[ G.R. No.

 35694, December 23, 1933 ]

ALLISON D. GIBBS, PETITIONER AND APPELLEE, VS. THE
GOVERNMENT OF THE PHILIPPINE ISLANDS, OPPOSITOR AND
APPELLANT. THE REGISTER OF DEEDS OF THE CITY OF MANILA,
RESPONDENT AND APPELLANT.

DECISION

BUTTE, J.:

This is an appeal from a final order of the Court of First Instance of Manila, requiring the
register of deeds of the City of Manila to cancel certificates of title Nos. 20880, 28336
and 28331, covering lands located in the City of Manila, Philippine Islands, and issue in
lieu thereof new certificates of transfer of title in favor of Allison D. Gibbs without
requiring him to present any document showing that the succession tax due under Article
XI of Chapter 40 of the Administrative Code has been paid.

The said order of court of March 10, 1931, recites that the parcels of land covered by said
certificates of title formerly belonged to the conjugal partnership of Allison D. Gibbs and
Eva Johnson Gibbs; that the latter died intestate in Palo Alto, California, on November
28, 1929; that at the time of her death she and her husband were citizens of the State of
California and domiciled therein.

It appears further from said order that Allison D. Gibbs was appointed administrator of
the estate of his said deceased wife in case No. 36795 in the same court, entitled "In the
Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased"; that in said intestate
proceedings, the said Allison D. Gibbs, on September 22, 1930, filed an ex parte petition
in which he alleged "that the parcels of land hereunder described belong to the conjugal
partnership of your petitioner and his wife, Eva Johnson Gibbs", describing in detail the
three tracts here involved; and further alleging that his said wife, a citizen and resident of
California, died on November 28, 1929; that in accordance with the law of California, the
community property of spouses who are citizens of California, upon the death of the wife
previous to that of the husband, belongs absolutely to the surviving husband without
administration; that the conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs,
deceased, has no obligations or debts and no one will be prejudiced by adjudicating said
parcels of land (and seventeen others not here involved) to be the absolute property of the
said Allison D. Gibbs as sole owner. The court granted said petition and on September
22, 1930, entered a decree adjudicating the said Allison D. Gibbs to be the sole and
absolute owner of said lands, applying section 1401 of the Civil Code of California.
Gibbs presented this decree to the register of deeds of Manila and demanded that the
latter issue to him a "transfer certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code provides in part
that:

"Registers of deeds shall not register in the registry of property any document transferring
real property or real rights therein or any chattel mortgage, by way of gifts mortis causa,
legacy or inheritance, unless the payment of the tax fixed in this article and actually due
thereon shall be shown. And they shall immediately notify the Collector of Internal
Revenue or the corresponding provincial treasurer of the nonpayment of the tax
discovered by them.

Acting upon the authority of said section, the register of deeds of the City of Manila,
declined to accept as binding said decree of court of September 22, 1930, and refused to
register the transfer of title of the said conjugal property to Allison D. Gibbs, on the
ground that the corresponding inheritance tax had not been paid. Thereupon, under date
of December 26, 1930, Allison D. Gibbs filed in the said court a petition for an order
requiring the said register of deeds "to issue the corresponding titles" to the petitioner
without requiring previous payment of any inheritance tax. After due hearing of the
parties, the court reaffirmed said order of September 22,1930, and entered the order of
March 10, 1931, which is under review on this appeal.

On January 3, 1933, this court remanded the case to the court of origin for new trial upon
additional evidence in regard to the pertinent law of California in force at the time of the
death of Mrs. Gibbs, also authorizing the introduction of evidence with reference to the
dates of the acquisition of the property involved in this suit and with reference to the
California law in force at the time of such acquisition. The case is now before us with the
supplementary evidence.

For the purposes of this case, we shall consider the following facts as established by the
evidence or the admissions of the parties: Allison D. Gibbs has been continuously, since
the year 1902, a citizen of the State of California and domiciled therein; that he and Eva
Johnson Gibbs were married at Columbus, Ohio, in July, 1906; that there was no
antenuptial marriage contract between the parties; that during the existence of said
marriage, the spouses acquired the following lands, among others, in the Philippine
Islands, as conjugal property:

1. A parcel of land in the City of Manila, represented by transfer certificate of title

No. 20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs
casado con Eva Johnson Gibbs".

2. A parcel of land in the City of Manila, represented by transfer certificate of title

No. 28336, dated May 14, 1927, in which it is certified "that the spouses Allison
D. Gibbs and Eva Johnson Gibbs are the owners in fee simple" of the land therein
described.
 3. A parcel of land in the City of Manila, represented by transfer certificate of title
No. 28331, dated April 6, 1927, which states "that Allison D. Gibbs married to
Eva Johnson Gibbs" is the owner of the land described therein; that said Eva
Johnson Gibbs died intestate on November 28, 1929, leaving surviving her her
husband, the appellee, and two sons, Allison J. Gibbs, now aged 25, and Finley J.
Gibbs, now aged 22, as her sole heirs at law.

Article XI of Chapter 40 of the Administrative Code entitled "Tax on inheritances,

legacies, and other acquisitions mortis causa" provides in section 1536 that "Every
transmission by virtue of inheritance * * * of real property * * * shall be subject to the
following tax." It results that the question for determination in this case is as follows:
Was Eva Johnson Gibbs at the time of her death the owner of a descendible interest in the
Philippine lands above-mentioned?

The appellee contends that the law of California should determine the nature and extent
of the title, if any, that vested in Eva Johnson Gibbs under the three certificates of title
Nos. 20880, 28336 and 28331 above referred to, citing article 9 of the Civil Code. But
that, even if the nature and extent of her title under said certificates be governed by the
law of the Philippine Islands, the laws of California govern the succession to such title,
citing the second paragraph of article 10 of the Civil Code.

Article 9 of the Civil Code is as follows:

"The laws relating to family rights and duties, or to the status, condition, and legal
capacity of persons, are binding upon Spaniards even though they reside in a foreign
country." It is argued that the conjugal right of the California wife in community real
estate in the Philippine Islands is a personal right and must, therefore, be settled by the
law governing her personal status, that is, the law of California. But our attention has not
been called to any law of California that incapacitates a married woman from acquiring
or holding land in a foreign jurisdiction in accordance with the lex rei sitæ. There is not
the slightest doubt that a California married woman can acquire title to land in a common
law jurisdiction like the State of Illinois or the District of Columbia, subject to the
common-law estate by the curtesy which would vest in her husband. Nor is there any
doubt that if a California husband acquired land in such a jurisdiction his wife would be
vested with the common law right of dower, the prerequisite conditions obtaining. Article
9 of the Civil Code treats of purely personal relations and status and capacity for juristic
acts, the rules relating to property, both personal and real, being governed by article 10 of
the Civil Code. Furthermore, article 9, by its very terms, is applicable only to "Spaniards"
(now, by construction, to citizens of the Philippine Islands).

The Organic Act of the Philippine Islands (Act of Congress, August 29, 1916, known as
the "Jones Law") as regards the determination of private rights, grants practical autonomy
to the Government of the Philippine Islands. This Government, therefore, may apply the
principles and rules of private international law (conflict of laws) on the same footing as
an organized territory or state of the United States. We should, therefore, resort to the law
of California, the nationality and domicile of Mrs. Gibbs, to ascertain the norm which
would be applied here as law were there any question as to her status.

But the appellant's chief argument and the sole basis of the lower court's decision rests
upon the second paragraph of article 10 of the Civil Code which is as follows:

"Nevertheless, legal and testamentary successions, in respect to the order of succession as

well as to the amount 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 or the country in which it may be
situated."

In construing the above language we are met at the outset with some difficulty by the
expression "the national law of the person whose succession is in question", by reason of
the rather anomalous political status of the Philippine Islands. (Cf. Manresa, vol.
1, Codigo Civil, pp. 103, 104.) We encountered no difficulty in applying article 10 in the
case of a citizen of Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to the
practical autonomy of the Philippine Islands, as above stated, we have concluded that if
article 10 is applicable and the estate in question is that of a deceased American citizen,
the succession shall be regulated in accordance with the norms of the State of his
domicile in the United States. (Cf. Babcock Templeton vs. Rider Babcock, 52 Phil., 130,
137; In re Estate of Johnson, 39 Phil., 156, 166.)

The trial court found that under the law of California, upon the death of the wife, the
entire community property without administration belongs to the surviving husband; that
he is the absolute owner of all the community property from the moment of the death of
his wife, not by virtue of succession or by virtue of her death, but by virtue of the fact
that when the death of the wife precedes that of the husband he acquires the community
property, not as an heir or as the beneficiary of his deceased wife, but because she never
had more than an inchoate interest or expectancy which is extinguished upon her death.
Quoting the case of Estate of Klumpke (167 Cal., 415, 419), the court said: "The
decisions under this section (1401 Civil Code of California) are uniform to the effect that
the husband does not take the community property upon the death of the wife by
succession, but that he holds it all from the moment of her death as though acquired by
himself. * * * It never belonged to the estate of the deceased wife."

The argument of the appellee apparently leads to this dilemma: If he takes nothing by
succession from his deceased wife, how can the second paragraph of article 10 be
invoked? Can the appellee be heard to say that there is a legal succession under the law of
the Philippine Islands and no legal succession under the law of California? It seems clear
that the second paragraph of article 10 applies only when a legal or testamentary
succession has taken place in the Philippines in accordance with the law of the Philippine
Islands; and the foreign law is consulted only in regard to the order of succession or the
extent of the successional rights; in other words, the second paragraph of article 10 can be
invoked only when the deceased was vested with a descendible interest in property within
the jurisdiction of the Philippine Islands.

In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law. ed., 1028, 1031), the court
said:

"It is a principle firmly established that to the law of the state in which the land is situated
we must look for the rules which govern its descent, alienation, and transfer, and for the
effect and construction of wills and other conveyances. (United States vs. Crosby, 7
Cranch, 115; 3 L. ed., 287; Clark vs. Graham, 6 Wheat., 577; 5 L. ed., 334;
McGoon vs. Scales, 9 Wall., 23; 19 L. ed., 545; Brine vs. Hartford F. Ins. Co., 96 U. S.,
627; 24 L. ed., 858.)" (See also Estate of Lloyd, 175 Cal., 704, 705.) This fundamental
principle is stated in the first paragraph of article 10 of our Civil Code as follows:
"Personal property is subject to the laws of the nation of the owner thereof; real property
to the laws of the country in which it is situated."

It is stated in 5 Cal. Jur., 478:

"In accord with the rule that real property is subject to the lex rex sitæ, the respective
rights of husband and wife in such property, in the absence of an antenuptial contract, are
determined by the law of the place where the property is situated, irrespective of the
domicile of the parties or of the place where the marriage was celebrated." (See
also Saul vs. His Creditors, 5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.];
Heidenheimer vs. Loring, 26 S. W., 99 [Texas].)

Under this broad principle, the nature and extent of the title which vested in Mrs. Gibbs at
the time of the acquisition of the community lands here in question must be determined in
accordance with the lex rei sitæ.

It is admitted that the Philippine lands here in question were acquired as community
property of the conjugal partnership of the appellee and his wife. Under the law of the
Philippine Islands, she was vested of a title equal to that of her husband. Article 1407 of
the Civil Code provides:

"All the property of the spouses shall be deemed partnership property in the absence of
proof that it belongs exclusively to the husband or to the wife." Article 1395 provides:

"The conjugal partnership shall be governed by the rules of law applicable to the contract
of partnership in all matters in which such rules do not conflict with the express
provisions of this chapter." Article 1414 provides that "the husband may dispose by will
of his half only of the property of the conjugal partnership." Article 1426 provides that
upon dissolution of the conjugal partnership and after inventory and liquidation, "the net
remainder of the partnership property shall be divided share and share alike between the
husband and wife, or their respective heirs." Under the provisions of the Civil Code and
the jurisprudence prevailing here, the wife, upon the acquisition of any conjugal property,
becomes immediately vested with an interest and title therein equal to that of her
husband, subject to the power of management and disposition which the law vests in the
husband. Immediately upon her death, if there are no obligations of the decedent, as is
true in the present case, her share in the conjugal property is transmitted to her heirs by
succession. (Articles 657, 659, 661, Civil Code; cf. also Coronel vs. Ona, 33 Phil., 456,
469.)

It results that the wife of the appellee was, by the law of the Philippine Islands, vested of
a descendible interest, equal to that of her husband, in the Philippine lands covered by
certificates of title Nos. 20880, 28336 and 28331, from the date of their acquisition to the
date of her death. That appellee himself believed that his wife was vested of such a title
and interest is manifest from the second of said certificates, No. 28336, dated May 14,
1927, introduced by him in evidence, in which it is certified that "the spouses Allison D.
Gibbs and Eva Johnson Gibbs are the owners in fee simple of the conjugal lands therein
described."

The descendible interest of Eva Johnson Gibbs in the lands aforesaid was transmitted to
her heirs by virtue of inheritance and this transmission plainly falls within the language of
section 1536 of Article XI of Chapter 40 of the Administrative Code which levies a tax
on inheritances. (Cf. Re Estate of Majot, 199 N. Y., 29; 92 N. E., 402; 29 L. R. A. [N. S.],
780.) It is unnecessary in this proceeding to determine the "order of succession" or the
"extent of the successional rights" (article 10, Civil Code, supra) which would be
regulated by section 1386 of the Civil Code of California which was in effect at the time
of the death of Mrs. Gibbs.

The record does not show what the proper amount of the inheritance tax in this case
would be nor that the appellee (petitioner below) in any way challenged the power of the
Government to levy an inheritance tax or the validity of the statute under which the
register of deeds refused to issue a certificate of transfer reciting that the appellee is the
exclusive owner of the Philippine lands included in the three certificates of title here
involved.

The judgment of the court below of March 10, 1931, is reversed with directions to
dismiss the petition, without special pronouncement as to the costs.
  
[ G.R. No. 104776, December 05, 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. NO. 105029-32. DECEMBER 5, 1994]

ASIA INTERNATIONAL BUILDER CORPORATION AND BROWN &

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

DECISION

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 & 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 the
POEA in the 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.
No. 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. No. 105029-32,
Rollo, p. 1562).

On June 6, 1984, Bienvenido M. Cadalin, Rolando M. Amul and Donato B. Evangelista,

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

BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in

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

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

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

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

On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July
23, 1984, AIBC filed a "Motion to Strike Out of the Records" the "Complaint" and the
"Compliance and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder
and Comments," averring, among other matters, the failure of AIBC and BRII to file their
answers and to attend the pre-trial conference on July 25, 1984. The claimants alleged
that AIBC and BRII had waived their right to present evidence and had defaulted by
failing to file their answers and to attend the pre trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the
Records" filed by AIBC but required the claimants to correct the deficiencies in the
complaint pointed out in the order.

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

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

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

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

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

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

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

On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position
Paper" dated March 24, 1985, adding new demands: namely, the payment of overtime
pay, extra night work pay, annual leave differential pay, leave indemnity pay, retirement
and savings benefits and their share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16).
On April 15, 1985, the POEA Administrator directed AIBC to file its answer to the
amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion For Summary Judgment." On the
same day, the POEA issued an order directing AIBC and BRII to file their answers to the
"Amended Complaint," otherwise, they would be deemed to have waived their right to
present evidence and the case would be resolved on the basis of complainants' 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, 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 Arguellas 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 reglementary 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; 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.
No. 104911-14).
III

The facts as found by the NLRC are as follows:

"We have taken painstaking efforts to sift over the more than fifty volumes now
comprising the records of these cases. From the records, it appears that the
complainants-appellants allege that they were recruited by respondent-appellant AIBC
for its accredited foreign principal, Brown & Root, on various dates from 1975 to 1983.
They were all deployed at various projects undertaken by Brown & Root in several
countries in the Middle East, such as Saudi Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia.
Having been officially processed as overseas contract workers by the Philippine
Government, all the individual complainants signed standard overseas employment
contracts (Records, Vols. 25-32. Hereafter, reference to the records would be sparingly
made, considering their chaotic arrangement) with AIBC before their departure from the
Philippines. These overseas employment contracts invariably contained the following
relevant terms and conditions.

PART B -

(1)    Employment Position
Classification                     :                                   
(Code)                               :                                  
(2)    Company Employment                 
Status                                :                                  
(3)    Date of Employment
to Commence on              :                                  
(4)    Basic Working
Hours Per Week                :                                  
(5)    Basic Working
Hours per Month                :                                  

(6)    Basic Hourly Rate :                                  

(7)    Overtime Rate
Per Hour                            :                                  
(8) Projected Period
of Service (Subject toC (1)
 of this [sic])                        :                                  
Months and/or
Job Completion
xxx
3. HOURS OF WORK AND COMPENSATION
a)      The Employee is employed at the hourly rate and overtime rate as set out in
Part B of this Document.
b)      The hours of work shall be those set forth by the Employer, and Employer
may, at his sole option, change or adjust such hours as maybe deemed necessary from
time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this agreement, the
Employer may, at his sole discretion, terminate employee's service with cause, under
this agreement at any time. If the Employer terminates the services of the Employee
under this Agreement because of the completion or termination, or suspension of the
work on which the Employee's services were being utilized, or because of a reduction in
force due to a decrease in scope of such work, or by change in the type of construction
of such work. The Employer will be responsible for his return transportation to his
country of origin. Normally on the most expeditious air route, economy class
accommodation.
xxx
10. VACATION/SICK LEAVE BENEFITS
a)       After one (1) year of continuous service and/or satisfactory completion of
contract, employee shall be entitled to 12-days vacation leave with pay. This shall be
computed at the basic wage rate. Fractions of a year's service will be computed on a
pro-rata basis.
b)       Sick leave of 15-days shall be granted to the employee for every year of
service for non-work connected injuries or illness. If the employee failed to avail of such
leave benefits, the same shall be forfeited at the end of the year in which said sick leave
is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will be accrued and payable
only upon satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of rest with 8 hours
regular pay. If work is performed on this day, all hours work shall be paid at the
premium rate. However, this offday pay provision is applicable only when the laws of
the Host Country require payments for rest day.
 In the State of Bahrain, where some of the individual complainants were
deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued his Amiri Decree
No. 23 on June 16, 1976, otherwise known as the Labour Law for the Private Sector
(Records, Vol. 18). This decree took effect on August 16, 1976. Some of the provisions of
Amiri Decree No. 23 that are relevant to the claims of the complainants-appellants are
as follows (underscoring supplied only for emphasis):

Art. 79: x x
x A worker shall receive payment for each extra hour equivalent to his wage entitlement i
ncreased 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 x x x."

