period during that year. Furthermore, the workman
shall be entitled to the service award provided for at the beginning of this article in the following
cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his control.17
(Emphasis supplied.)
Respondent, however, has called the benefit other names such as long service award and longevity
pay. On the other hand, petitioner claimed that the service award is the same as severance pay.
Notably, the Labor Arbiter was unable to specify any law to support his award of longevity pay.18 He
anchored the award on his finding that respondent’s allegations were more credible because his
seven-year employment at MMG had sufficiently oriented him on the benefits given to workers. To
the NLRC, respondent is entitled to service award or longevity pay under Article 87 and that
longevity pay is different from severance pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree with
respondent that service award is the same as longevity pay, and wrong to agree with petitioner that
service award is the same as severance pay? And why would it be correct to say that service award
is severance pay, and wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented. Respondent’s position paper
mentioned how his long service award or longevity pay is computed: half-month’s pay per year of
service and one-month’s pay per year after five years of service. Article 87 has the same formula to
compute the service award.
The payroll submitted by petitioner showed that respondent received severance pay of SR2,786 for
his sixth employment contract covering the period April 21, 1998 to April 29, 1999.19 The
computation below shows that respondent’s severance pay of SR2,786 was his service award under
Article 87.
Service Award = ½ (SR5,438)20 + (9 days/365 days)21 x ½ (SR5,438)
Service Award = SR2,786.04
Respondent’s service award for the sixth contract is equivalent only to half-month’s pay plus the
proportionate amount for the additional nine days of service he rendered after one year.
Respondent’s employment contracts expressly stated that his employment ended upon his
departure from work. Each year he departed from work and successively new contracts were
executed before he reported for work anew. His service was not cumulative. Pertinently, in Brent
School, Inc. v. Zamora,22 we said that "a fixed term is an essential and natural appurtenance" of
overseas employment contracts,23 as in this case. We also said in that case that under American law,
"[w]here a contract specifies the period of its duration, it terminates on the expiration of such
period. A contract of employment for a definite period terminates by its own terms at the end of
such period."24 As it is, Article 72 of the Saudi Labor Law is also of similar import. It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both
parties continue to enforce the contract, thereafter, it shall be considered renewed for an
unspecified period.25
Regarding respondent’s claim that he was offered US$12,640.33 as longevity pay before he
returned to the Philippines on May 1, 1999, we find that he was not candid on this particular point.
His categorical assertion about the offer being "engrained in his mind" such that he "reconstructed
the computation … and arrived at the … computation exactly the same with the amount he was
previously offered" is not only beyond belief. Such assertion is also a stark departure from his July
6, 1999 letter to MMG where he could only express his hope that he was entitled to a long service
award and where he never mentioned the supposed previous offer. Moreover, respondent’s claim
that his monthly compensation is SR10,248.9226 is belied by the payroll which shows that he
receives SR5,438 per month.
We therefore emphasize that such payroll should have prompted the lower tribunals to examine
closely respondent’s computation of his supposed longevity pay before adopting that computation
as their own.
On the matter of prescription, however, we cannot agree with petitioner that respondent’s action
has prescribed under Article 13 of the Saudi Labor Law. What applies is Article 291 of our Labor
Code which reads:
ART. 291. 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.
xxxx
In Cadalin v. POEA’s Administrator,27 we held that Article 291 covers all money claims from
employer-employee relationship and is broader in scope than claims arising from a specific law. It
is not limited to money claims recoverable under the Labor Code, but applies also to claims of
overseas contract workers.28 The following ruling in Cadalin v. POEA’s Administrator is instructive:
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" x x x.
As a general rule, a foreign procedural law will not be applied in the forum.1avvphi1 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.
xxxx
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 Philippine 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 Procedure 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 [of the Code of Civil Procedure] cannot be
enforced ex proprio vigore insofar as it ordains the application in this jurisdiction of [Article] 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 x
x x. 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.29

xxxx

Thus, in our considered view, respondent’s complaint was filed well within the three-year
prescriptive period under Article 291 of our Labor Code. This point, however, has already been
mooted by our finding that respondent’s service award had been paid, albeit the payroll termed
such payment as severance pay.