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

x x x 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 x x x."

Art. 81: x x
x When conditions of work require the worker to work on any official holiday, he shall b
e 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 sha
ll be entitled to leave on full pay for a period of not less than 21 days for each year increa
sed 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 t
he 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: x x x 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 da
ys' wages for each year of the first three years of service and of one month's wages for ea
ch 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 and 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)    that 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)    that 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. No. 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 AIBI
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 petitioners'
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 workers' contracts of employment.
Respondents consciously failed to conform to these provisions which specifically provide
for the increase of the workers' 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:

‘Article 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, pp. 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 xxx 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 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 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 on 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."

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, xxx".

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 a 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. No. 104911-14 that said
Article refers only to claims "arising from the employer's violation of the employee's
right," as provided by the Labor Code supported by the facial reading of the provision.

VII

G.R. No. 104776

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

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

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

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

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

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

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

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

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

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

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

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

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

"1. Unexpired portion of contract;

2.     Interest earnings of Travel and Fund;
3.     Retirement and Savings Plan benefit;
4.     War Zone bonus or premium pay of at least 100% of basic pay;
5.     Area Differential pay;
6.     Accrued Interest of all the unpaid benefits;
7.     Salary differential pay;
8.     Wage Differential pay;
9.     Refund of SSS premiums not remitted to Social Security System;
 10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue
(B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits
consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC
and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not excluding
reportorial requirements thereof" (NLRC Resolution, September 2, 1991, pp. 18-19; G.R.
No. 104776, Rollo, pp. 73-74).

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

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

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

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

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

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

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

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

Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties
and the public respondents would not know which claim of which petitioner was
dismissed and which was not."

B. Claimants insist that all their claims could properly be consolidated in a "class suit"
because "all the named complainants have similar money claims and similar rights sought
irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi,
Libya or in any part of the Middle East" (Rollo, pp. 35-38).

A class suit is proper where the subject matter of the controversy is one of common or
general interest to many and the parties are so numerous that it is impracticable to bring
them all before the court (Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain law, many of the
claimants worked outside Bahrain. Some of the claimants were deployed in Indonesia
and Malaysia under different terms and conditions of employment.

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

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

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

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

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

The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to
the practice of some parties of filing multiple petitions and complaints involving the same
issues, with the result that the courts or agencies have to resolve the same issues. Said
Rule, however, applies only to petitions filed with the Supreme Court and the Court of
Appeals. It is entitled "Additional Requirements For Petitions Filed with the Supreme
Court and the Court of Appeals To Prevent Forum Shopping or Multiple Filing of
Petitioners and Complainants." The first sentence of the circular expressly states that said
circular applies to and governs the filing of petitions in the Supreme Court and the Court
of Appeals.

While Administrative Circular No. 04-94 extended the application of the anti-forum
shopping rule to the lower courts and administrative agencies, said circular took effect
only on April 1, 1994.

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

Attorney's Lien

The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed
by Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services
rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 838-810; 1525).

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

Contempt of Court

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

G.R. No. 104911-14

Claimants charge NLRC with grave abuse of discretion in not accepting their formula of
"Three Hours Average Daily Overtime" in computing the overtime payments. They
claim that it was BRII itself which proposed the formula during the negotiations for the
settlement of their claims in Bahrain and therefore it is in estoppel to disclaim said offer
(Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16,
1983, which in pertinent part states:

"After the perusal of the memorandum of the Vice President and the Area
Manager, Middle East, of Brown & Root Co. and the Summary of the compensation
offered by the Company to the employees in respect of the difference of pay of the
wages of the overtime and the difference of vacation leave and the perusal of the
documents attached thereto e.e.., minutes of the meetings between the Representative
of the employees and the management of the Company, the complaint filed by the
employees on 14/2/83 where they have claimed as hereinabove stated, sample of the
Service Contract executed between one of the employees and the company
through its agent in (sic) Philippines, Asia International Builders Corporation where it
has been provided for 48 hours of work per week and an annual leave of 12 days and an
overtime wage of 1 & 1/4 of the normal hourly wage.
xxx
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 x x x.
2. The average wage per hour for the Philippino (sic) employee is US$2.69 x x x.
3. The average hours for the overtime is 3 hours plus in all public holidays and
weekends.
4. Payment of US$8.72 per months (sic) of service as compensation for the
difference of the wages of the overtime done for each Philipino (sic) employee xxx"
(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 amicably 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 def      eat
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 "xxx
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 a 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 than 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 rebut 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, xxx."
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.

SECOND DIVISION
[ G.R. No. 133876, December 29, 1999 ]
BANK OF AMERICA, NT AND SA, PETITIONER, VS. AMERICAN REALTY
CORPORATION AND COURT OF APPEALS, RESPONDENTS.

DECISION

BUENA, J.:
 Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage
constituted over a third party mortgagor’s property situated in the Philippines by filing
an action for the collection of the principal loan before foreign courts?

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

Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing

institution duly licensed to do business in the Philippines, organized and existing under
and by virtue of the laws of the State of California, United States of America while
private respondent American Realty Corporation (ARC) is a domestic corporation.

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

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

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

Eventually, the corporate borrowers defaulted in the payment of the restructured loans
prompting petitioner BANTSA to file civil actions[5] before foreign courts for the
collection of the principal loan, to wit:
"a) In England, in its High Court of Justice, Queen’s Bench Division, Commercial
Court (1992-Folio No. 2098) against Liberian Transport Navigation S.A., Eshley Compania
Naviera S.A., El Challenger S.A., Espriona Shipping Company S.A., Eddie Navigation Corp.,
S.A., Eduardo Katipunan Litonjua and Aurelio Katipunan Litonjua on June 17, 1992.

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

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

d) In Hongkong, in the Supreme Court of Hongkong High Court (Action No. 4040 of
1992) against Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping
Company, S.A., Pacific Navigators Corporation, Eddie Navigation Corporation S.A.,
Litonjua Chartering (Edyship) Co., Jr. and Eduardo Katipunan Litonjua on November 21,
1992."
In the civil suits instituted before the foreign courts, private respondent ARC,
being a third party mortgagor, was not impleaded as party-defendant.

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

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

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

In its answer[9] petitioner alleged that the rule prohibiting the mortgagee from
foreclosing the mortgage after an ordinary suit for collection has been filed, is not
applicable in the present case, claiming that:
"a) The plaintiff, being a mere third party mortgagor and not a party to the
principal restructuring agreements, was never made a party defendant in the civil cases
filed in Hongkong and England;

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

"c) Under English Law, which is the governing law under the principal agreements, the
mortgagee does not lose its security interest by filing civil actions for sums of money."
On 14 December 1993, private respondent filed a motion for suspension [10] of the
redemption period on the ground that "it cannot exercise said right of redemption
without at the same time waiving or contradicting its contentions in the case that the
foreclosure of the mortgage on its properties is legally improper and therefore invalid."

In an order[11] dated 28 January 1994, the trial court granted the private respondent’s
motion for suspension after which a copy of said order was duly received by the Register
of Deeds of Meycauayan, Bulacan.

On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the

foreclosure sale, consolidated its ownership over the real properties, resulting to the
issuance of Transfer Certificate of Title Nos. T-18627, T-186272, T-186273, T-16471 and
T-16472 in its name.

On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real
properties to Stateland Investment Corporation for the amount of Thirty Nine Million
Pesos (P39,000,000.00).[12] Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-
187782(m), T-187783(m), T-16653P(m) and T-16652P(m) were issued in the latter’s
name.

After trial, the lower court rendered a decision[13] in favor of private respondent ARC
dated 12 May 1993, the decretal portion of which reads:
 "WHEREFORE, judgment is hereby rendered declaring that the filing in foreign
courts by the defendant of collection suits against the principal debtors operated as a
waiver of the security of the mortgages. Consequently, the plaintiff’s rights as owner
and possessor of the properties then covered by Transfer Certificates of Title Nos. T-
78759, T-78762, T-78763, T-78760 and T-78761, all of the Register of Deeds of
Meycauayan, Bulacan, Philippines, were violated when the defendant caused the
extrajudicial foreclosure of the mortgages constituted thereon.

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

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

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

"3) Costs of suit.

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

Hence, the instant petition for review[14] on certiorari where herein petitioner BANTSA
ascribes to the Court of Appeals the following assignment of errors:
1. The Honorable Court of Appeals disregarded the doctrines laid down by this
Hon. Supreme Court in the cases of Caltex Philippines, Inc. vs. Intermediate Appellate
Court docketed as G.R. No. 74730 promulgated on August 25, 1989 and Philippine
Commercial International Bank vs. IAC, 196 SCRA 29 (1991 case), although said cases
were duly cited, extensively discussed and specifically mentioned, as one of the issues in
the assignment of errors found on page 5 of the decision dated September 30, 1997.

2. The Hon. Court of Appeals acted with grave abuse of discretion when it awarded the
private respondent actual and exemplary damages totalling P171,600,000.00, as of July
12, 1998 although such huge amount was not asked nor prayed for in private
respondent’s complaint, is contrary to law and is totally unsupported by evidence (sic).
 In fine, this Court is called upon to resolve two main issues:
1. Whether or not the petitioner’s act of filing a collection suit against the
principal debtors for the recovery of the loan before foreign courts constituted a waiver
of the remedy of foreclosure.

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

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

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

We do not agree.

Certainly, this Court finds petitioner’s arguments untenable and upholds the
jurisprudence laid down in Bachrach[15] and similar cases adjudicated thereafter, thus:
"In the absence of express statutory provisions, a mortgage creditor may institute
against the mortgage debtor either a personal action for debt or a real action to
foreclose the mortgage. In other words, he may pursue either of the two remedies, but
not both. By such election, his cause of action can by no means be impaired, for each of
the two remedies is complete in itself. Thus, an election to bring a personal action will
leave open to him all the properties of the debtor for attachment and execution, even
including the mortgaged property itself. And, if he waives such personal action and
pursues his remedy against the mortgaged property, an unsatisfied judgment thereon
would still give him the right to sue for a deficiency judgment, in which case, all the
properties of the defendant, other than the mortgaged property, are again open to him
for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of
action undiminished, and any advantages attendant to the pursuit of one or the other
remedy are purely accidental and are all under his right of election. On the other hand, a
rule that would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would
result not only in multiplicity of suits so offensive to justice (Soriano vs. Enriques, 24
Phil. 584) and obnoxious to law and equity (Osorio vs. San Agustin, 25 Phil., 404), but
also in subjecting the defendant to the vexation of being sued in the place of his
residence or of the residence of the plaintiff, and then again in the place where the
property lies."
In Danao vs. Court of Appeals,[16] this Court, reiterating jurisprudence enunciated
in Manila Trading and Supply Co. vs. Co Kim[17]and Movido vs. RFC,[18] invariably held:
"x x x The rule is now settled that a mortgage creditor may elect to waive his
security and bring, instead, an ordinary action to recover the indebtedness with the
right to execute a judgment thereon on all the properties of the debtor, including
the subject matter of the mortgage x x x, subject to the qualification that if he fails in the
remedy by him elected, he cannot pursue further the remedy he has
waived. (Underscoring Ours)
Anent real properties in particular, the Court has laid down the rule that a
mortgage creditor may institute against the mortgage debtor either a personal action
for debt or a real action to foreclose the mortgage.[19]

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

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

Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which

makes a third person who secures the fulfillment of another‘s obligation by mortgaging
his own property, to be solidarily bound with the principal obligor. The signatory to the
principal contract"loan"remains to be primarily bound. It is only upon default of the
latter that the creditor may have recourse on the mortgagors by foreclosing the
mortgaged properties in lieu of an action for the recovery of the amount of the loan. [21]

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

Thus, in Cerna vs. Court of Appeals,[22] we agreed with the petitioner in said case, that
the filing of a collection suit barred the foreclosure of the mortgage:
"A mortgagee who files a suit for collection abandons the remedy of foreclosure
of the chattel mortgage constituted over the personal property as security for the debt
or value of the promissory note when he seeks to recover in the said collection suit."

"x x x When the mortgagee elects to file a suit for collection, not foreclosure, thereby
abandoning the chattel mortgage as basis for relief, he clearly manifests his lack of
desire and interest to go after the mortgaged property as security for the promissory
note x x x."
Contrary to petitioner’s arguments, we therefore reiterate the rule, for clarity
and emphasis, that the mere act of filing of an ordinary action for collection operates as
a waiver of the mortgage-creditor’s remedy to foreclose the mortgage. By the mere
filing of the ordinary action for collection against the principal debtors, the petitioner in
the present case is deemed to have elected a remedy, as a result of which a waiver of
the other necessarily must arise. Corollarily, no final judgment in the collection suit is
required for the rule on waiver to apply.

Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court, [23] a case relied upon
by petitioner, supposedly to buttress its contention, this Court had occasion to rule that
the mere act of filing a collection suit for the recovery of a debt secured by a mortgage
constitutes waiver of the other remedy of foreclosure.

In the case at bar, petitioner BANTSA only has one cause of action which is non-payment
of the debt. Nevertheless, alternative remedies are available for its enjoyment and
exercise. Petitioner then may opt to exercise only one of two remedies so as not to
violate the rule against splitting a cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc. vs.
Icarangal.[24]
"For non-payment of a note secured by mortgage, the creditor has a single cause
of action against the debtor. This single cause of action consists in the recovery of the
credit with execution of the security. In other words, the creditor in his action may make
two demands, the payment of the debt and the foreclosure of his mortgage. But both
demands arise from the same cause, the non-payment of the debt, and for that reason,
they constitute a single cause of action. Though the debt and the mortgage constitute
separate agreements, the latter is subsidiary to the former, and both refer to one and
the same obligation. Consequently, there exists only one cause of action for a single
breach of that obligation. Plaintiff, then, by applying the rules above stated, cannot split
up his single cause of action by filing a complaint for payment of the debt, and
thereafter another complaint for foreclosure of the mortgage. If he does so, the filing of
the first complaint will bar the subsequent complaint. By allowing the creditor to file
two separate complaints simultaneously or successively, one to recover his credit and
another to foreclose his mortgage, we will, in effect, be authorizing him plural redress
for a single breach of contract at so much cost to the courts and with so much vexation
and oppression to the debtor."
Petitioner further faults the Court of Appeals for allegedly disregarding the
doctrine enunciated in Caltex, wherein this High Court relaxed the application of the
general rules to wit:
"In the present case, however, we shall not follow this rule to the letter but
declare that it is the collection suit which was waived and/or abandoned. This ruling is
more in harmony with the principles underlying our judicial system. It is of no moment
that the collection suit was filed ahead, what is determinative is the fact that the
foreclosure proceedings ended even before the decision in the collection suit was
rendered. x x x"
Notably, though, petitioner took the Caltex ruling out of context. We must stress
that the Caltex case was never intended to overrule the well-entrenched doctrine
enunciated in Bachrach, which to our mind still finds applicability in cases of this sort. To
reiterate, Bachrach is still good law.

We then quote the decision[25]of the trial court, in the present case, thus:
"The aforequoted ruling in Caltex is the exception rather than the rule, dictated
by the peculiar circumstances obtaining therein. In the said case, the Supreme Court
chastised Caltex for making - x x x a mockery of our judicial system when it initially filed
a collection suit then, during the pendency thereof, foreclosed extrajudicially the
mortgaged property which secured the indebtedness, and still pursued the collection
suit to the end." Thus, to prevent a mockery of our judicial system", the collection suit
had to be nullified because the foreclosure proceedings have already been pursued to
their end and can no longer be undone.

xxxxxxxxx

"In the case at bar, it has not been shown whether the defendant pursued to the end or
are still pursuing the collection suits filed in foreign courts. There is no occasion,
therefore, for this court to apply the exception laid down by the Supreme Court in
Caltex, by nullifying the collection suits. Quite obviously, too, the aforesaid collection
suits are beyond the reach of this Court. Thus the only way the court may prevent the
spector of a creditor having "plural redress for a single breach of contract" is by holding,
as the Court hereby holds, that the defendant has waived the right to foreclose the
mortgages constituted by the plaintiff on its properties originally covered by Transfer
Certificates of Title Nos. T-78759, T-78762, T-78760 and T-78761." (RTC Decision pp., 10-
11)
In this light, the actuations of Caltex are deserving of severe criticism, to say the
[26]
least.

Moreover, petitioner attempts to mislead this Court by citing the case of PCIB vs. IAC.
[27]
 Again, petitioner tried to fit a square peg in a round hole. It must be stressed that far
from overturning the doctrine laid down in Bachrach, this Court in PCIB buttressed its
firm stand on this issue by declaring:
"While the law allows a mortgage creditor to either institute a personal action for
the debt or a real action to foreclosure the mortgage, he cannot pursue both remedies
simultaneously or successively as was done by PCIB in this case."

xxxxxxxxx

"Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the 1.3 million
promissory note secured by real estate mortgages and subsequently filed a petition for
extrajudicial foreclosure, it violates the rule against splitting a cause of action."
Accordingly, applying the foregoing rules, we hold that petitioner, by the
expediency of filing four civil suits before foreign courts, necessarily abandoned the
remedy to foreclose the real estate mortgages constituted over the properties of third-
party mortgagor and herein private respondent ARC. Moreover, by filing the four civil
actions and by eventually foreclosing extrajudicially the mortgages, petitioner in effect
transgressed the rules against splitting a cause of action well-enshrined in jurisprudence
and our statute books.

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

Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy
chosen in addressing the creditor’s cause. Hence, a suit brought before a foreign court
having competence and jurisdiction to entertain the action is deemed, for this purpose,
to be within the contemplation of the remedy available to the mortgagee-creditor. This
pronouncement would best serve the interest of justice and fair play and further
discourage the noxious practice of splitting up a lone cause of action.

Incidentally, BANTSA alleges that under English Law, which according to petitioner is the
governing law with regard to the principal agreements, the mortgagee does not lose its
security interest by simply filing civil actions for sums of money. [29]

We rule in the negative.

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

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

In the instant case, assuming arguendo that the English Law on the matter were
properly pleaded and proved in accordance with Section 24, Rule 132 of the Rules of
Court and the jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales,[32] said foreign
law would still not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established
public policy of the forum, the said foreign law, judgment or order shall not be applied.
[33]

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

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

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

"If two or more suits are instituted on the basis of the same cause of action, the
filing of one or a judgment upon the merits in any one is available as a ground for the
dismissal of the others."
Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust
negates the fundamental principles of Conflict of Laws. [35]

Clearly then, English Law is not applicable.

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

Actual or compensatory damages are those recoverable because of pecuniary loss in

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

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

On this matter, the trial court observed:

"The record herein reveals that plaintiff-appellee formally offered as evidence the
appraisal report dated March 29, 1993 (Exhibit J, Records, p. 409), consisting of twenty
three (23) pages which set out in detail the valuation of the property to determine its
fair market value (TSN, April 22, 1994, p. 4), in the amount of P99,986,592.00 (TSN, ibid.,
p. 5), together with the corroborative testimony of one Mr. Reynaldo F. Flores, an
appraiser and director of Philippine Appraisal Company, Inc. (TSN, ibid., p. 3). The
latter’s testimony was subjected to extensive cross-examination by counsel for
defendant-appellant (TSN, April 22, 1994, pp. 6-22)."[39]
In the matter of credibility of witnesses, the Court reiterates the familiar and
well-entrenched rule that the factual findings of the trial court should be respected.
[40]
 The time-tested jurisprudence is that the findings and conclusions of the trial court
on the credibility of witnesses enjoy a badge of respect for the reason that trial courts
have the advantage of observing the demeanor of witnesses as they testify. [41]

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

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

In arriving at the amount of actual damages, the trial court justified the award by
presenting the following ratiocination in its assailed decision [45], to wit:
 "Indeed, the Court has its own mind in the matter of valuation. The size of the
subject real properties are (sic) set forth in their individual titles, and the Court itself has
seen the character and nature of said properties during the ocular inspection it
conducted. Based principally on the foregoing, the Court makes the following
observations:

"1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del Monte,
Bulacan, which is (sic) not distant from Metro Manila - the biggest urban center in the
Philippines - and are easily accessible through well-paved roads;

"2. The properties are suitable for development into a subdivision for low cost housing,
as admitted by defendant’s own appraiser (TSN, May 30, 1994, p. 31);

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

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

"5. The fact that ICCS was able to sell the subject properties to Stateland Investment
Corporation for Thirty Nine Million (P39,000,000.00) Pesos, which is more than triple
defendant’s appraisal (Exh. 2) clearly shows that the Court cannot rely on defendant’s
aforesaid estimate (Decision, Records, p. 603)."
It is a fundamental legal aphorism that the conclusions of the trial judge on the
credibility of witnesses command great respect and consideration especially when the
conclusions are supported by the evidence on record. [46] Applying the foregoing
principle, we therefore hold that the trial court committed no palpable error in giving
credence to the testimony of Reynaldo Flores, who according to the records, is a
licensed real estate broker, appraiser and director of Philippine Appraisal Company, Inc.
since 1990.[47] As the records show, Flores had been with the company for 26 years at
the time of his testimony.

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

Based on these considerations and the evidence submitted, we affirm the ruling of the
trial court as regards the valuation of the property -
"x x x a valuation of Ninety Nine Million Pesos (P99,000,000.00) for the 39-
hectare properties (sic) translates to just about Two Hundred Fifty Four Pesos (P254.00)
per square meter. This appears to be, as the court so holds, a better approximation of
the fair market value of the subject properties. This is the amount which should be
restituted by the defendant to the plaintiff by way of actual or compensatory damages x
x x."[48]
Further, petitioner ascribes error to the lower court for awarding an amount
allegedly not asked nor prayed for in private respondent’s complaint.

Notwithstanding the fact that the award of actual and compensatory damages by the
lower court exceeded that prayed for in the complaint, the same is nonetheless valid,
subject to certain qualifications.

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

"SEC. 5. Amendment to conform to or authorize presentation of evidence. -
When issues not raised by the pleadings are tried with the express or implied consent of
the parties, they shall be treated in all respects as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any
party at any time, even after judgement; but failure to amend does not affect the result
of the trial of these issues. If evidence is objected to at the trial on the ground that it is
not within the issues made by the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation of the merits of the action
and the ends of substantial justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made."
 The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de
Agricultures de Talisay-Silay, Inc.[49] citing Northern Cement Corporation vs.
Intermediate Appellate Court [50] is enlightening:
"There have been instances where the Court has held that even without the
necessary amendment, the amount proved at the trial may be validly awarded, as in
Tuazon v. Bolanos (95 Phil. 106), where we said that if the facts shown entitled plaintiff
to relief other than that asked for, no amendment to the complaint was necessary,
especially where defendant had himself raised the point on which recovery was based.
The appellate court could treat the pleading as amended to conform to the evidence
although the pleadings were actually not amended. Amendment is also unnecessary
when only clerical error or non substantial matters are involved, as we held in Bank of
the Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we
stressed that the rule on amendment need not be applied rigidly, particularly where no
surprise or prejudice is caused the objecting party. And in the recent case of National
Power Corporation vs. Court of Appeals (113 SCRA 556), we held that where there is a
variance in the defendant’s pleadings and the evidence adduced by it at the trial, the
Court may treat the pleading as amended to conform with the evidence.

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

"The failure of a party to amend a pleading to conform to the evidence adduced during
trial does not preclude an adjudication by the court on the basis of such evidence which
may embody new issues not raised in the pleadings, or serve as a basis for a higher
award of damages. Although the pleading may not have been amended to conform to
the evidence submitted during trial, judgment may nonetheless be rendered, not simply
on the basis of the issues alleged but also on the basis of issues discussed and the
assertions of fact proved in the course of trial. The court may treat the pleading as if it
had been amended to conform to the evidence, although it had not been actually so
amended. Former Chief Justice Moran put the matter in this way:

`When evidence is presented by one party, with the expressed or implied consent of the
adverse party, as to issues not alleged in the pleadings, judgment may be rendered
validly as regards those issues, which shall be considered as if they have been raised in
the pleadings. There is implied consent to the evidence thus presented when the
adverse party fails to object thereto.’

"Clearly, a court may rule and render judgment on the basis of the evidence before it
even though the relevant pleading had not been previously amended, so long as no
surprise or prejudice is thereby caused to the adverse party. Put a little differently, so
long as the basis requirements of fair play had been met, as where litigants were given
full opportunity to support their respective contentions and to object to or refute each
other’s evidence, the court may validly treat the pleadings as if they had been amended
to conform to the evidence and proceed to adjudicate on the basis of all the evidence
before it."
In the instant case, inasmuch as the petitioner was afforded the opportunity to
refute and object to the evidence, both documentary and testimonial, formally offered
by private respondent, the rudiments of fair play are deemed satisfied. In fact, the
testimony of Reynaldo Flores was put under scrutiny during the course of the cross-
examination. Under these circumstances, the court acted within the bounds of its
jurisdiction and committed no reversible error in awarding actual damages the amount
of which is higher than that prayed for. Verily, the lower court’s actuations are
sanctioned by the Rules and supported by jurisprudence.

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

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The

decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION of the
amount awarded as exemplary damages. Accordingly, petitioner is hereby ordered to
pay private respondent the sum of P99,000,000.00 as actual or compensatory damages;
P50,000.00 as exemplary damage and the costs of suit.

SO ORDERED.
 FIRST DIVISION
[ G.R. No. 122191, October 08, 1998 ]
SAUDI ARABIAN AIRLINES, PETITIONER, VS. COURT OF APPEALS,
MILAGROS P. MORADA AND HON. RODOLFO A. ORTIZ, IN HIS
CAPACITY AS PRESIDING JUDGE OF BRANCH 89, REGIONAL TRIAL
COURT OF QUEZON CITY, RESPONDENTS.

DECISION

QUISUMBING, J.:

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

The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision[9], are as follows:
"On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for
its airlines based in Jeddah, Saudi Arabia. x x x

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

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

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

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

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

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once

again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after
receiving assurance from SAUDIA’s Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.

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

On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court where
the judge, to her astonishment and shock, rendered a decision, translated to her in
English, sentencing her to five months imprisonment and to 286 lashes. Only then did
she realize that the Saudi court had tried her, together with Thamer and Allah, for what
happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco,
dancing and listening to the music in violation of Islamic laws; and (3) socializing with
the male crew, in contravention of Islamic tradition."[10]
Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah
continued to serve in the international flights.[11]

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

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

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

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

On June 23, 1994, Morada filed an Amended Complaint [17] wherein Al-Balawi was
dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and
Motion to Dismiss Amended Complaint[18].
The trial court issued an Order[19] dated August 29, 1994 denying the Motion to Dismiss
Amended Complaint filed by Saudia.

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

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

Respondent Judge subsequently issued another Order [24] dated February 2, 1995,

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

SO ORDERED."[25]
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order[26] with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
Order[27] dated February 23, 1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed, in the interim.

In another Resolution[28] promulgated on September 27, 1995, now assailed, the

appellate court denied SAUDIA’s Petition for the Issuance of a Writ of Preliminary
Injunction dated February 18, 1995, to wit:
"The Petition for the Issuance of a Writ of Preliminary Injunction is hereby
DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary
Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein petitioner is
not clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court of Appeals, et.
Al., 100335, April 7, 1993, Second Division).

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

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

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

Petitioner SAUDIA raised the following issues:

"I

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

II.

Leave of court before filing a supplemental pleading is not a jurisdictional requirement.

Besides, the matter as to absence of leave of court is now moot and academic when this
Honorable Court required the respondents to comment on petitioner’s April 30, 1996
Supplemental Petition For Review With Prayer For A Temporary Restraining Order
Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of Court should
be construed with liberality pursuant to Section 2, Rule 1 thereof.

III.

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

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE REGIONAL

TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-
93-18394 ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN AIRLINES."

II.

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN THE CASE

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

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

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

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

"2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation

doing business in the Philippines. It may be served with summons and other court
processes at Travel Wide Associated Sales (Phils.), Inc., 3rd Floor, Cougar Building, 114
Valero St., Salcedo Village, Makati, Metro Manila.

x x x     x x x      x x x

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

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

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

9.Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once

again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after
receiving assurance from SAUDIA’s Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no danger to her.

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

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

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

Where the factual antecedents satisfactorily establish the existence of a foreign

element, we agree with petitioner that the problem herein could present a "conflicts"
case.

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

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

In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as
a flight stewardess, events did transpire during her many occasions of travel across
national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice
versa, that caused a "conflicts" situation to arise.

We thus find private respondent’s assertion that the case is purely domestic, imprecise.
A conflicts problem presents itself here, and the question of jurisdiction [43] confronts the
court a quo.

After a careful study of the private respondent’s Amended Complaint, [44] and the
Comment thereon, we note that she aptly predicated her cause of action on Articles 19
and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides;

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

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

"Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for
damages."
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, [45] this Court held
that:
 "The aforecited provisions on human relations were intended to expand the
concept of torts in this jurisdiction by granting adequate legal remedy for the untold
number of moral wrongs which is impossible for human foresight to specifically provide
in the statutes."
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent’s assertion that violations of Articles
19 and 21 are actionable, with judicially enforceable remedies in the municipal forum.

Based on the allegations[46] in the Amended Complaint, read in the light of the Rules of
Court on jurisdiction[47] we find that the Regional Trial Court (RTC) of Quezon City
possesses jurisdiction over the subject matter of the suit. [48] Its authority to try and hear
the case is provided for under Section 1 of Republic Act No. 7691, to wit:
"Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980", is hereby amended to read as follows:

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

x x x     x x x      x x x

(8) In all other cases in which demand, exclusive of interest, damages of whatever

kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases
in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds
Two hundred Thousand pesos (P200,000.00). (Emphasis ours)

x x x    x x x       x x x
And following Section 2 (b), Rule 4 of the Revised Rules of Court—the venue,
Quezon City, is appropriate:
"SEC. 2 Venue in Courts of First Instance. -[Now Regional Trial Court]

(a) x x x        x x x     x x x

(b) Personal actions. - All other actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff or
any of the plaintiff resides, at the election of the plaintiff."
 Pragmatic considerations, including the convenience of the parties, also weigh
heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private
interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious.
Relative advantages and obstacles to a fair trial are equally important. Plaintiff may not,
by choice of an inconvenient forum, ‘vex’, ‘harass’, or ‘oppress’ the defendant, e.g. by
inflicting upon him needless expense or disturbance. But unless the balance is strongly
in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed. [49]

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

Moreover, by hearing the case in the Philippines no unnecessary difficulties and

inconvenience have been shown by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.

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

The records show that petitioner SAUDIA has filed several motions [50] praying for the
dismissal of Morada’s Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the
motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably,
petitioner SAUDIA has effectively submitted to the trial court’s jurisdiction by praying for
the dismissal of the Amended Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.:[51]

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

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

"When the appearance is by motion for the purpose of objecting to the jurisdiction of
the court over the person, it must be for the sole and separate purpose of objecting to
the jurisdiction of the court. If his motion is for any other purpose than to object to the
jurisdiction of the court over his person, he thereby submits himself to the jurisdiction
of the court. A special appearance by motion made for the purpose of objecting to the
jurisdiction of the court over the person will be held to be a general appearance, if the
party in said motion should, for example, ask for a dismissal of the action upon the
further ground that the court had no jurisdiction over the subject matter." [52]
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its
exercise thereof, justified.

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

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

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

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

Note that one or more circumstances may be present to serve as the possible test for
the determination of the applicable law.[59] These "test factors" or "points of contact" or
"connecting factors" could be any of the following:
"(1) The nationality of a person, his domicile, his residence, his place of sojourn,
or his origin;

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

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

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

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

(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;

(7) the place where judicial or administrative proceedings are instituted or done. The lex
fori"the law of the forum"is particularly important because, as we have seen earlier,
matters of ‘procedure’ not going to the substance of the claim involved are governed by
it; and because the lex fori applies whenever the content of the otherwise applicable
foreign law is excluded from application in a given case for the reason that it falls under
one of the exceptions to the applications of foreign law; and

(8) the flag of a ship, which in many cases is decisive of practically all legal relationships
of the ship and of its master or owner as such. It also covers contractual relationships
particularly contracts of affreightment."[60] (Underscoring ours.)
 After a careful study of the pleadings on record, including allegations in the
Amended Complaint deemed submitted for purposes of the motion to dismiss, we are
convinced that there is reasonable basis for private respondent’s assertion that
although she was already working in Manila, petitioner brought her to Jeddah on the
pretense that she would merely testify in an investigation of the charges she made
against the two SAUDIA crew members for the attack on her person while they were in
Jakarta. As it turned out, she was the one made to face trial for very serious charges,
including adultery and violation of Islamic laws and tradition.

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

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

Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability[61] have been advanced to offer
fresh judicial approaches to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the "State of the most
significant relationship" rule, which in our view should be appropriate to apply now,
given the factual context of this case.

In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the place
where the injury occurred; (b) the place where the conduct causing the injury occurred;
(c) the domicile, residence, nationality, place of incorporation and place of business of
the parties, and (d) the place where the relationship, if any, between the parties is
centered.[62]

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

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

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

WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-

93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is
hereby REMANDED to Regional Trial Court of Quezon City, Branch 89 for further
proceedings.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 155014, November 11, 2005 ]
CRESCENT PETROLEUM, LTD., PETITIONER, VS. M/V "LOK
MAHESHWARI," THE SHIPPING CORPORATION OF INDIA, AND
PORTSERV LIMITED AND/OR TRANSMAR SHIPPING, INC.,
RESPONDENTS.

DECISION

PUNO, J.:

This petition for review on certiorari under Rule 45 seeks the (a) reversal of the
November 28, 2001 Decision of the Court of Appeals in CA-G.R. No. CV-54920,
  which dismissed for "want of jurisdiction" the instant case, and the September 3, 2002
[1]

Resolution of the same appellate court,[2] which denied petitioner's motion for

reconsideration, and (b) reinstatement of the July 25, 1996 Decision [3] of the Regional
Trial Court (RTC) in Civil Case No. CEB-18679, which held that respondents were
solidarily liable to pay petitioner the sum prayed for in the complaint.

The facts are as follows:  Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing
vessel of Indian registry that is owned by respondent Shipping Corporation of India
(SCI), a corporation organized and existing under the laws of India and principally owned
by the Government of India.  It was time-chartered by respondent SCI to Halla Merchant
Marine Co. Ltd. (Halla), a South Korean company.  Halla, in turn, sub-chartered the
Vessel through a time charter to Transmar Shipping, Inc. (Transmar).  Transmar further
sub-chartered the Vessel to Portserv Limited (Portserv).  Both Transmar and Portserv are
corporations organized and existing under the laws of Canada.

On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd.

(Crescent), a corporation organized and existing under the laws of Canada that is engaged
in the business of selling petroleum and oil products for the use and operation of
oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the Vessel.  Petitioner
Crescent granted and confirmed the request through an advice via facsimile dated
November 2, 1995.  As security for the payment of the bunker fuels and related services,
petitioner Crescent received two (2) checks in the amounts of US$100,000.00 and
US$200,000.00.  Thus, petitioner Crescent contracted with its supplier, Marine Petrobulk
Limited (Marine Petrobulk), another Canadian corporation, for the physical delivery of
the bunker fuels to the Vessel.

On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting
to US$103,544 inclusive of barging and demurrage charges to the Vessel at the port of
Pioneer Grain, Vancouver, Canada.  The Chief Engineer Officer of the Vessel duly
acknowledged and received the delivery receipt.  Marine Petrobulk issued an invoice to
petitioner Crescent for the US$101,400.00 worth of the bunker fuels.  Petitioner Crescent
issued a check for the same amount in favor of Marine Petrobulk, which check was duly
encashed.

Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated
November 21, 1995 to "Portserv Limited, and/or the Master, and/or Owners, and/or
Operators, and/or Charterers of M/V 'Lok Maheshwari'" in the amount of US$103,544.00
with instruction to remit the amount on or before December 1, 1995.  The period lapsed
and several demands were made but no payment was received.  Also, the checks issued to
petitioner Crescent as security for the payment of the bunker fuels were dishonored for
insufficiency of funds.  As a consequence, petitioner Crescent incurred additional
expenses of US$8,572.61 for interest, tracking fees, and legal fees.
On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner
Crescent instituted before the RTC of Cebu City an action "for a sum of money with
prayer for temporary restraining order and writ of preliminary attachment" against
respondents Vessel and SCI, Portserv and/or Transmar.  The case was raffled to Branch
10 and docketed as Civil Case No. CEB-18679.

On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond
at P2,710,000.00.  Petitioner Crescent withdrew its prayer for a temporary restraining
order and posted the required bond.

On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv
and/or Transmar through the Master of the Vessel.  On May 28, 1996, respondents Vessel
and SCI, through Pioneer Insurance and Surety Corporation (Pioneer), filed an urgent ex-
parte motion to approve Pioneer's letter of undertaking, to consider it as counter-bond and
to discharge the attachment.  On May 29, 1996, the trial court granted the motion; thus,
the letter of undertaking was approved as counter-bond to discharge the attachment.