WHEREFORE, the petition is GRANTED. The assailed Decision dated December 6, 2005 and
Resolution dated April 12, 2006, of the Court of Appeals in CA-G.R. SP No. 76843, as well as the
Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case No. RAB-CAR-12-0649-00 and the
Decision dated November 29, 2002 and Resolution dated January 31, 2003 of the NLRC in NLRC CA
No. 028994-01 (NLRC RAB-CAR-12-0649-00) are REVERSED and SET ASIDE. The Complaint of
respondent is hereby DISMISSED.

No pronouncement as to costs.

SO ORDERED.
CONFLICT – CHOICE OF LAW – CHARACTERIZATION – RENVOI
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-
appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr.,
presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949, approving among
things the final accounts of the executor, directing the executor to reimburse Maria Lucy
Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and
declaring Maria Lucy Christensen entitled to the residue of the property to be enjoyed during her
lifetime, and in case of death without issue, one-half of said residue to be payable to Mrs. Carrie
Louise C. Borton, etc., in accordance with the provisions of the will of the testator Edward E.
Christensen. The will was executed in Manila on March 5, 1951 and contains the following
provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs. Bernard
Daney), who was born in the Philippines about twenty-eight years ago, and who is now residing
at No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants except my above
named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo Garcia,
about eighteen years of age and who, notwithstanding the fact that she was baptized
Christensen, is not in any way related to me, nor has she been at any time adopted by me, and
who, from all information I have now resides in Egpit, Digos, Davao, Philippines, the sum of THREE
THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in
trust for the said Maria Helen Christensen with the Davao Branch of the Philippine National Bank,
and paid to her at the rate of One Hundred Pesos (P100.00), Philippine Currency per month until
the principal thereof as well as any interest which may have accrued thereon, is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY
CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A., all the income from the rest, remainder, and residue of my
property and estate, real, personal and/or mixed, of whatsoever kind or character, and
wheresoever situated, of which I may be possessed at my death and which may have come to me
from any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account and
project of partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed
that the residue of the estate be transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar
as it deprives her (Helen) of her legitime as an acknowledged natural child, she having been declared
by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased Edward E. Christensen.
The legal grounds of opposition are (a) that the distribution should be governed by the laws of the
Philippines, and (b) that said order of distribution is contrary thereto insofar as it denies to Helen
Christensen, one of two acknowledged natural children, one-half of the estate in full ownership. In
amplification of the above grounds it was alleged that the law that should govern the estate of the
deceased Christensen should not be the internal law of California alone, but the entire law thereof
because several foreign elements are involved, that the forum is the Philippines and even if the case
were decided in California, Section 946 of the California Civil Code, which requires that the domicile
of the decedent should apply, should be applicable. It was also alleged that Maria Helen Christensen
having been declared an acknowledged natural child of the decedent, she is deemed for all purposes
legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of the
State of California at the time of his death, the successional rights and intrinsic validity of the
provisions in his will are to be governed by the law of California, in accordance with which a testator
has the right to dispose of his property in the way he desires, because the right of absolute dominion
over his property is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d
952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor
Maria Helen Christensen, through counsel, filed various motions for reconsideration, but these were
denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME COURT THAT
HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN AND,
CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE EXISTENCE
OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF
INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN
SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED
BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN
CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the State
of California at the time of his death. But there is also no question that at the time of his death he
was domiciled in the Philippines, as witness the following facts admitted by the executor himself in
appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show that the deceased
Edward E. Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his first
arrival in the Philippines, as an appointed school teacher, was on July 1, 1901, on board the U.S.
Army Transport "Sheridan" with Port of Embarkation as the City of San Francisco, in the State of
California, U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and stayed there for the
following nine years until 1913, during which time he resided in, and was teaching school in
Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928,
he again departed the Philippines for the United States and came back here the following year,
1929. Some nine years later, in 1938, he again returned to his own country, and came back to the
Philippines the following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the
Philippines during World War II. Upon liberation, in April 1945, he left for the United States but
returned to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp.
Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p.
473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly after the making
of his last will and testament (now in question herein) which he executed at his lawyers' offices
in Manila on March 5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30,
1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded
by the fact that he was born in New York, migrated to California and resided there for nine years,
and since he came to the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have owned or acquired a
home or properties in that state, which would indicate that he would ultimately abandon the
Philippines and make home in the State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere temporary presence
to the most permanent abode. Generally, however, it is used to denote something more than
mere physical presence. (Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines,