For failing to file their respective answers and upon motion of petitioner Crescent, the
trial court declared respondents Vessel and SCI, Portserv and/or Transmar in default. 
Petitioner Crescent was allowed to present its evidence ex-parte.

On July 25, 1996, the trial court rendered its decision in favor of petitioner Crescent,
thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff
[Crescent] and against the defendants [Vessel, SCI, Portserv and/or Transmar].

Consequently, the latter are hereby ordered to pay plaintiff jointly and solidarily, the
following:
(a) the sum of US$103,544.00, representing the outstanding obligation;
 
(b) interest of US$10,978.50 as of July 3, 1996, plus additional interest at 18% per annum
for the period thereafter, until the principal account is fully paid;
 
(c) attorney's fees of P300,000.00; and
 
(d) P200,000.00 as litigation expenses.
SO ORDERED.
On August 19, 1996, respondents Vessel and SCI appealed to the Court of Appeals. 
They attached copies of the charter parties between respondent SCI and Halla, between
Halla and Transmar, and between Transmar and Portserv.  They pointed out that Portserv
was a time charterer and that there is a clause in the time charters between respondent
SCI and Halla, and between Halla and Transmar, which states that "the Charterers shall
provide and pay for all the fuel except as otherwise agreed."  They submitted a copy of
Part II of the Bunker Fuel Agreement between petitioner Crescent and Portserv
containing a stipulation that New York law governs the "construction, validity and
performance" of the contract.  They likewise submitted certified copies of the
Commercial Instruments and Maritime Lien Act of the United States (U.S.), some U.S.
cases, and some Canadian cases to support their defense.

On November 28, 2001, the Court of Appeals issued its assailed Decision, which
reversed that of the trial court, viz:
WHEREFORE, premises considered, the Decision dated July 25, 1996, issued by the
Regional Trial Court of Cebu City, Branch 10, is hereby REVERSED and SET ASIDE,
and a new one is entered DISMISSING the instant case for want of jurisdiction.
The appellate court denied petitioner Crescent's motion for reconsideration explaining
that it "dismissed the instant action primarily on the ground of forum non
conveniens considering that the parties are foreign corporations which are not doing
business in the Philippines."

Hence, this petition submitting the following issues for resolution, viz:

1. Philippine courts have jurisdiction over a foreign vessel found inside

Philippine waters for the enforcement of a maritime lien against said vessel
and/or its owners and operators;

2. The principle of forum non conveniens is inapplicable to the instant case;

3. The trial court acquired jurisdiction over the subject matter of the instant
case, as well as over the res and over the persons of the parties;

4. The enforcement of a maritime lien on the subject vessel is expressly

granted by law.  The Ship Mortgage Acts as well as the Code of Commerce
provides for relief to petitioner for its unpaid claim;

5. The arbitration clause in the contract was not rigid or inflexible but
expressly allowed petitioner to enforce its maritime lien in Philippine courts
provided the vessel was in the Philippines;

6. The law of the state of New York is inapplicable to the present controversy
as the same has not been properly pleaded and proved;

7. Petitioner has legal capacity to sue before Philippine courts as it is suing

upon an isolated business transaction;

8. Respondents were duly served summons although service of summons

upon respondents is not a jurisdictional requirement, the action being a suit
quasi in rem;
 9. The trial court's decision has factual and legal bases; and,

10. The respondents should be held jointly and solidarily liable.

In a nutshell, this case is for the satisfaction of unpaid supplies furnished by a foreign
supplier in a foreign port to a vessel of foreign registry that is owned, chartered and sub-
chartered by foreign entities.

Under Batas Pambansa Bilang 129, as amended by Republic Act No. 7691, RTCs
exercise exclusive original jurisdiction "(i)n all actions in admiralty and maritime where
the demand or claim exceeds two hundred thousand pesos (P200,000) or in Metro
Manila, where such demand or claim exceeds four hundred thousand pesos (P400,000)." 
Two (2) tests have been used to determine whether a case involving a contract comes
within the admiralty and maritime jurisdiction of a court - the locational test and
the subject matter test.  The English rule follows the locational test wherein maritime
and admiralty jurisdiction, with a few exceptions, is exercised only on contracts made
upon the sea and to be executed thereon.  This is totally rejected under the American rule
where the criterion in determining whether a contract is maritime depends on the nature
and subject matter of the contract, having reference to maritime service and transactions.
[4]
   In International Harvester Company of the Philippines v. Aragon,[5] we adopted
the American rule and held that "(w)hether or not a contract is maritime depends not on
the place where the contract is made and is to be executed, making the locality the test,
but on the subject matter of the contract, making the true criterion a maritime service or a
maritime transaction."

A contract for furnishing supplies like the one involved in this case is maritime and
within the jurisdiction of admiralty.[6]  It may be invoked before our courts through an
action in rem or quasi in rem or an action in personam.  Thus: [7]

xxx
"Articles 579 and 584 [of the Code of Commerce] provide a method of collecting or
enforcing not only the liens created under Section 580 but also for the collection of any
kind of lien whatsoever."[8]  In the Philippines, we have a complete legislation, both
substantive and adjective, under which to bring an action in rem against a vessel for the
purpose of enforcing liens.  The substantive law is found in Article 580 of the Code of
Commerce.  The procedural law is to be found in Article 584 of the same Code.  The
result is, therefore, that in the Philippines any vessel – even though it be a foreign vessel
– found in any port of this Archipelago may be attached and sold under the substantive
law which defines the right, and the procedural law contained in the Code of Commerce
by which this right is to be enforced.[9] x x x.   But where neither the law nor the contract
between the parties creates any lien or charge upon the vessel, the only way in which it
can be seized before judgment is by pursuing the remedy relating to attachment under
Rule 59 [now Rule 57] of the Rules of Court.[10]
But, is petitioner Crescent entitled to a maritime lien under our laws'  Petitioner Crescent
bases its claim of a maritime lien on Sections 21, 22 and 23 of Presidential Decree No.
1521 (P.D. No. 1521), also known as the Ship Mortgage Decree of 1978, viz:
Sec. 21. Maritime Lien for Necessaries; persons entitled to such lien. - Any person
furnishing repairs, supplies, towage, use of dry dock or maritime railway, or other
necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of
such vessel, or of a person authorized by the owner, shall have a maritime lien on the
vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove
that credit was given to the vessel.

Sec. 22. Persons Authorized to Procure Repairs, Supplies and Necessaries. - The
following persons shall be presumed to have authority from the owner to procure repairs,
supplies, towage, use of dry dock or marine railway, and other necessaries for the vessel: 
The managing owner, ship's husband, master or any person to whom the management of
the vessel at the port of supply is entrusted.  No person tortuously or unlawfully in
possession or charge of a vessel shall have authority to bind the vessel.

Sec. 23. Notice to Person Furnishing Repairs, Supplies and Necessaries. - The officers
and agents of a vessel specified in Section 22 of this Decree shall be taken to include
such officers and agents when appointed by a charterer, by an owner pro hac vice, or by
an agreed purchaser in possession of the vessel; but nothing in this Decree shall be
construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence
could have ascertained, that because of the terms of a charter party, agreement for sale of
the vessel, or for any other reason, the person ordering the repairs, supplies, or other
necessaries was without authority to bind the vessel therefor.
Petitioner Crescent submits that these provisions apply to both domestic and foreign
vessels, as well as domestic and foreign suppliers of necessaries.  It contends that the use
of the term "any person" in Section 21 implies that the law is not restricted to domestic
suppliers but also includes all persons who supply provisions and necessaries to a vessel,
whether foreign or domestic.  It points out further that the law does not indicate that the
supplies or necessaries must be furnished in the Philippines in order to give petitioner the
right to seek enforcement of the lien with a Philippine court.[11]

Respondents Vessel and SCI, on the other hand, maintain that Section 21 of the P.D. No.
1521 or the Ship Mortgage Decree of 1978 does not apply to a foreign supplier like
petitioner Crescent as the provision refers only to a situation where the person furnishing
the supplies is situated inside the territory of the Philippines and not where the
necessaries were furnished in a foreign jurisdiction like Canada.[12]

We find against petitioner Crescent.

I.
P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted "to accelerate the
growth and development of the shipping industry" and "to extend the benefits accorded to
overseas shipping under Presidential Decree No. 214 to domestic shipping."[13]  It is
patterned closely from the U.S. Ship Mortgage Act of 1920 and the Liberian Maritime
Law relating to preferred mortgages.[14]  Notably, Sections 21, 22 and 23 of P.D. No.
1521 or the Ship Mortgage Decree of 1978 are identical to Subsections P, Q, and R,
respectively, of the U.S. Ship Mortgage Act of 1920, which is part of the Federal
Maritime Lien Act.  Hence, U.S. jurisprudence finds relevance to determining whether
P.D. No. 1521 or the Ship Mortgage Decree of 1978 applies in the present case.

The various tests used in the U.S. to determine whether a maritime lien exists are the
following:

One.  "In a suit to establish and enforce a maritime lien for supplies furnished to a vessel
in a foreign port, whether such lien exists, or whether the court has or will exercise
jurisdiction, depends on the law of the country where the supplies were furnished,
which must be pleaded and proved."[15]  This principle was laid down in the 1888 case
of The Scotia,[16] reiterated in The Kaiser Wilhelm II[17] (1916),  in The
Woudrichem[18] (1921) and in The City of Atlanta[19] (1924).

Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-

factor methodologies as the law of the place of supply.[20]

In Lauritzen v. Larsen,[21] a Danish seaman, while temporarily in New York, joined the
crew of a ship of Danish flag and registry that is owned by a Danish citizen.  He signed
the ship's articles providing that the rights of the crew members would be governed by
Danish law and by the employer's contract with the Danish Seamen's Union, of which he
was a member.  While in Havana and in the course of his employment, he was
negligently injured.  He sued the shipowner in a federal district court in New York for
damages under the Jones Act.  In holding that Danish law and not the Jones Act was
applicable, the Supreme Court adopted a multiple-contact test to determine, in the
absence of a specific Congressional directive as to the statute's reach, which jurisdiction's
law should be applied.  The following factors were considered: (1) place of the wrongful
act; (2) law of the flag; (3) allegiance or domicile of the injured; (4) allegiance of the
defendant shipowner; (5) place of contract; (6) inaccessibility of foreign forum; and
(7) law of the forum.

Several years after Lauritzen, the U.S. Supreme Court in the case of Romero v.
International Terminal Operating Co.[22] again considered a foreign seaman's personal
injury claim under both the Jones Act and the general maritime law.  The Court held that
the factors first announced in the case of Lauritzen were applicable not only to personal
injury claims arising under the Jones Act but to all matters arising under maritime
law in general.[23]

Hellenic Lines, Ltd. v. Rhoditis[24] was also a suit under the Jones Act by a Greek
seaman injured aboard a ship of Greek registry while in American waters.  The ship was
operated by a Greek corporation which has its largest office in New York and another
office in New Orleans and whose stock is more than 95% owned by a U.S. domiciliary
who is also a Greek citizen.  The ship was engaged in regularly scheduled runs between
various ports of the U.S. and the Middle East, Pakistan, and India, with its entire income
coming from either originating or terminating in the U.S.  The contract of employment
provided that Greek law and a Greek collective bargaining agreement would apply
between the employer and the seaman and that all claims arising out of the employment
contract were to be adjudicated by a Greek court.  The U.S. Supreme Court observed
that of the seven factors listed in the Lauritzen test, four were in favor of the
shipowner and against jurisdiction.  In arriving at the conclusion that the Jones Act
applies, it ruled that the application of the Lauritzen test is not a mechanical one.  It stated
thus: "[t]he significance of one or more factors must be considered in light of the national
interest served by the assertion of Jones Act jurisdiction. (footnote omitted) Moreover,
the list of seven factors in Lauritzen was not intended to be exhaustive.  x x x  [T]he
shipowner's base of operations is another factor of importance in determining whether the
Jones Act is applicable; and there well may be others."

The principles enunciated in these maritime tort cases have been extended to cases
involving unpaid supplies and necessaries such as the cases of Forsythe International
U.K., Ltd. v. M/V Ruth Venture,[25] and Comoco Marine Services v. M/V El
Centroamericano.[26]

Three. The factors provided in Restatement (Second) of Conflicts of Law have also

been applied, especially in resolving cases brought under the Federal Maritime Lien Act. 
Their application suggests that in the absence of an effective choice of law by the parties,
the forum contacts to be considered include: (a) the place of contracting; (b) the place of
negotiation of the contract; (c) the place of performance; (d) the location of the subject
matter of the contract; and (e) the domicile, residence, nationality, place of incorporation
and place of business of the parties.[27]

In Gulf Trading and Transportation Co. v. The Vessel Hoegh Shield,[28] an admiralty
action in rem was brought by an American supplier against a vessel of Norwegian flag
owned by a Norwegian Company and chartered by a London time charterer for unpaid
fuel oil and marine diesel oil delivered while the vessel was in U.S. territory.  The
contract was executed in London.  It was held that because the bunker fuel was delivered
to a foreign flag vessel within the jurisdiction of the U.S., and because the invoice
specified payment in the U.S., the admiralty and maritime law of the U.S. applied.  The
U.S. Court of Appeals recognized the modern approach to maritime conflict of law
problems introduced in the Lauritzen case.  However, it observed that Lauritzen involved
a torts claim under the Jones Act while the present claim involves an alleged maritime
lien arising from unpaid supplies.  It made a disclaimer that its conclusion is limited to
the unique circumstances surrounding a maritime lien as well as the statutory directives
found in the Maritime Lien Statute and that the initial choice of law determination is
significantly affected by the statutory policies surrounding a maritime lien.  It ruled
that the facts in the case call for the application of the Restatement (Second) of Conflicts
of Law.  The U.S. Court gave much significance to the congressional intent in enacting
the Maritime Lien Statute to protect the interests of American supplier of goods, services
or necessaries by making maritime liens available where traditional services are routinely
rendered.  It concluded that the Maritime Lien Statute represents a relevant policy of the
forum that serves the needs of the international legal system as well as the basic policies
underlying maritime law. The court also gave equal importance to the predictability of
result and protection of justified expectations in a particular field of law.  In the maritime
realm, it is expected that when necessaries are furnished to a vessel in an American port
by an American supplier, the American Lien Statute will apply to protect that supplier
regardless of the place where the contract was formed or the nationality of the vessel.

The same principle was applied in the case of Swedish Telecom Radio v. M/V
Discovery I[29] where the American court refused to apply the Federal Maritime Lien Act
to create a maritime lien for goods and services supplied by foreign companies in foreign
ports.  In this case, a Swedish company supplied radio equipment in a Spanish port to
refurbish a Panamanian vessel damaged by fire.  Some of the contract negotiations
occurred in Spain and the agreement for supplies between the parties indicated Swedish
company's willingness to submit to Swedish law.  The ship was later sold under a
contract of purchase providing for the application of New York law and was arrested in
the U.S. The U.S. Court of Appeals also held that while the contacts-based framework set
forth in Lauritzen was useful in the analysis of all maritime choice of law situations, the
factors were geared towards a seaman's injury claim.  As in Gulf Trading, the lien arose
by operation of law because the ship's owner was not a party to the contract under which
the goods were supplied.  As a result, the court found it more appropriate to consider the
factors contained in Section 6 of the Restatement (Second) of Conflicts of Law.  The U.S.
Court held that the primary concern of the Federal Maritime Lien Act is the protection of
American suppliers of goods and services.

The same factors were applied in the case of Ocean Ship Supply, Ltd. v. M/V Leah.[30]

II.

Finding guidance from the foregoing decisions, the Court cannot sustain petitioner
Crescent's insistence on the application of P.D. No. 1521 or the Ship Mortgage Decree of
1978 and hold that a maritime lien exists.

First.  Out of the seven basic factors listed in the case of Lauritzen, Philippine law only
falls under one – the law of the forum.  All other elements are foreign – Canada is the
place of the wrongful act, of the allegiance or domicile of the injured and the place of
contract; India is the law of the flag and the allegiance of the defendant shipowner. 
Balancing these basic interests, it is inconceivable that the Philippine court has any
interest in the case that outweighs the interests of Canada or India for that matter.

Second. P.D. No. 1521 or the Ship Mortgage Decree of 1978 is inapplicable following
the factors under Restatement (Second) of Conflict of Laws.  Like the Federal Maritime
Lien Act of the U.S., P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted
primarily to protect Filipino suppliers and was not intended to create a lien from a
contract for supplies between foreign entities delivered in a foreign port.

Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of 1978 and rule that a
maritime lien exists would not promote the public policy behind the enactment of the law
to develop the domestic shipping industry.  Opening up our courts to foreign suppliers by
granting them a maritime lien under our laws even if they are not entitled to a maritime
lien under their laws will encourage forum shopping.

Finally. The submission of petitioner is not in keeping with the reasonable expectation of
the parties to the contract.  Indeed, when the parties entered into a contract for supplies in
Canada, they could not have intended the laws of a remote country like the Philippines to
determine the creation of a lien by the mere accident of the Vessel's being in Philippine
territory.

III.

But under which law should petitioner Crescent prove the existence of its maritime lien?

In light of the interests of the various foreign elements involved, it is clear that Canada
has the most significant interest in this dispute.  The injured party is a Canadian
corporation, the sub-charterer which placed the orders for the supplies is also Canadian,
the entity which physically delivered the bunker fuels is in Canada, the place of
contracting and negotiation is in Canada, and the supplies were delivered in Canada.

The arbitration clause contained in the Bunker Fuel Agreement which states that New
York law governs the "construction, validity and performance" of the contract is only a
factor that may be considered in the choice-of-law analysis but is not conclusive.  As in
the cases of Gulf Trading and Swedish Telecom, the lien that is the subject matter of
this case arose by operation of law and not by contract because the shipowner was not a
party to the contract under which the goods were supplied.

It is worthy to note that petitioner Crescent never alleged and proved Canadian law as
basis for the existence of a maritime lien.  To the end, it insisted on its theory that
Philippine law applies.  Petitioner contends that even if foreign law applies, since the
same was not properly pleaded and proved, such foreign law must be presumed to be the
same as Philippine law pursuant to the doctrine of processual presumption.

Thus, we are left with two choices: (1) dismiss the case for petitioner's failure to establish
a cause of action[31] or (2) presume that Canadian law is the same as Philippine law.  In
either case, the case has to be dismissed.

It is well-settled that a party whose cause of action or defense depends upon a foreign law
has the burden of proving the foreign law.  Such foreign law is treated as a question of
fact to be properly pleaded and proved.[32]  Petitioner Crescent's insistence on enforcing a
maritime lien before our courts depended on the existence of a maritime lien under the
proper law.  By erroneously claiming a maritime lien under Philippine law instead of
proving that a maritime lien exists under Canadian law, petitioner Crescent failed to
establish a cause of action.[33]

Even if we apply the doctrine of processual presumption, the result will still be the same. 
Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the following are the
requisites for maritime liens on necessaries to exist: (1)  the "necessaries" must have been
furnished to and for the benefit of the vessel; (2) the "necessaries" must have been
necessary for the continuation of the voyage of the vessel; (3) the credit must have been
extended to the vessel; (4) there must be necessity for the extension of the credit; and (5)
the necessaries must be ordered by persons authorized to contract on behalf of the vessel.
[34]
   These do not avail in the instant case.

First. It was not established that benefit was extended to the vessel.  While this is
presumed when the master of the ship is the one who placed the order, it is not disputed
that in this case it was the sub-charterer Portserv which placed the orders to petitioner
Crescent.[35]  Hence, the presumption does not arise and it is incumbent upon petitioner
Crescent to prove that benefit was extended to the vessel.  Petitioner did not.

Second. Petitioner Crescent did not show any proof that the marine products were
necessary for the continuation of the vessel.

Third. It was not established that credit was extended to the vessel.  It is presumed that
"in the absence of fraud or collusion, where advances are made to a captain in a foreign
port, upon his request, to pay for necessary repairs or supplies to enable his vessel to
prosecute her voyage, or to pay harbor dues, or for pilotage, towage and like services
rendered to the vessel, that they are made upon the credit of the vessel as well as upon
that of her owners."[36]  In this case, it was the sub-charterer Portserv which requested for
the delivery of the bunker fuels.  The issuance of two checks amounting to US$300,000
in favor of petitioner Crescent prior to the delivery of the bunkers as security for the
payment of the obligation weakens petitioner Crescent's contention that credit was
extended to the Vessel.

We also note that when copies of the charter parties were submitted by respondents in the
Court of Appeals, the time charters between respondent SCI and Halla and between Halla
and Transmar were shown to contain a clause which states that "the Charterers shall
provide and pay for all the fuel except as otherwise agreed."  This militates against
petitioner Crescent's position that Portserv is authorized by the shipowner to contract for
supplies upon the credit of the vessel.

Fourth. There was no proof of necessity of credit.  A necessity of credit will be

presumed where it appears that the repairs and supplies were necessary for the ship and
that they were ordered by the master.  This presumption does not arise in this case since
the fuels were not ordered by the master and there was no proof of necessity for the
supplies.

Finally. The necessaries were not ordered by persons authorized to contract in behalf of

the vessel as provided under Section 22 of P.D. No. 1521 or the Ship Mortgage Decree of
1978 - the managing owner, the ship's husband, master or any person with whom the
management of the vessel at the port of supply is entrusted.  Clearly, Portserv, a sub-
charterer under a time charter, is not someone to whom the management of the vessel has
been entrusted.   A time charter is a contract for the use of a vessel for a specified period
of time or for the duration of one or more specified voyages wherein the owner of the
time-chartered vessel retains possession and control through the master and crew who
remain his employees.[37]  Not enjoying the presumption of authority, petitioner Crescent
should have proved that Portserv was authorized by the shipowner to contract for
supplies.  Petitioner failed.

A discussion on the principle of forum non conveniens is unnecessary.

IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. No. CV

54920, dated November 28, 2001, and its subsequent Resolution of September 3, 2002
are AFFIRMED.  The instant petition for review on certiorari is DENIED for lack of
merit.  Cost against petitioner.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 149177, November 23, 2007 ]
KAZUHIRO HASEGAWA AND NIPPON ENGINEERING CONSULTANTS
CO., LTD., PETITIONERS, VS. MINORU KITAMURA, RESPONDENT.
 DECISION

NACHURA, J.:

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

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

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

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

Threatened with impending unemployment, respondent, through his lawyer, requested a

negotiation conference and demanded that he be assigned to the BBRI project. Nippon
insisted that respondent’s contract was for a fixed term that had already expired, and
refused to negotiate for the renewal of the ICA.[10]

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

For their part, petitioners, contending that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss the complaint for lack of
jurisdiction. They asserted that the claim for improper pre-termination of respondent's
ICA could only be heard and ventilated in the proper courts of Japan following the
principles of lex loci celebrationis and lex contractus.[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the
replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI Project.
[13]

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

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

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

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

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

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

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

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO
THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF
RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.
[26]

The pivotal question that this Court is called upon to resolve is whether the subject matter
jurisdiction of Philippine courts in civil cases for specific performance and damages
involving contracts executed outside the country by foreign nationals may be assailed on
the principles of lex loci celebrationis, lex contractus, the “state of the most significant
relationship rule,” or forum non conveniens.

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

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

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

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

Necessarily, because the said dismissal is without prejudice and has no res
judicata effect, and even if petitioners still indicated in the verification and certification
of the second certiorari petition that the first had already been dismissed on procedural
grounds,[33] petitioners are no longer required by the Rules to indicate in their certification
of non-forum shopping in the instant petition for review of the second certiorari
petition, the status of the aforesaid first petition before the CA. In any case, an omission
in the certificate of non-forum shopping about any event that will not constitute res
judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant
the dismissal and nullification of the entire proceedings, considering that the evils sought
to be prevented by the said certificate are no longer present.[34]

The Court also finds no merit in respondent's contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon, the certiorari petition filed with the
CA and not the instant petition. True, the Authorization[35] dated September 4, 2000,
which is attached to the second certiorari petition and which is also attached to the instant
petition for review, is limited in scope—its wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company only in the petition filed with the
appellate court, and that authority cannot extend to the instant petition for review. [36] In a
plethora of cases, however, this Court has liberally applied the Rules or even suspended
its application whenever a satisfactory explanation and a subsequent fulfillment of the
requirements have been made.[37] Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply[38] an updated Authorization[39] for
Hasegawa to act on behalf of the company in the instant petition, the Court finds the
same as sufficient compliance with the Rules.

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

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

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

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

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

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

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

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

In this case, only the first phase is at issue—jurisdiction. Jurisdiction, however, has
various aspects. For a court to validly exercise its power to adjudicate a controversy, it
must have jurisdiction over the plaintiff or the petitioner, over the defendant or the
respondent, over the subject matter, over the issues of the case and, in cases involving
property, over the res or the thing which is the subject of the litigation.[57] In assailing the
trial court's jurisdiction herein, petitioners are actually referring to subject matter
jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign

authority which establishes and organizes the court. It is given only by law and in the
manner prescribed by law.[58] It is further determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein.[59] To succeed in its motion for the dismissal of an action for lack of jurisdiction
over the subject matter of the claim,[60] the movant must show that the court or tribunal
cannot act on the matter submitted to it because no law grants it the power to adjudicate
the claims.[61]

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

The Court finds the invocation of these grounds unsound.

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

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

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact

that they have not yet pointed out any conflict between the laws of Japan and ours.
Before determining which law should apply, first there should exist a conflict of laws
situation requiring the application of the conflict of laws rules.[72] Also, when the law of a
foreign country is invoked to provide the proper rules for the solution of a case, the
existence of such law must be pleaded and proved.[73]

It should be noted that when a conflicts case, one involving a foreign element, is brought
before a court or administrative agency, there are three alternatives open to the latter in
disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to
assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the
internal law of the forum; or (3) assume jurisdiction over the case and take into account
or apply the law of some other State or States.[74] The court’s power to hear cases and
controversies is derived from the Constitution and the laws. While it may choose to
recognize laws of foreign nations, the court is not limited by foreign sovereign law short
of treaties or other formal agreements, even in matters regarding rights provided by
foreign sovereigns.[75]

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

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

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

SO ORDERED.
 SECOND DIVISION
[ 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 Decision [1] and Resolution[2] 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.

In its Answer,[8] 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 Judgment [12] 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 Order[14] 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 Reconsideration[16] 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 Petition[19] 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 Decision [21] 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
Resolution[25] 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 instances [27] 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 law[30] 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.

SECOND DIVISION
[ 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 Resolution [2] 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 13[10] 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 P648,562.69 and attorney's fees of
P64,856.27 or a total of P713,418.96.[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 SR10,248.92[26] 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. 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.

SECOND DIVISION
 [ G.R. No. 168785, February 05, 2010 ]
HERALD BLACK DACASIN, PETITIONER, VS. SHARON DEL MUNDO
DACASIN, RESPONDENT.

DECISION

CARPIO, J.:

The Case

For review [1] is a dismissal [2] of a suit to enforce a post-foreign divorce child custody

agreement for lack of jurisdiction.

The Facts

Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del Mundo
Dacasin (respondent), Filipino, were married in Manila in April 1994. They have one
daughter, Stephanie, born on 21 September 1995. In June 1999, respondent sought and
obtained from the Circuit Court, 19th Judicial Circuit, Lake County, Illinois (Illinois court) a
divorce decree against petitioner. [3] In its ruling, the Illinois court dissolved the marriage
of petitioner and respondent, awarded to respondent sole custody of Stephanie and
retained jurisdiction over the case for enforcement purposes.

On 28 January 2002, petitioner and respondent executed in Manila a contract

(Agreement [4] ) for the joint custody of Stephanie. The parties chose Philippine courts as
exclusive forum to adjudicate disputes arising from the Agreement. Respondent
undertook to obtain from the Illinois court an order "relinquishing" jurisdiction to
Philippine courts.

In 2004, petitioner sued respondent in the Regional Trial Court of Makati City, Branch 60
(trial court) to enforce the Agreement. Petitioner alleged that in violation of the
Agreement, respondent exercised sole custody over Stephanie.

Respondent sought the dismissal of the complaint for, among others, lack of jurisdiction
because of the Illinois court's retention of jurisdiction to enforce the divorce decree.

The Ruling of the Trial Court

In its Order dated 1 March 2005, the trial court sustained respondent's motion and
dismissed the case for lack of jurisdiction. The trial court held that: (1) it is precluded
from taking cognizance over the suit considering the Illinois court's retention of
jurisdiction to enforce its divorce decree, including its order awarding sole custody of
Stephanie to respondent; (2) the divorce decree is binding on petitioner following the
"nationality rule" prevailing in this jurisdiction; [5] and (3) the Agreement is void for
contravening Article 2035, paragraph 5 of the Civil Code [6] prohibiting compromise
agreements on jurisdiction. [7]

Petitioner sought reconsideration, raising the new argument that the divorce decree
obtained by respondent is void. Thus, the divorce decree is no bar to the trial court's
exercise of jurisdiction over the case.

In its Order dated 23 June 2005, the trial court denied reconsideration, holding that
unlike in the case of respondent, the divorce decree is binding on petitioner under the
laws of his nationality.

Hence, this petition.

Petitioner submits the following alternative theories for the validity of the Agreement to
justify its enforcement by the trial court: (1) the Agreement novated the valid divorce
decree, modifying the terms of child custody from sole (maternal) to joint; [8] or (2) the
Agreement is independent of the divorce decree obtained by respondent.

The Issue

The question is whether the trial court has jurisdiction to take cognizance of petitioner's
suit and enforce the Agreement on the joint custody of the parties' child.

The Ruling of the Court

The trial court has jurisdiction to entertain petitioner's suit but not to enforce the
Agreement which is void. However, factual and equity considerations militate against
the dismissal of petitioner's suit and call for the remand of the case to settle the
question of Stephanie's custody.
 Regional Trial Courts Vested With Jurisdiction
to Enforce Contracts

Subject matter jurisdiction is conferred by law. At the time petitioner filed his suit in the
trial court, statutory law vests on Regional Trial Courts exclusive original jurisdiction
over civil actions incapable of pecuniary estimation. [9] An action for specific
performance, such as petitioner's suit to enforce the Agreement on joint child custody,
belongs to this species of actions. [10] Thus, jurisdiction-wise, petitioner went to the right
court.

Indeed, the trial court's refusal to entertain petitioner's suit was grounded not on its
lack of power to do so but on its thinking that the Illinois court's divorce decree stripped
it of jurisdiction. This conclusion is unfounded. What the Illinois court retained was
"jurisdiction x x x for the purpose of enforcing all and sundry the various provisions of
[its] Judgment for Dissolution." [11] Petitioner's suit seeks the enforcement not of the
"various provisions" of the divorce decree but of the post-divorce Agreement on joint
child custody. Thus, the action lies beyond the zone of the Illinois court's so-called
"retained jurisdiction."

Petitioner's Suit Lacks Cause of Action

The foregoing notwithstanding, the trial court cannot enforce the Agreement which is
contrary to law.

In this jurisdiction, parties to a contract are free to stipulate the terms of agreement
subject to the minimum ban on stipulations contrary to law, morals, good customs,
public order, or public policy. [12] Otherwise, the contract is denied legal existence,
deemed "inexistent and void from the beginning." [13] For lack of relevant stipulation in
the Agreement, these and other ancillary Philippine substantive law serve as default
parameters to test the validity of the Agreement's joint child custody stipulations. [14]

At the time the parties executed the Agreement on 28 January 2002, two facts are
undisputed: (1) Stephanie was under seven years old (having been born on 21
September 1995); and (2) petitioner and respondent were no longer married under the
laws of the United States because of the divorce decree. The relevant Philippine law on
child custody for spouses separated in fact or in law [15] (under the second paragraph of
Article 213 of the Family Code) is also undisputed: "no child under seven years of age
shall be separated from the mother x x x." [16] (This statutory awarding of sole parental
custody [17] to the mother is mandatory, [18] grounded on sound policy
consideration, [19] subject only to a narrow exception not alleged to obtain here. [20] )
Clearly then, the Agreement's object to establish a post-divorce joint custody regime
between respondent and petitioner over their child under seven years old contravenes
Philippine law.

The Agreement is not only void ab initio for being contrary to law, it has also been
repudiated by the mother when she refused to allow joint custody by the father. The
Agreement would be valid if the spouses have not divorced or separated because the
law provides for joint parental authority when spouses live together. [21] However, upon
separation of the spouses, the mother takes sole custody under the law if the child is
below seven years old and any agreement to the contrary is void. Thus, the law
suspends the joint custody regime for (1) children under seven of (2) separated or
divorced spouses. Simply put, for a child within this age bracket (and for
commonsensical reasons), the law decides for the separated or divorced parents how
best to take care of the child and that is to give custody to the separated mother.
Indeed, the separated parents cannot contract away the provision in the Family Code on
the maternal custody of children below seven years anymore than they can privately
agree that a mother who is unemployed, immoral, habitually drunk, drug addict, insane
or afflicted with a communicable disease will have sole custody of a child under seven as
these are reasons deemed compelling to preclude the application of the exclusive
maternal custody regime under the second paragraph of Article 213. [22]

It will not do to argue that the second paragraph of Article 213 of the Family Code
applies only to judicial custodial agreements based on its text that "No child under
seven years of age shall be separated from the mother, unless the court finds
compelling reasons to order otherwise." To limit this provision's enforceability to court
sanctioned agreements while placing private agreements beyond its reach is to sanction
a double standard in custody regulation of children under seven years old of separated
parents. This effectively empowers separated parents, by the simple expedient of
avoiding the courts, to subvert a legislative policy vesting to the separated mother sole
custody of her children under seven years of age "to avoid a tragedy where a mother
has seen her baby torn away from her." [23] This ignores the legislative basis that "[n]o
man can sound the deep sorrows of a mother who is deprived of her child of tender
age." [24]

It could very well be that Article 213's bias favoring one separated parent (mother) over
the other (father) encourages paternal neglect, presumes incapacity for joint parental
custody, robs the parents of custodial options, or hijacks decision-making between the
separated parents. [25] However, these are objections which question the law's wisdom
not its validity or uniform enforceability. The forum to air and remedy these grievances
is the legislature, not this Court. At any rate, the rule's seeming harshness or
undesirability is tempered by ancillary agreements the separated parents may wish to
enter such as granting the father visitation and other privileges. These arrangements are
not inconsistent with the regime of sole maternal custody under the second paragraph
of Article 213 which merely grants to the mother final authority on the care and custody
of the minor under seven years of age, in case of disagreements.

Further, the imposed custodial regime under the second paragraph of Article 213 is
limited in duration, lasting only until the child's seventh year. From the eighth year until
the child's emancipation, the law gives the separated parents freedom, subject to the
usual contractual limitations, to agree on custody regimes they see fit to adopt. Lastly,
even supposing that petitioner and respondent are not barred from entering into the
Agreement for the joint custody of Stephanie, respondent repudiated the Agreement by
asserting sole custody over Stephanie. Respondent's act effectively brought the parties
back to ambit of the default custodial regime in the second paragraph of Article 213 of
the Family Code vesting on respondent sole custody of Stephanie.

Nor can petitioner rely on the divorce decree's alleged invalidity - not because the
Illinois court lacked jurisdiction or that the divorce decree violated Illinois law, but
because the divorce was obtained by his Filipino spouse [26] - to support the Agreement's
enforceability. The argument that foreigners in this jurisdiction are not bound by foreign
divorce decrees is hardly novel. Van Dorn v. Romillo [27] settled the matter by holding that
an alien spouse of a Filipino is bound by a divorce decree obtained abroad. [28] There, we
dismissed the alien divorcee's Philippine suit for accounting of alleged post-divorce
conjugal property and rejected his submission that the foreign divorce (obtained by the
Filipino spouse) is not valid in this jurisdiction in this wise:

There can be no question as to the validity of that Nevada divorce in any of the
States of the United States. The decree is binding on private respondent as an
American citizen. For instance, private respondent cannot sue petitioner, as her
husband, in any State of the Union. What he is contending in this case is that the
divorce is not valid and binding in this jurisdiction, the same being contrary to local
law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code,
only Philippine nationals are covered by the policy against absolute divorces the same
being considered contrary to our concept of public policy and morality. However, aliens
may obtain divorces abroad, which may be recognized in the Philippines, provided
they are valid according to their national law. In this case, the divorce in Nevada
released private respondent from the marriage from the standards of American law,
under which divorce dissolves the marriage.

xxxx

Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner's husband
entitled to exercise control over conjugal assets. As he is bound by the Decision of his
own country's Court, which validly exercised jurisdiction over him, and whose decision
he does not repudiate, he is estopped by his own representation before said Court from
asserting his right over the alleged conjugal property. (Emphasis supplied)

We reiterated Van Dorn in Pilapil v. Ibay-Somera [29] to dismiss criminal complaints for

adultery filed by the alien divorcee (who obtained the foreign divorce decree) against
his former Filipino spouse because he no longer qualified as "offended spouse" entitled
to file the complaints under Philippine procedural rules. Thus, it should be clear by now
that a foreign divorce decree carries as much validity against the alien divorcee in this
jurisdiction as it does in the jurisdiction of the alien's nationality, irrespective of who
obtained the divorce.