for the latter was a territory of the United States (not a state) until 1946 and the deceased appears
to have considered himself as a citizen of California by the fact that when he executed his will in
1951 he declared that he was a citizen of that State; so that he appears never to have intended to
abandon his California citizenship by acquiring another. This conclusion is in accordance with the
following principle expounded by Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of
permanent abode. But domicile, as has been shown, has acquired a technical meaning. Thus one
may be domiciled in a place where he has never been. And he may reside in a place where he has
no domicile. The man with two homes, between which he divides his time, certainly resides in
each one, while living in it. But if he went on business which would require his presence for several
weeks or months, he might properly be said to have sufficient connection with the place to be
called a resident. It is clear, however, that, if he treated his settlement as continuing only for the
particular business in hand, not giving up his former "home," he could not be a domiciled New
Yorker. Acquisition of a domicile of choice requires the exercise of intention as well as physical
presence. "Residence simply requires bodily presence of an inhabitant in a given place, while
domicile requires bodily presence in that place and also an intention to make it one's domicile."
Residence, however, is a term used with many shades of meaning, from the merest temporary
presence to the most permanent abode, and it is not safe to insist that any one use et the only
proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil
Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the country where it
is situated.
However, intestate and testamentary successions, both with respect to the order of succession
and to the amount of successional rights and to the intrinsic validity of testamentary provisions,
shall be regulated by the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country where said property
may be found.
The application of this article in the case at bar requires the determination of the meaning of the
term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the United
States, each state of the Union having its own private law applicable to its citizens only and in force
only within the state. The "national law" indicated in Article 16 of the Civil Code above quoted can
not, therefore, possibly mean or apply to any general American law. So it can refer to no other than
the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal property?
The decision of the court below, sustains the contention of the executor-appellee that under the
California Probate Code, a testator may dispose of his property by will in the form and manner he
desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant
invokes the provisions of Article 946 of the Civil Code of California, which is as follows:
 If there is no law to the contrary, in the place where personal property is situated, it is deemed
to follow the person of its owner, and is governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We have
checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on the case
cited in the decision and testified to by a witness. (Only the case of Kaufman is correctly cited.) It is
argued on executor's behalf that as the deceased Christensen was a citizen of the State of California,
the internal law thereof, which is that given in the abovecited case, should govern the determination
of the validity of the testamentary provisions of Christensen's will, such law being in force in the
State of California of which Christensen was a citizen. Appellant, on the other hand, insists that
Article 946 should be applicable, and in accordance therewith and following the doctrine of the
renvoi, the question of the validity of the testamentary provision in question should be referred
back to the law of the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a
jural matter to a foreign law for decision, is the reference to the purely internal rules of law of
the foreign system; i.e., to the totality of the foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that is,
applied the Conflict of Laws rule of Illinois which referred the matter back to Michigan law. But
once having determined the the Conflict of Laws principle is the rule looked to, it is difficult to
see why the reference back should not have been to Michigan Conflict of Laws. This would have
resulted in the "endless chain of references" which has so often been criticized be legal writers.
The opponents of the renvoi would have looked merely to the internal law of Illinois, thus
rejecting the renvoi or the reference back. Yet there seems no compelling logical reason why the
original reference should be the internal law rather than to the Conflict of Laws rule. It is true that
such a solution avoids going on a merry-go-round, but those who have accepted the renvoi theory
avoid this inextricabilis circulas by getting off at the second reference and at that point applying
internal law. Perhaps the opponents of the renvoi are a bit more consistent for they look always
to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that greater
uniformity will result from adoption of their respective views. And still more strange is the fact
that the only way to achieve uniformity in this choice-of-law problem is if in the dispute the two
states whose laws form the legal basis of the litigation disagree as to whether the renvoi should
be accepted. If both reject, or both accept the doctrine, the result of the litigation will vary with
the choice of the forum. In the case stated above, had the Michigan court rejected the renvoi,
judgment would have been against the woman; if the suit had been brought in the Illinois courts,
and they too rejected the renvoi, judgment would be for the woman. The same result would
happen, though the courts would switch with respect to which would hold liability, if both courts
accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land is in question,
and where the validity of a decree of divorce is challenged. In these cases the Conflict of Laws
rule of the situs of the land, or the domicile of the parties in the divorce case, is applied by the
forum, but any further reference goes only to the internal law. Thus, a person's title to land,
recognized by the situs, will be recognized by every court; and every divorce, valid by the domicile
of the parties, will be valid everywhere. (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in
Massachusetts, England, and France. The question arises as to how this property is to be
distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of
laws as to intestate succession to movables calls for an application of the law of the deceased's
last domicile. Since by hypothesis X's last domicile was France, the natural thing for the
Massachusetts court to do would be to turn to French statute of distributions, or whatever
corresponds thereto in French law, and decree a distribution accordingly. An examination of