The Facts of the Case and Nature of Proceeding

Justify Remand

Instead of ordering the dismissal of petitioner's suit, the logical end to its lack of cause
of action, we remand the case for the trial court to settle the question of Stephanie's
custody. Stephanie is now nearly 15 years old, thus removing the case outside of the
ambit of the mandatory maternal custody regime under Article 213 and bringing it
within coverage of the default standard on child custody proceedings - the best interest
of the child. [30] As the question of custody is already before the trial court and the child's
parents, by executing the Agreement, initially showed inclination to share custody, it is
in the interest of swift and efficient rendition of justice to allow the parties to take
advantage of the court's jurisdiction, submit evidence on the custodial arrangement
best serving Stephanie's interest, and let the trial court render judgment. This
disposition is consistent with the settled doctrine that in child custody proceedings,
equity may be invoked to serve the child's best interest. [31]

WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23 June 2005 of the
Regional Trial Court of Makati City, Branch 60. The case is REMANDED for further
proceedings consistent with this ruling.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 198587, January 14, 2015 ]
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA,
PETITIONERS, VS. MA. JOPETTE M. REBESENCIO, MONTASSAH B.
SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S.
SCHNEIDER-CRUZ, RESPONDENTS.

DECISION

LEONEN, J.:

All Filipinos are entitled to the protection of the rights guaranteed in the
Constitution.

This is a Petition for Review on Certiorari with application for the issuance of a
temporary restraining order and/or writ of preliminary injunction under Rule 45 of the
1997 Rules of Civil Procedure praying that judgment be rendered reversing and setting
aside the June 16, 2011 Decision[1] and September 13, 2011 Resolution[2] of the Court of
Appeals in CA-G.R. SP. No. 113006.

Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and

existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office
located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati City. [3] In its
Petition filed with this court, Saudia identified itself as follows:
 1. Petitioner SAUDIA is a foreign corporation established and existing under the
Royal Decree No. M/24 of 18.07.1385H (10.02.1962G) in Jeddah, Kingdom of Saudi
Arabia ("KSA"). Its Philippine Office is located at 4/F Metro House Building, Sen, Gil J.
Puyat Avenue, Makati City (Philippine Office). It may be served with orders of this
Honorable Court through undersigned counsel at 4th and 6th Floors, Citibank Center
Bldg., 8741 Paseo de Roxas, Makati City.[4] (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited and hired
by Saudia as Temporary Flight Attendants with the accreditation and approval of the
Philippine Overseas Employment Administration.[5] After undergoing seminars required
by the Philippine Overseas Employment Administration for deployment overseas, as
well as training modules offered by Saudia (e.g., initial flight attendant/training course
and transition training), and after working as Temporary Flight Attendants, respondents
became Permanent Flight Attendants. They then entered into Cabin Attendant contracts
with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16, 1990; [6] Montassah B.
Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993;
[7]
 and Loraine Schneider-Cruz (Loraine) on August 27, 1995.[8]

Respondents continued their employment with Saudia until they were separated from
service on various dates in 2006.[9]

Respondents contended that the termination of their employment was illegal. They
alleged that the termination was made solely because they were pregnant.[10]

As respondents alleged, they had informed Saudia of their respective pregnancies and
had gone through the necessary procedures to process their maternity leaves. Initially,
Saudia had given its approval but later on informed respondents that its management in
Jeddah, Saudi Arabia had disapproved their maternity leaves. In addition, it required
respondents to file their resignation letters.[11]

Respondents were told that if they did not resign, Saudia would terminate them all the
same. The threat of termination entailed the loss of benefits, such as separation pay and
ticket discount entitlements.[12]

Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base
Manager, Abdulmalik Saddik (Abdulmalik).[13] Montassah was informed personally by
Abdulmalik and a certain Faisal Hussein on October 20, 2006 after being required to
report to the office one (1) month into her maternity leave. [14] Rouen Ruth was also
personally informed by Abdulmalik on October 17, 2006 after being required to report
to the office by her Group Supervisor.[15] Loraine received a call on October 12, 2006
from her Group Supervisor, Dakila Salvador.[16]

Saudia anchored its disapproval of respondents' maternity leaves and demand for their
resignation on its "Unified Employment Contract for Female Cabin Attendants" (Unified
Contract).[17] Under the Unified Contract, the employment of a Flight Attendant who
becomes pregnant is rendered void. It provides:
(H) Due to the essential nature of the Air Hostess functions to be physically fit on
board to provide various services required in normal or emergency cases on both
domestic/international flights beside her role in maintaining continuous safety and
security of passengers, and since she will not be able to maintain the required medical
fitness while at work in case of pregnancy, accordingly, if the Air Hostess becomes
pregnant at any time during the term of this contract, this shall render her
employment contract as void and she will be terminated due to lack of medical fitness.
[18]
 (Emphasis supplied)
In their Comment on the present Petition,[19] respondents emphasized that the
Unified Contract took effect on September 23, 2006 (the first day of Ramadan), [20] well
after they had filed and had their maternity leaves approved. Ma. Jopette filed her
maternity leave application on September 5, 2006.[21] Montassah filed her maternity
leave application on August 29, 2006, and its approval was already indicated in Saudia's
computer system by August 30, 2006.[22] Rouen Ruth filed her maternity leave
application on September 13, 2006,[23] and Loraine filed her maternity leave application
on August 22, 2006.[24]

Rather than comply and tender resignation letters, respondents filed separate appeal
letters that were all rejected.[25]

Despite these initial rejections, respondents each received calls on the morning of
November 6, 2006 from Saudia's office secretary informing them that their maternity
leaves had been approved. Saudia, however, was quick to renege on its approval. On
the evening of November 6, 2006, respondents again received calls informing them that
it had received notification from Jeddah, Saudi Arabia that their maternity leaves had
been disapproved.[26]

Faced with the dilemma of resigning or totally losing their benefits, respondents
executed handwritten resignation letters. In Montassah's and Rouen Ruth's cases, their
resignations were executed on Saudia's blank letterheads that Saudia had provided.
These letterheads already had the word "RESIGNATION" typed on the subject portions
of their headings when these were handed to respondents. [27]

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for
illegal dismissal and for underpayment of salary, overtime pay, premium pay for holiday,
rest day, premium, service incentive leave pay, 13th month pay, separation pay, night
shift differentials, medical expense reimbursements, retirement benefits, illegal
deduction, lay-over expense and allowances, moral and exemplary damages, and
attorney's fees.[28] The case was initially assigned to Labor Arbiter Hermino V. Suelo and
docketed as NLRC NCR Case No. 00-11-12342-07.

Saudia assailed the jurisdiction of the Labor Arbiter. [29] It claimed that all the
determining points of contact referred to foreign law and insisted that the Complaint
ought to be dismissed on the ground of forum non conveniens.[30] It added that
respondents had no cause of action as they resigned voluntarily. [31]

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the
Decision[32] dismissing respondents' Complaint. The dispositive portion of this Decision
reads:
WHEREFORE, premises' considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of jurisdiction/merit. [33]
On respondents' appeal, the National Labor Relations Commission's Sixth Division
reversed the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that
"[considering that complainants-appellants are OFWs, the Labor Arbiters and the NLRC
has [sic] jurisdiction to hear and decide their complaint for illegal termination." [34] On the
matter of forum non conveniens, it noted that there were no special circumstances that
warranted its abstention from exercising jurisdiction. [35] On the issue of whether
respondents were validly dismissed, it held that there was nothing on record to support
Saudia's claim that respondents resigned voluntarily.

The dispositive portion of the November 19, 2009 National Labor Relations Commission
Decision[36] reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the
appeal impressed with merit. The respondents-appellees are hereby directed to pay
complainants-appellants the aggregate amount of SR614,001.24 corresponding to their
backwages and separation pay plus ten (10%) percent thereof as attorney's fees. The
decision of the Labor Arbiter dated December 12, 2008 is hereby VACATED and SET
ASIDE. Attached is the computation prepared by this Commission and made an integral
part of this Decision.[37]
In the Resolution dated February 11, 2010,[38] the National Labor Relations
Commission denied petitioners' Motion for Reconsideration.

In the June 16, 2011 Decision,[39] the Court of Appeals denied petitioners' Rule 65
Petition and modified the Decision of the National Labor Relations Commission with
respect to the award of separation pay and backwages.

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the instant petition is hereby DENIED. The Decision dated
November 19, 2009 issued by public respondent, Sixth Division of the National Labor
Relations Commission - National Capital Region is MODIFIED only insofar as the
computation of the award of separation pay and backwages. For greater clarity,
petitioners are ordered to pay private respondents separation pay which shall be
computed from private respondents' first day of employment up to the finality of this
decision, at the rate of one month per year of service and backwages which shall be
computed from the date the private respondents were illegally terminated until finality
of this decision. Consequently, the ten percent (10%) attorney's fees shall be based on
the total amount of the award. The assailed Decision is affirmed in all other respects.

The labor arbiter is hereby DIRECTED to make a recomputation based on the foregoing.

[40]

In the Resolution dated September 13, 2011,[41] the Court of Appeals denied

petitioners' Motion for Reconsideration.

Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations Commission may
exercise jurisdiction over Saudi Arabian Airlines and apply Philippine law in adjudicating
the present dispute;

Second, whether respondents' voluntarily resigned or were illegally terminated; and

Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian
Airlines.

Summons were validly served on Saudia and jurisdiction over it validly acquired.

There is no doubt that the pleadings and summons were served on Saudia through its
counsel.[42] Saudia, however, claims that the Labor Arbiter and the National Labor
Relations Commission had no jurisdiction over it because summons were never served
on it but on "Saudia Manila."[43] Referring to itself as "Saudia Jeddah," it claims that
"Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:

First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into
by respondents;

Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries
and benefits; and

Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. [44]

Saudia posits that respondents' Complaint was brought against the wrong party because
"Saudia Manila," upon which summons was served, was never the employer of
respondents.[45]

Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare
allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from "Saudia
Manila."

What is clear is Saudia's statement in its own Petition that what it has is a "Philippine
Office . . . located at 4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City."[46] Even in the position paper that Saudia submitted to the Labor Arbiter,[47] what
Saudia now refers to as "Saudia Jeddah" was then only referred to as "Saudia Head
Office at Jeddah, KSA,"[48] while what Saudia now refers to as "Saudia Manila" was then
only referred to as "Saudia's office in Manila."[49]

By its own admission, Saudia, while a foreign corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act
of 1991, provides the following:
The phrase "doing business" shall include . . . opening offices, whether called
"liaison" offices or branches; . . . and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the performance
of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain or of the purpose and object of the business
organization. (Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no
other conclusion than that Saudia is a foreign corporation doing business in the
Philippines. As such, Saudia may be sued in the Philippines and is subject to the
jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia
Manila" — the latter being nothing more than Saudia's local office — service of
summons to Saudia's office in Manila sufficed to vest jurisdiction over Saudia's person in
Philippine tribunals.

II

Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin
Attendant contracts require the application of the laws of Saudi Arabia, rather than
those of the Philippines.[50] It claims that the difficulty of ascertaining foreign law calls
into operation the principle of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals. [51]

A choice of law governing the validity of contracts or the interpretation of its provisions
dees not necessarily imply forum non conveniens. Choice of law and forum non
conveniens are entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of

contracts. Article 1306 of the Civil Code firmly ensconces this:
Article 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule against forum
shopping. It is designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute
resolution) were left entirely to the whim of either party.

Contractual choice of law provisions factor into transnational litigation and dispute
resolution in one of or in a combination of four ways: (1) procedures for settling
disputes, e.g., arbitration; (2) forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not subsumed by, the second of
these.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on

the laws of a given jurisdiction as the governing law of a contract does not preclude the
exercise of jurisdiction by tribunals elsewhere. The reverse is equally true: The
assumption of jurisdiction by tribunals does not ipso facto mean that it cannot apply and
rule on the basis of the parties' stipulation. In Hasegawa v. Kitamura:[52]
Analytically, 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 V'hich will
determine the merits of the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often, coincide, the "minimum
contacts" for one do not always provide the necessary "significant contacts" for the
other. The question of whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state have jurisdiction to enter
a judgment.[53]
As various dealings, commercial or otherwise, are facilitated by the progressive
ease of communication and travel, persons from various jurisdictions find themselves
transacting with each other. Contracts involving foreign elements are, however, nothing
new. Conflict of laws situations precipitated by disputes and litigation anchored on
these contracts are not totally novel.

Transnational transactions entail differing laws on the requirements Q for the validity of
the formalities and substantive provisions of contracts and their interpretation. These
transactions inevitably lend themselves to the possibility of various fora for litigation
and dispute resolution. As observed by an eminent expert on transnational law:
The more jurisdictions having an interest in, or merely even a point of contact
with, a transaction or relationship, the greater the number of potential fora for the
resolution of disputes arising out of or related to that transaction or relationship. In a
world of increased mobility, where business and personal transactions transcend
national boundaries, the jurisdiction of a number of different fora may easily be invoked
in a single or a set of related disputes.[54]
Philippine law is definite as to what governs the formal or extrinsic validity of
contracts. The first paragraph of Article 17 of the Civil Code provides that "[t]he forms
and solemnities of contracts . . . shall be governed by the laws of the country in which
they are executed"[55] (i.e., lex loci celebrationis).

In contrast, there is no statutorily established mode of settling conflict of laws situations

on matters pertaining to substantive content of contracts. It has been noted that three
(3) modes have emerged: (1) lex loci contractus or the law of the place of the making;
(2) lex loci solutionis or the law of the place of performance; and (3) lex loci
intentionis or the law intended by the parties.[56]

Given Saudia's assertions, of particular relevance to resolving the present dispute is lex
loci intentionis.

An author observed that Spanish jurists and commentators "favor lex loci

intentionis."[57] These jurists and commentators proceed from the Civil Code of Spain,
which, like our Civil Code, is silent on what governs the intrinsic validity of contracts, and
the same civil law traditions from which we draw ours.

In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P.
Eusebio Construction, Inc.,[58] manifested preference for allowing the parties to select
the law applicable to their contract":
No conflicts rule on essential validity of contracts is expressly provided for in our
laws. The rule followed by most legal systems, however, is that the intrinsic validity of a
contract must be governed by the lex contractus or "proper law of the contract." This is
the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the law
intended by them either expressly or implicitly (the lex loci intentionis). The law selected
may be implied from such factors as substantial connection with the transaction, or the
nationality or domicile of the parties. Philippine courts would do well to adopt the first
and most basic rule in most legal systems, namely, to allow the parties to select the law
applicable to their contract, subject to the limitation that it is not against the law,
morals, or public policy of the forum and that the chosen law must bear a substantive
relationship to the transaction.[59] (Emphasis in the original)
 Saudia asserts that stipulations set in the Cabin Attendant contracts require the
application of the laws of Saudi Arabia. It insists that the need to comply with these
stipulations calls into operation the doctrine of forum non conveniens and, in turn,
makes it necessary for Philippine tribunals to refrain from exercising jurisdiction.

As mentioned, contractual choice of laws factors into transnational litigation in any or a

combination of four (4) ways. Moreover, forum non conveniens relates to one of these:
choosing between multiple possible fora.

Nevertheless, the possibility of parallel litigation in multiple fora — along with the host
of difficulties it poses — is not unique to transnational litigation. It is a difficulty that
similarly arises in disputes well within the bounds of a singe jurisdiction.

When parallel litigation arises strictly within the context of a single jurisdiction, such
rules as those on forum shopping, litis pendentia, and res judicata come into operation.
Thus, in the Philippines, the 1997 Rules on Civil Procedure provide for willful and
deliberate forum shopping as a ground not only for summary dismissal with prejudice
but also for citing parties and counsels in direct contempt, as well as for the imposition
of administrative sanctions.[60] Likewise, the same rules expressly provide that a party
may seek the dismissal of a Complaint or another pleading asserting a claim on the
ground "[t]hat there is another action pending between the same parties for the same
cause," i.e., litis pendentia, or "[t]hat the cause of action is barred by a prior
judgment,"[61] i.e., res judicata.

Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata,
is a means of addressing the problem of parallel litigation. While the rules of forum
shopping, litis pendentia, and res judicata are designed to address the problem of
parallel litigation within a single jurisdiction, forum non conveniens is a means devised to
address parallel litigation arising in multiple jurisdictions.

Forum non conveniens literally translates to "the forum is inconvenient." [62] It is a

concept in private international law and was devised to combat the "less than
honorable" reasons and excuses that litigants use to secure procedural advantages,
annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier"
venue.[63] Thus, the doctrine of forum non conveniens addresses the same rationale that
the rule against forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,[64] is a concept originating in common law.
[65]
 However, unlike the rule on res judicata, as well as those on litis pendentia and forum
shopping, forum non conveniens finds no textual anchor, whether in statute or in
procedural rules, in our civil law system. Nevertheless, jurisprudence has applied forum
non conveniens as basis for a court to decline its exercise of jurisdiction. [66]

Forum non conveniens is soundly applied not only to address parallel litigation and
undermine a litigant's capacity to vex and secure undue advantages by engaging in
forum shopping on an international scale. It is also grounded on principles of comity and
judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction

on account of forum non conveniens is a deferential gesture to the tribunals of another
sovereign. It is a measure that prevents the former's having to interfere in affairs which
are better and more competently addressed by the latter. Further, forum non
conveniens entails a recognition not only that tribunals elsewhere are better suited to
rule on and resolve a controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non conveniens prevents
the embarrassment of an awkward situation where a tribunal is rendered incompetent
in the face of the greater capability — both analytical and practical — of a tribunal in
another jurisdiction.

The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of

efficiency and economy as it is a matter of international courtesy. A court would
effectively be neutering itself if it insists on adjudicating a controversy when it knows full
well that it is in no position to enforce its judgment. Doing so is not only an exercise in
futility; it is an act of frivolity. It clogs the dockets of a.tribunal and leaves it to waste its
efforts on affairs, which, given transnational exigencies, will be reduced to mere
academic, if not trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "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."[67] In Puyat v. Zabarte,[68] this court recognized the following situations as
among those that may warrant a court's desistance from exercising jurisdiction:
1 The belief that the matter can be better tried and decided elsewhere, either because
) the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
 2 The belief that the non-resident plaintiff sought the forum[,] a practice known
) as forum shopping[,] merely to secure procedural advantages or to convey or harass the
defendant;
3 The unwillingness to extend local judicial facilities to non residents or aliens when the
) docket may already be overcrowded;
4 The inadequacy of the local judicial machinery for effectuating the right sought to be
) maintained; and
5 The difficulty of ascertaining foreign law. [69]
)
In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of
Appeals,[70] this court underscored that a Philippine court may properly assume
jurisdiction over a case if it chooses to do so to the extent: "(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." [71]

The use of the word "may" (i.e., "may refuse impositions on its jurisdiction"[72]) in the
decisions shows that the matter of jurisdiction rests on the sound discretion of a court.
Neither the mere invocation of forum non conveniens nor the averment of foreign
elements operates to automatically divest a court of jurisdiction. Rather, a court should
renounce jurisdiction only "after 'vital facts are established, to determine whether
special circumstances' require the court's desistance." [73] As the propriety of
applying forum non conveniens is contingent on a factual determination, it is, therefore,
a matter of defense.[74]

The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is
exclusive in its recital of the grounds for dismissal that are exempt from the omnibus
motion rule: (1) lack of jurisdiction over the subject matter; (2) litis pendentia; (3) res
judicata; and (4) prescription. Moreover, dismissal on account of  forum non
conveniens is a fundamentally discretionary matter. It is, therefore, not a matter for a
defendant to foist upon the court at his or her own convenience; rather, it must be
pleaded at the earliest possible opportunity.

On the matter of pleading forum non conveniens, we state the rule, thus: Forum non
conveniens must not only be clearly pleaded as a ground for dismissal; it must be
pleaded as such at the earliest possible opportunity. Otherwise, it shall be deemed
waived.

This court notes that in Hasegawa,[75] this court stated that forum non conveniens is not
a ground for a motion to dismiss.[76] The factual ambience of this case however does not
squarely raise the viability of this doctrine. Until the opportunity comes to review the
use of motions to dismiss for parallel litigation, Hasegawa remains existing doctrine.

Consistent with forum non conveniens as fundamentally a factual matter, it is imperative

that it proceed from & factually established basis. It would be improper to dismiss an
action pursuant to forum non conveniens based merely on a perceived, likely, or
hypothetical multiplicity of fora. Thus, a defendant must also plead and show that a
prior suit has, in fact, been brought in another jurisdiction.

The existence of a prior suit makes real the vexation engendered by duplicitous
litigation, the embarrassment of intruding into the affairs of another sovereign, and the
squandering of judicial efforts in resolving a dispute already lodged and better resolved
elsewhere. As has been noted:
A case will not be stayed o dismissed on [forum] non conveniens grounds unless
the plaintiff is shown to have an available alternative forum elsewhere. On this, the
moving party bears the burden of proof.

A number of factors affect the assessment of an alternative forum's adequacy. The

statute of limitations abroad may have run, of the foreign court may lack either subject
matter or personal jurisdiction over the defendant. . . . Occasionally, doubts will be
raised as to the integrity or impartiality of the foreign court (based, for example, on
suspicions of corruption or bias in favor of local nationals), as to the fairness of its
judicial procedures, or as to is operational efficiency (due, for example, to lack of
resources, congestion and delay, or interfering circumstances such as a civil unrest). In
one noted case, [it was found] that delays of 'up to a quarter of a century' rendered the
foreign forum... inadequate for these purposes. [77]
We deem it more appropriate and in the greater interest of prudence that a
defendant not only allege supposed dangerous tendencies in litigating in this
jurisdiction; the defendant must also show that such danger is real and present in that
litigation or dispute resolution has commenced in another jurisdiction  and that a foreign
tribunal has chosen to exercise jurisdiction.

III

Forum non conveniens finds no application and does not operate to divest Philippine
tribunals of jurisdiction and to require the application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the
Cabin Attendant contracts that require the application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to the choice of governing law. Thai forum
non conveniens may ultimately result in the application of foreign law is merely an
incident of its application. In this strict sense, forum non conveniens is not applicable. It
is not the primarily pivotal consideration in this case.

In any case, even a further consideration of the applicability of forum non conveniens on
the incidental matter of the law governing respondents' relation with Saudia leads to
the conclusion that it is improper for Philippine tribunals to divest themselves of
jurisdiction.

Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents
must grapple with two (2) considerations: first, the availability and adequacy of recourse
to a foreign tribunal; and second, the question of where, as between the forum court
and a foreign court, the balance of interests inhering in a dispute weighs more heavily.

The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign
tribunal and can be resolved by juxtaposing the competencies and practical
circumstances of the tribunals in alternative fora. Exigencies, like the statute of
limitations, capacity to enforce orders and judgments, access to records, requirements
for the acquisition of jurisdiction, and even questions relating to the integrity of foreign
courts, may render undesirable or even totally unfeasible recourse to a foreign court. As
mentioned, we consider it in the greater interest of prudence that a defendant show, in
pleading forum non conveniens, that litigation has commenced in another jurisdiction
and that a foieign tribunal has, in fact, chosen to exercise jurisdiction.

Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a
dispute: first, the vinculum which the parties and their relation have to a given
jurisdiction; and second, the public interest that must animate a tribunal, in its capacity
as an agent of the sovereign, in choosing to assume or decline jurisdiction. The first is
more concerned with the parties, their personal circumstances, and private interests;
the second concerns itself with the state and the greater social order.

In considering the vinculum, a court must look into the preponderance of linkages which
the parties and their transaction may have to either jurisdiction. In this respect, factors,
such as the parties' respective nationalities and places of negotiation, execution,
performance, engagement or deployment, come into play.

In considering public interest, a court proceeds with a consciousness that it is an organ

of the state. It must, thus, determine if the interests of the sovereign (which acts
through it) are outweighed by those of the alternative jurisdiction. In this respect, the
court delves into a consideration of public policy. Should it find that public interest
weighs more heavily in favor of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or .contrary view arising from the preponderance of
linkages notwithstanding.

Our law on contracts recognizes the validity of contractual choice of law provisions.
Where such provisions exist, Philippine tribunals, acting as the forum court, generally
defer to the parties' articulated choice.

This is consistent with the fundamental principle of autonomy of contracts. Article 1306
of the Civ:l Code expressly provides that "[t]he contracting parties may establish 'such
stipulations, clauses, terms and conditions as they may deem
convenient."[78] Nevertheless, while a Philippine tribunal (acting as the forum court) is
called upon to respect the parties' choice of governing law, such respect must not be so
permissive as to lose sight of considerations of law, morals, good customs, public order,
or public policy that underlie the contract central to the controversy.

Specifically with respect to public policy, in Pakistan International Airlines Corporation v.

Ople,[79] this court explained that:
counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written inta the contract. Put a little differently,
the governing principle is that parties may not contract away applicable provisions of
law especially peremptory provisions dealing with matters heavily impressed with public
interest.[80] (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall
ensure the fundamental equality before the law of women and men." Contrasted with
Article II, Section 1 of the 1987 Constitution's statement that "[n]o person shall ... be
denied the equal protection of the laws," Article II, Section 14 exhorts the State to
"ensure." This does not only mean that the Philippines shall not countenance nor lend
legal recognition and approbation to measures that discriminate on the basis of one's
being male or female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.

The Convention on the Elimination of all Forms of Discrimination against Women

(CEDAW), signed and ratified by the Philippines on July 15, 1980, and on August 5, 1981,
respectively,[81] is part of the law of the land. In view of the widespread signing and
ratification of, as well as adherence (in practice) to it by states, it may even be said that
many provisions of the CEDAW may have become customary international law. The
CEDAW gives effect to the Constitution's policy statement in Article II, Section 14. Article
I of the CEDAW defines "discrimination against women" as:
any distinction, exclusion or restriction made on the basis of sex which has the
effect or purpose of impairing or nullifying the recognition, enjoyment or exercise by
women, irrespective of their marital status, on a basis of equality of men and women, of
human rights and fundamental freedoms in the political, economic, social, cultural, civil
or any other field.[82]
The constitutional exhortation to ensure fundamental equality, as illumined by its
enabling law, the CEDAW, must inform and animate all the actions of all personalities
acting on behalf of the State. It is, therefore, the bounden duty of this court, in
rendering judgment on the disputes brought before it, to ensure that no discrimination
is heaped upon women on the mere basis of their being women. This is a point so basic
and central that all our discussions and pronouncements — regardless of whatever
averments there may be of foreign law — must proceed from this premise.

So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's

policy. As argued by respondents, Saudia's policy entails the termination of employment
of flight attendants who become pregnant. At the risk of stating the obvious, pregnancy
is an occurrence that pertains specifically to women. Saudia's policy excludes from and
restricts employment on the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present physical limitations that
may render difficult the performance of functions associated with being a flight
attendant. Nevertheless, it would be the height of iniquity to view pregnancy as a
disability so permanent and immutable that, it must entail the termination of one's
employment. It is clear to us that any individual, regardless of gender, may be subject to
exigencies that limit the performance of functions. However, we fail to appreciate how
pregnancy could be such an impairing occurrence that it leaves no other recourse but
the complete termination of the means through which a woman earns a living.
Apart from the constitutional policy on the fundamental equality before the law of men
and women, it is settled that contracts relating to labor and employment are impressed
with public interest. Article 1700 of the Civil Code provides that "[t]he relation between
capital and labor are not merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good."

Consistent with this, this court's pronouncements in Pakistan International Airlines

Corporation[83] are clear and unmistakable:
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement
which specifies, firstly, the law of Pakistan as the applicable law of the agreement, and,
secondly, lays the venue for settlement of any dispute arising out of or in connection
with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application of Philippine labor laws and'regulations
to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon
some other law to govern their relationship. . . . Under these circumstances, paragraph
10 of the employment agreement cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested upon them by Philippine law. [84] (Emphasis
supplied)
As the present dispute relates to (what the respondents allege to be) the illegal
termination of respondents' employment, this case is immutably a matter of public
interest and public policy. Consistent with clear pronouncements in law and
jurisprudence, Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the application forum non
conveniens has been shattered, it follows that Philippine tribunals may properly assume
jurisdiction over the present controversy. Philippine jurisprudence provides ample
illustrations of when a court's renunciation of jurisdiction on account of forum non
conveniens is proper or improper.'

In Philsec Investment Corporation v. Court of Appeals,[85] this court noted that the trial
court failed to consider that one of the plaintiffs was a domestic corporation, that one of
the defendants was a Filipino, and that it was the extinguishment of the latter's debt
that was the object of the transaction subject of the litigation. Thus, this court held,
among others, that the trial court's refusal to assume jurisdiction was not justified
by forum non conveniens and remanded the case to the trial court.

In Raytheon International, Inc. v. Rouzie, Jr.,[86] this court sustained the trial court's
assumption of jurisdiction considering that the trial court could properly enforce
judgment on the petitioner which was a foreign corporation licensed to do business in
the Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,[87] this court found no reason to disturb the
trial court's assumption of jurisdiction over a case in which, as noted by the trial court,
"it is more convenient to hear and decide the case in the Philippines because Todaro
[the plaintiff] resides in the Philippines and the contract allegedly breached involve[d]
employment in the Philippines."[88]

In Pacific Consultants International Asia, Inc. v. Schonfeld,[89] this court held that the fact
that the complainant in an illegal dismissal case was a Canadian citizen and a repatriate
did not warrant the application of forum non conveniens considering that: (1) the Labor
Code does not include forum non conveniens as a ground for the dismissal of a
complaint for illegal dismissal; (2) the propriety of dismissing a case based on forum non
conveniens requires a factual determination; and (3) the requisites for assumption of
jurisdiction as laid out in Bank of America, NT&SA[90] were all satisfied.

In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations
Commission[91] that the National Labor Relations Q Commission was a seriously
inconvenient forum. In that case, private respondent Marcelo G. Santos was working in
the Sultanate of Oman when he received a letter from Palace Hotel recruiting him for
employment in Beijing, China. Santos accepted the offer. Subsequently, however, he
was released from employment supposedly due to business reverses arising from
political upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos later
filed a Complaint for illegal dismissal impleading Palace Hotel's General Manager, Mr.
Gerhard Schmidt, the Manila Hotel International Company Ltd. (which was, responsible
for training Palace Hotel's personnel and staff), and the Manila Hotel Corporation (which
owned 50% of Manila Hotel International Company Ltd.'s capital stock).

In ruling against the National Labor Relations Commission's exercise of jurisdiction, this
court noted that the main aspects of the case transpired in two (2) foreign jurisdictions,
Oman and China, and that the case involved purely foreign elements. Specifically,
Santos was directly hired by a foreign employer through correspondence sent to Oman.
Also, the proper defendants were neither Philippine nationals nor engaged in business
in the Philippines, while the main witnesses were not residents of the Philippines.
Likewise, this court noted that the National Labor Relations Commission was in no
position to conduct the following: first, determine the law governing the employment
contract, as it was entered into in foreign soil; second, determine the facts, as Santos'
employment was terminated in Beijing; and third, enforce its judgment, since Santos'
employer, Palace Hotel, was incorporated under the laws of China and was not even
served with summons.

Contrary to Manila Hotel, the case now before us does not entail a preponderance of
linkages that favor a foreign jurisdiction.

Here, the circumstances of the parties and their relation do not approximate the
circumstances enumerated in Puyat,[92] which this court recognized as possibly justifying
the desistance of Philippine tribunals from exercising jurisdiction.

First, there is no basis for concluding that the case can be more conveniently tried
elsewhere. As established earlier, Saudia is doing business in the Philippines. For their
part, all four (4) respondents are Filipino citizens maintaining residence in the
Philippines and, apart from their previous employment with Saudia, have no other
connection to the Kingdom of Saudi Arabia. It would even be to respondents'
inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint
in an effort to engage in forum shopping or to vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local judicial facilities to non-

residents or aliens."[93] That Saudia has managed to bring the present controversy all the
way to this court proves this.

Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating
the right sought to be maintained. Summons was properly served on Saudia and
jurisdiction over its person was validly acquired.

Lastly, there is not even room for considering foreign law. Philippine law properly
governs the present dispute.
As the question of applicable law has been settled, the supposed difficulty of
ascertaining foreign law (which requires the application of forum non conveniens)
provides no insurmountable inconvenience or special circumstance that will justify
depriving Philippine tribunals of jurisdiction.

Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia
which should apply, it does not follow that Philippine tribunals should refrain from
exercising jurisdiction. To. recall our pronouncements in Puyat, [94] as well as in Bank of
America, NT&SA,[95] it is not so much the mere applicability of foreign law which calls
into operation forum non conveniens. Rather, what justifies a court's desistance from
exercising jurisdiction is "[t]he difficulty of ascertaining foreign law"[96] or the inability of
a "Philippine Court to make an intelligent decision as to the law[.]"[97]

Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e.,
"to make an intelligent decision"[98]), Philippine tribunals may apply the foreign law
selected by the parties. In fact, (albeit without meaning to make a pronouncement on
the accuracy and reliability of respondents' citation) in this case, respondents
themselves have made averments as to the laws of Saudi Arabia. In their Comment,
respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and
unlawful to terminate the employment of any woman by virtue of pregnancy. The law in
Saudi Arabia is even more harsh and strict [sic] in that no employer can terminate the
employment of a female worker or give her a warning of the same while on Maternity
Leave, the specific provision of Saudi Labor Laws on the matter is hereto quoted as
follows:
"An employer may not terminate the employment of a female worker or give her
a warning of the same while on maternity leave." (Article 155, Labor Law of the Kingdom
of Saudi Arabia, Royal Decree No. M/51.)[99]
All told, the considerations for assumption of jurisdiction by Philippine tribunals
as outlined in Bank of America, NT&SA[100] have been satisfied. First, all the parties are
based in the Philippines and all the material incidents transpired in this jurisdiction.
Thus, the parties may conveniently seek relief from Philippine tribunals. Second,
Philippine tribunals are in a position to make an intelligent decision as to the law and
the facts. Third, Philippine tribunals are in a position to enforce their decisions. There is
no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the
immense public policy considerations attendant to this case behoove Philippine
tribunals to not shy away from their duty to rule on the case.
 IV

Respondents were illegally terminated.

In Bilbao v. Saudi Arabian Airlines,[101] this court defined voluntary resignation as "the

voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement
or relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment." [102] Thus, essential to the act of resignation
is voluntariness. It must be the result of an employee's exercise of his or her own will.

In the same case of Bilbao, this court advanced a means for determining whether an
employee resigned voluntarily:
As the intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended, to sever his or her employment.
[103]
 (Emphasis supplied)
On the other hand, constructive dismissal has been defined as "cessation of work
because 'continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank or a diminution in pay' and other benefits." [104]

In Penaflor v. Outdoor Clothing Manufacturing Corporation,[105] constructive dismissal

has been described as tantamount to "involuntarily [sic] resignation due to the harsh,
hostile, and unfavorable conditions set by the employer." [106] In the same case, it was
noted that "[t]he gauge for constructive dismissal is whether a reasonable person in the
employee's position would feel compelled to give up his employment under the
prevailing circumstances."[107]

Applying the cited standards on resignation and constructive dismissal, it is clear that
respondents were constructively dismissed. Hence, their termination was illegal.

The termination of respondents' employment happened when they were pregnant and
expecting to incur costs on account of child delivery and infant rearing. As noted by the
Court of Appeals, pregnancy is a time when they need employment to sustain their
families.[108] Indeed, it goes against normal and reasonable human behavior to abandon
one's livelihood in a time of great financial need.
It is clear that respondents intended to remain employed with Saudia. All they did was
avail of their maternity leaves. Evidently, the very nature of a maternity leave means
that a pregnant employee will not report for work only temporarily and that she will
resume the performance of her duties as soon as the leave allowance expires.

It is also clear that respondents exerted all efforts to' remain employed with Saudia.
Each of them repeatedly filed appeal letters (as much as five [5] letters in the case of
Rebesencio[109]) asking Saudia to reconsider the ultimatum that they resign or be
terminated along with the forfeiture of their benefits. Some of them even went to
Saudia's office to personally seek reconsideration.[110]

Respondents also adduced a copy of the "Unified Employment Contract for Female
Cabin Attendants."[111] This contract deemed void the employment of a flight attendant
who becomes pregnant and threatened termination due to lack of medical fitness.
[112]
 The threat of termination (and the forfeiture of benefits that it entailed) is enough to
compel a reasonable person in respondents' position to give up his or her employment.