French law, however, would show that if a French court were called upon to determine how this
property should be distributed, it would refer the distribution to the national law of the deceased,
thus applying the Massachusetts statute of distributions. So on the surface of things the
Massachusetts court has open to it alternative course of action: (a) either to apply the French law
is to intestate succession, or (b) to resolve itself into a French court and apply the Massachusetts
statute of distributions, on the assumption that this is what a French court would do. If it accepts
the so-called renvoi doctrine, it will follow the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum
refers to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter back again to
the law of the forum. This is renvoi in the narrower sense. The German term for this judicial
process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as governing a particular
case, the further question may arise: Are the rules as to the conflict of laws contained in such
foreign law also to be resorted to? This is a question which, while it has been considered by the
courts in but a few instances, has been the subject of frequent discussion by textwriters and
essayists; and the doctrine involved has been descriptively designated by them as the "Renvoyer"
to send back, or the "Ruchversweisung", or the "Weiterverweisung", since an affirmative answer
to the question postulated and the operation of the adoption of the foreign law in toto would in
many cases result in returning the main controversy to be decided according to the law of the
forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the doctrine
of renvoi is that the court of the forum, in determining the question before it, must take into
account the whole law of the other jurisdiction, but also its rules as to conflict of laws, and then
apply the law to the actual question which the rules of the other jurisdiction prescribe. This may
be the law of the forum. The doctrine of the renvoi has generally been repudiated by the
American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application in a
country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp.
529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws are to be
understood as incorporating not only the ordinary or internal law of the foreign state or country,
but its rules of the conflict of laws as well. According to this theory 'the law of a country' means
the whole of its law.
xxx xxx xxx
 Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel,
in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall respect:
(a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as
regards their personal statute, and desires that said personal statute shall be determined by
the law of the domicile, or even by the law of the place where the act in question occurred.
(b) The decision of two or more foreign systems of law, provided it be certain that one of
them is necessarily competent, which agree in attributing the determination of a question
to the same system of law.
xxx xxx xxx
If, for example, the English law directs its judge to distribute the personal estate of an Englishman
who has died domiciled in Belgium in accordance with the law of his domicile, he must first
inquire whether the law of Belgium would distribute personal property upon death in accordance
with the law of domicile, and if he finds that the Belgian law would make the distribution in
accordance with the law of nationality — that is the English law — he must accept this reference
back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied
in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of
California are to be enforced jointly, each in its own intended and appropriate sphere, the principle
cited In re Kaufman should apply to citizens living in the State, but Article 946 should apply to such
of its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of
resorting to the law of the domicile in the determination of matters with foreign element involved
is in accord with the general principle of American law that the domiciliary law should govern in
most matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a will directing the
manner of distribution of the property, the law of the state where he was domiciled at the time
of his death will be looked to in deciding legal questions about the will, almost as completely as
the law of situs is consulted in questions about the devise of land. It is logical that, since the
domiciliary rules control devolution of the personal estate in case of intestate succession, the
same rules should determine the validity of an attempted testamentary dispostion of the
property. Here, also, it is not that the domiciliary has effect beyond the borders of the domiciliary
state. The rules of the domicile are recognized as controlling by the Conflict of Laws rules at the
situs property, and the reason for the recognition as in the case of intestate succession, is the
general convenience of the doctrine. The New York court has said on the point: 'The general
principle that a dispostiton of a personal property, valid at the domicile of the owner, is valid
anywhere, is one of the universal application. It had its origin in that international comity which
was one of the first fruits of civilization, and it this age, when business intercourse and the process
of accumulating property take but little notice of boundary lines, the practical wisdom and justice
of the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national
law is the internal law of California. But as above explained the laws of California have prescribed
two sets of laws for its citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal law prescribed for its
citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If
we must enforce the law of California as in comity we are bound to go, as so declared in Article 16
of our Civil Code, then we must enforce the law of California in accordance with the express
mandate thereof and as above explained, i.e., apply the internal law for residents therein, and its
conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where
the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code
of the Philippines and that the law to the contrary in the Philippines is the provision in said Article
16 that the national law of the deceased should govern. This contention can not be sustained. As
explained in the various authorities cited above the national law mentioned in Article 16 of our Civil
Code is the law on conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the
reference or return of the question to the law of the testator's domicile. The conflict of laws rule in
California, Article 946, Civil Code, precisely refers back the case, when a decedent is not domiciled
in California, to the law of his domicile, the Philippines in the case at bar. The court of the domicile
can not and should not refer the case back to California; such action would leave the issue incapable
of determination because the case will then be like a football, tossed back and forth between the
two states, between the country of which the decedent was a citizen and the country of his domicile.
The Philippine court must apply its own law as directed in the conflict of laws rule of the state of
the decedent, if the question has to be decided, especially as the application of the internal law of
California provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil Code
of the Philippines, makes natural children legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano
vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs.
Government, 59 Phil. 293.) cited by appellees to support the decision can not possibly apply in the
case at bar, for two important reasons, i.e., the subject in each case does not appear to be a citizen
of a state in the United States but with domicile in the Philippines, and it does not appear in each
case that there exists in the state of which the subject is a citizen, a law similar to or identical with
Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the
Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the
appellant, should be governed by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil
Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower
court with instructions that the partition be made as the Philippine law on succession provides.
Judgment reversed, with costs against appellees.
CONFLICT – CHOICE OF LAW – CHARACTERIZATION – RENVOI
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First
Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in
Civil Case No. 37089 therein.1äwphï1.ñët
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his
first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis,
George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children:
Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children:
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after
all taxes, obligations, and expenses of administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen;
(b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma
Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the remainder
shall go to his seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry
A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E.
Bellis, in equal shares.1äwphï1.ñët
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will
was admitted to probate in the Court of First Instance of Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests therein including
the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the three (3)
illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts
totalling P40,000.00 each in satisfaction of their respective legacies, or a total of P120,000.00, which
it released from time to time according as the lower court approved and allowed the various
motions or petitions filed by the latter three requesting partial advances on account of their
respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and Project of Partition" wherein it reported,
inter alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock
amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition,
the executor — pursuant to the "Twelfth" clause of the testator's Last Will and Testament — divided
the residuary estate into seven equal portions for the benefit of the testator's seven legitimate
children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions
to the project of partition on the ground that they were deprived of their legitimes as illegitimate
children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
evidenced by the registry receipt submitted on April 27, 1964 by the executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the lower court,
on April 30, 1964, issued an order overruling the oppositions and approving the executor's final
account, report and administration and project of partition. Relying upon Art. 16 of the Civil Code,
it applied the national law of the decedent, which in this case is Texas law, which did not provide
for legitimes.
Their respective motions for reconsideration having been denied by the lower court on June 11,
1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply —
Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied
by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually
pertinent where the decedent is a national of one country, and a domicile of another. In the present
case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the
time of his death.2 So that even assuming Texas has a conflict of law rule providing that the
domiciliary system (law of the domicile) should govern, the same would not result in a reference
back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a conflicts
rule adopting the situs theory (lex rei sitae) calling for the application of the law of the place where
the properties are situated, renvoi would arise, since the properties here involved are found in the
Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it should not
be presumed different from ours.3 Appellants' position is therefore not rested on the doctrine of
renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they argue
that their case falls under the circumstances mentioned in the third paragraph of Article 17 in
relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent,
in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b)
the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the
capacity to succeed. They provide that —
ART. 16. Real property as well as personal property is subject to the law of the country
where it is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
 succession is under consideration, whatever may he the nature of the property and
regardless of the country wherein said property may be found.

ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.

Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that —

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

prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil
Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art.
16 a specific provision in itself which must be applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees
that capacity to succeed is to be governed by the national law of the decedent.

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

Appellants would also point out that the decedent executed two wills — one to govern his Texas
estate and the other his Philippine estate — arguing from this that he intended Philippine law to
govern his Philippine estate. Assuming that such was the decedent's intention in executing a
separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50
Phil. 867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in
accordance with Philippine law and not with his national law, is illegal and void, for his national law
cannot be ignored in regard to those matters that Article 10 — now Article 16 — of the Civil Code
states said national law should govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and
that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional rights are to be determined under
Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.

Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants.
So ordered.