Saudia draws attention to how respondents' resignation letters were supposedly made
in their own handwriting. This minutia fails to surmount all the other indications
negating any voluntariness on respondents' part. If at all, these same resignation letters
are proof of how any supposed resignation did not arise from respondents' own
initiative. As earlier pointed out, respondents' resignations were executed on Saudia's
blank letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portion of their respective headings when these
were handed to respondents.[113]

"In termination cases, the burden of proving just or valid cause for dismissing an
employee rests on the employer."[114] In this case, Saudia makes much of how
respondents supposedly completed their exit interviews, executed quitclaims, received
their separation pay, and took more than a year to file their Complaint. [115] If at all,
however, these circumstances prove only the fact of their occurrence, nothing more.
The voluntariness of respondents' departure from Saudia is non sequitur.

Mere compliance with standard procedures or processes, such as the completion of

their exit interviews, neither negates compulsion nor indicates voluntariness.
As with respondent's resignation letters, their exit interview forms even support their
claim of illegal dismissal and militates against Saudia's arguments. These exit interview
forms, as reproduced by Saudia in its own Petition, confirms the unfavorable conditions
as regards respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview
forms are particularly telling:
a. From Ma. Jopette's exit interview form:

    3. In what respects has the job met or failed to meet your expectations?

THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE. [116]

b. From Loraine's exit interview form:

    1. What are your main reasons for leaving Saudia? What company are you joining?

        xxx xxx xxx

        Others

CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY) [117]

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v.
Paramio,[118] this court noted that "[i]f (a) there is clear proof that the waiver was
wangled from an unsuspecting or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal."[119] Respondents executed their quitclaims after having been unfairly
given an ultimatum to resign or be terminated (and forfeit their benefits).

Having been illegally and unjustly dismissed, respondents are entitled to full backwages
and benefits from the time of their termination until the finality of this Decision. They
are likewise entitled to separation pay in the amount of one (1) month's salary for every
year of service until the fmality of this Decision, with a fraction of a year of at least six
(6) months being counted as one (1) whole year.

Moreover, "[m]oral damages are awarded in termination cases where the employee's
dismissal was attended by bad faith, malice or fraud, or where it constitutes an act
oppressive to labor, or where it was done in a manner contrary to morals, good customs
or public policy."[120] In this case, Saudia terminated respondents' employment in a
manner that is patently discriminatory and running afoul of the public interest that
underlies employer-employee relationships. As such, respondents are entitled to moral
damages.

To provide an "example or correction for the public good"[121] as against such

discriminatory and callous schemes, respondents are likewise entitled to exemplary
damages.

In a long line of cases, this court awarded exemplary damages to illegally dismissed
employees whose "dismissal[s were] effected in a wanton, oppressive or malevolent
manner."[122] This court has awarded exemplary damages to employees who were
terminated on such frivolous, arbitrary, and unjust grounds as membership in or
involvement with labor unions,[123] injuries sustained in the course of employment,
[124]
 development of a medical condition due to the employer's own violation of the
employment contract,[125] and lodging of a Complaint against the employer.
[126]
 Exemplary damages were also awarded to employees who were deemed illegally
dismissed by an employer in an attempt to evade compliance with statutorily
established employee benefits.[127] Likewise, employees dismissed for supposedly just
causes, but in violation of due process requirements, were awarded exemplary
damages.[128]

These examples pale in comparison to the present controversy. Stripped of all

unnecessary complexities, respondents were dismissed for no other reason than simply
that they were pregnant. This is as wanton, oppressive, and tainted with bad faith as
any reason for termination of employment can be. This is no ordinary case of illegal
dismissal. This is a case of manifest gender discrimination. It is an affront not only to our
statutes and policies on employees' security of tenure, but more so, to the
Constitution's dictum of fundamental equality between men and women. [129]

The award of exemplary damages is, therefore, warranted, not only to remind
employers of the need to adhere to the requirements of procedural and substantive due
process in termination of employment, but more importantly, to demonstrate that
gender discrimination should in no case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal,
respondents are likewise entitled to attorney's fees in the amount of 10% of the total
monetary award.[130]

VI

Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of the persons
composing it. Thus, as a rule, corporate directors and officers are not liable for the illegal
termination of a corporation's employees. It is only when they acted in bad faith or with
malice that they become solidarity liable with the corporation. [131]

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever

Electrical,[132] this court clarified that "[b]ad faith does not connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
of wrong; it means breach of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud."[133]

Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or
with malice as regards their termination. Thus, she may not be held solidarity liable with
Saudia.

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not

solidarity liable with petitioner Saudi Arabian Airlines, and second, that petitioner Saudi
Arabian Airlines is liable for moral and exemplary damages. The June 16, 2011 Decision
and the September 13, 2011 Resolution of the Court of Appeals in CA-G.R. SP. No.
113006 are hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi
Arabian Airlines is ordered to pay respondents:

(1 Full backwages and all other benefits computed from the respective dates in which
) each of the respondents were illegally terminated until the finality of this Decision;
(2 Separation pay computed from the respective dates in which each of the respondents
) commenced employment until the finality of this Decision at the rate of one (1) month's
salary for every year of service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year;
(3 Moral damages in the amount of P100,000.00 per respondent;
)
(4 Exemplary damages in the amount of P200,000.00 per respondent; and
)
(5 Attorney's fees equivalent to 10% of the total award.
)

Interest of 6% per annum shall likewise be imposed on the total judgment award from
the finality of this Decision until full satisfaction thereof.

This case is REMANDED to the Labor Arbiter to make a detailed computation of the
amounts due to respondents which petitioner Saudi Arabian Airlines should pay without
delay.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 205703, March 07, 2016 ]
INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. (IPAMS),
SNC LAVALIN ENGINEERS & CONTRACTORS, INC. AND ANGELITO C.
HERNANDEZ, PETITIONERS, VS. JOSE G. DE VERA AND ALBERTO B.
ARRIOLA, RESPONDENTS.

DECISION

MENDOZA, J.:

When can a foreign law govern an overseas employment contract? This is the fervent
question that the Court shall resolve, once and for all.

This petition for review on certiorari seeks to reverse and set aside the January 24, 2013
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 118869, which modified the
November 30, 2010 Decision[2] of the National Labor Relations Commission (NLRC) and
its February 2, 2011 Resolution,[3] in NLRC LAC Case No. 08-000572-10/NLRC Case
No. NCR 09-13563-09, a case for illegal termination of an Overseas Filipino Worker
(OFW).

The Facts

Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local

placement agency duly organized and existing under Philippine laws, with petitioner
Angelito C. Hernandez as its president and managing director. Petitioner SNC Lavalin
Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a Canadian
company with business interests in several countries. On the other hand, respondent
Alberto Arriola (Arriola) is a licensed general surgeon in the Philippines.[4]

Employee's Position

Arriola was offered by SNC-Lavalin, through its letter,[5] dated May 1, 2008, the position
of Safety Officer in its Ambatovy Project site in Madagascar. The position offered had a
rate of CA$32.00 per hour for forty (40) hours a week with overtime pay in excess of
forty (40) hours. It was for a period of nineteen (19) months starting from June 9, 2008 to
December 31, 2009.

Arriola was then hired by SNC-Lavalin, through its local manning agency, IPAMS, and
his overseas employment contract was processed with the Philippine Overseas
Employment Agency (POEA)[6] In a letter of understanding,[7] dated June 5, 2008, SNC-
Lavalin confirmed Arriola's assignment in the Ambatovy Project. According to Arriola,
he signed the contract of employment in the Philippines.[8] On June 9, 2008, Arriola
started working in Madagascar.

After three months, Arriola received a notice of pre-termination of employment,[9] dated

September 9, 2009, from SNC-Lavalin. It stated that his employment would be pre-
terminated effective September 11, 2009 due to diminishing workload in the area of his
expertise and the unavailability of alternative assignments. Consequently, on September
15, 2009, Arriola was repatriated. SNC-Lavalin deposited in Arriola's bank account his
pay amounting to Two Thousand Six Hundred Thirty Six Dollars and Eight Centavos
(CA$2,636.80), based on Canadian labor law.

Aggrieved, Arriola filed a complaint against the petitioners for illegal dismissal and non-
payment of overtime pay, vacation leave and sick leave pay before the Labor Arbiter
(LA). He claimed that SNC-Lavalin still owed him unpaid salaries equivalent to the three-
month unexpired portion of his contract, amounting to, more or less, One Million Sixty-
Two Thousand Nine Hundred Thirty-Six Pesos (P1,062,936.00). He asserted that SNC-
Lavalin never offered any valid reason for his early termination and that he was not given
sufficient notice regarding the same. Arriola also insisted that the petitioners must prove
the applicability of Canadian law before the same could be applied to his employment
contract.

Employer's Position

The petitioners denied the charge of illegal dismissal against them. They claimed that
SNC-Lavalin was greatly affected by the global financial crises during the latter part of
2008. The economy of Madagascar, where SNC-Lavalin had business sites, also slowed
down. As proof of its looming financial standing, SNC-Lavalin presented a copy of a
news item in the Financial Post,[10] dated March 5, 2009, showing the decline of the value
of its stocks. Thus, it had no choice but to minimize its expenditures and operational
expenses. It re-organized its Health and Safety Department at the Ambatovy Project site
and Arriola was one of those affected.[11]

The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC[12] (EDI-

Staffbuilders), pointing out that particular labor laws of a foreign country incorporated in
a contract freely entered into between an OFW and a foreign employer through the latter's
agent was valid. In the present case, as all of Arriola's employment documents were
processed in Canada, not to mention that SNC-Lavalin's office was in Ontario, the
principle of lex loci celebrationis was applicable. Thus, the petitioners insisted that
Canadian laws governed the contract.

The petitioners continued that the pre-termination of Arriola's contract was valid for
being consistent with the provisions of both the Expatriate Policy and laws of Canada.
The said foreign law did not require any ground for early termination of employment, and
the only requirement was the written notice of termination. Even assuming that
Philippine laws should apply, Arriola would still be validly dismissed because domestic
law recognized retrenchment and redundancy as legal grounds for termination.

In their Rejoinder,[13] the petitioners presented a copy of the Employment Standards Act

(ESA) of Ontario, which was duly authenticated by the Canadian authorities and certified
by the Philippine Embassy.

The LA Ruling

In a Decision,[14] dated May 31, 2010, the LA dismissed Arriola's complaint for lack of
merit. The LA ruled that the rights and obligations among and between the OFW, the
local recruiter/agent, and the foreign employer/principal were governed by the
employment contract pursuant to the EDI-Staffbuilders case. Thus, the provisions on
termination of employment found in the ESA, a foreign law which governed Arriola's
employment contract, were applied. Given that SNC-Lavalin was able to produce the
duly authenticated ESA, the LA opined that there was no other conclusion but to uphold
the validity of Arriola's dismissal based on Canadian law. The fallo of the LA decision
reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
dismissing the complaint for lack of merit.

SO ORDERED.[15]
Aggrieved, Arriola elevated the LA decision before the NLRC.

The NLRC Ruling

In its decision, dated November 30, 2010, the NLRC reversed the LA decision and ruled
that Arriola was illegally dismissed by the petitioners. Citing PNB v. Cabansag,[16] the
NLRC stated that whether employed locally or overseas, all Filipino workers enjoyed the
protective mantle of Philippine labor and social legislation, contract stipulations to the
contrary notwithstanding. Thus, the Labor Code of the Philippines and Republic Act
(R.A.) No. 8042, or the Migrant Workers Act, as amended, should be applied. Moreover,
the NLRC added that the overseas employment contract of Arriola was processed in the
POEA.

Applying the Philippine laws, the NLRC found that there was no substantial evidence
presented by the petitioners to show any just or authorized cause to terminate Arriola.
The ground of financial losses by SNC-Lavalin was not supported by sufficient and
credible evidence. The NLRC concluded that, for being illegally dismissed, Arriola
should be awarded CA$81,920.00 representing sixteen (16) months of Arriola's purported
unpaid salary, pursuant to the Serrano v. Gallant[17] doctrine. The decretal portion of the
NLRC decision states:
WHEREFORE, premises considered, judgment is hereby rendered finding complainant-
appellant to have been illegally dismissed. Respondents-appellees are hereby ordered to
pay complainant-appellant the amount of CA$81,920.00, or its Philippine Peso
equivalent prevailing at the time of payment. Accordingly, the decision of the Labor
Arbiter dated May 31, 2010 is hereby VACATED and SET ASIDE.

SO ORDERED.[18]
The petitioners moved for reconsideration, but their motion was denied by the NLRC in
its resolution, dated February 2, 2011.

Undaunted, the petitioners filed a petition for certiorari before the CA arguing that it

should be the ESA, or the Ontario labor law, that should be applied in Arriola's
employment contract. No temporary restraining order, however, was issued by the CA.

The Execution Proceedings

In the meantime, execution proceedings were commenced before the LA by Arriola. The
LA granted the motion for execution in the Order,[19] dated August 8, 2011.

The petitioners appealed the execution order to the NLRC. In its Decision, [20] dated May
31, 2012, the NLRC corrected the decretal portion of its November 30, 2010 decision. It
decreased the award of backpay in the amount of CA$26,880.00 or equivalent only to
three (3) months and three (3) weeks pay based on 70-hours per week workload. The
NLRC found that when Arriola was dismissed on September 9, 2009, he only had three
(3) months and three (3) weeks or until December 31, 2009 remaining under his
employment contract.

Still not satisfied with the decreased award, IPAMS filed a separate petition
for certiorari before the CA. In its decision, dated July 25, 2013, the CA affirmed the
decrease in Arriola's backpay because the unpaid period in his contract was just three (3)
months and three (3) weeks.

Unperturbed, IPAMS appealed before the Court and the case was docketed as G.R. No.
212031. The appeal, however, was dismissed outright by the Court in its resolution, dated
August 8, 2014, because it was belatedly filed and it did not comply with Sections 4 and
5 of Rule 7 of the Rules of Court. Hence, it was settled in the execution proceedings that
the award of backpay to Arriola should only amount to three (3) months and three (3)
weeks of his pay.

The CA Ruling

Returning to the principal case of illegal dismissal, in its assailed January 24, 2013
decision, the CA affirmed that Arriola was illegally dismissed by the petitioners. The CA
explained that even though an authenticated copy of the ESA was submitted, it did not
mean that the said foreign law automatically applied in this case. Although parties were
free to establish stipulations in their contracts, the same must remain consistent with law,
morals, good custom, public order or public policy. The appellate court wrote that the
ESA allowed an employer to disregard the required notice of termination by simply
giving the employee a severance pay. The ESA could not be made to apply in this case
for being contrary to our Constitution, specifically on the right of due process. Thus, the
CA opined that our labor laws should find application.

As the petitioners neither complied with the twin notice-rule nor offered any just or
authorized cause for his termination under the Labor Code, the CA held that Arriola's
dismissal was illegal. Accordingly, it pronounced that Arriola was entitled to his salary
for the unexpired portion of his contract which is three (3) months and three (3) weeks
salary. It, however, decreased the award of backpay to Arriola because the NLRC made a
wrong calculation. Based on his employment contract, the backpay of Arriola should only
be computed on a 40-hour per week workload, or in the amount of CA$19,200.00. The
CA disposed the case in this wise:
WHEREFORE, in view of the foregoing premises, the petition is PARTIALLY
GRANTED. The assailed Order of the National Labor Relations Commission in NLRC
LAC No. 08-000572-10/NLRC Case No. NCR 09-13563-09 is MODIFIED in that
private respondent is only entitled to a monetary judgment equivalent to his unpaid
salaries in the amount of CA$19,200.00 or its Philippine Peso equivalent.

SO ORDERED.[21]
Hence, this petition, anchored on the following
ISSUES

I
WHETHER OR NOT RESPONDENT ARRIOLA WAS VALIDLY DISMISSED
PURSUANT TO THE EMPLOYMENT CONTRACT.

II

GRANTING THAT THERE WAS ILLEGAL DISMISSAL IN THE CASE AT

BAR, WHETHER OR NOT THE SIX-WEEK ON, TWO-WEEK OFF SCHEDULE
SHOULD BE USED IN THE COMPUTATION OF ANY MONETARY AWARD.

III

GRANTING THAT THERE WAS ILLEGAL DISMISSAL, WHETHER OR NOT

THE AMOUNT BEING CLAIMED BY RESPONDENTS HAD ALREADY BEEN
SATISFIED, OR AT THE VERY LEAST, WHETHER OR NOT THE AMOUNT
OF CA$2,636.80 SHOULD BE DEDUCTED FROM THE MONETARY AWARD.
[22]

The petitioners argue that the rights and obligations of the OFW, the local recruiter, and
the foreign employer are governed by the employment contract, citing EDI-Staffbuilders;
that the terms and conditions of Arriola's employment are embodied in the Expatriate
Policy, Ambatovy Project - Site, Long Term, hence, the laws of Canada must be applied;
that the ESA, or the Ontario labor law, does not require any ground for the early
termination of employment and it permits the termination without any notice provided
that a severance pay is given; that the ESA was duly authenticated by the Canadian
authorities and certified by the Philippine Embassy; that the NLRC Sixth Division
exhibited bias and bad faith when it made a wrong computation on the award of backpay;
and that, assuming there was illegal dismissal, the CA$2,636.80, earlier paid to Arriola,
and his home leaves should be deducted from the award of backpay.

In his Comment,[23] Arriola countered that foreign laws could not apply to employment
contracts if they were contrary to law, morals, good customs, public order or public
policy, invoking Pakistan International Airlines Corporation v. Ople (Pakistan
International);[24] that the ESA was not applicable because it was contrary to his
constitutional right to due process; that the petitioners failed to substantiate an authorized
cause to justify his dismissal under Philippine labor law; and that the petitioners could not
anymore claim a deduction of CA$2,636.80 from the award of backpay because it was
raised for the first time on appeal.

In their Reply,[25] the petitioners asserted that R.A. No. 8042 recognized the applicability
of foreign laws on labor contracts; that the Pakistan International case was superseded
by EDI-Staffbuilders and other subsequent cases; and that SNC-Lavalin suffering
financial losses was an authorized cause to terminate Arriola's employment.
In his Memorandum,[26] Arriola asserted that his employment contract was executed in the
Philippines and that the alleged authorized cause of financial losses by the petitioners was
not substantiated by evidence.

In their Consolidated Memorandum,[27] the petitioners reiterated that the ESA was

applicable in the present case and that recent jurisprudence recognized that the parties
could agree on the applicability of foreign laws in their labor contracts.

The Court's Ruling

The petition lacks merit.

Application of foreign laws with labor contracts

At present, Filipino laborers, whether skilled or professional, are enticed to depart from
the motherland in search of greener pastures. There is a distressing reality that the offers
of employment abroad are more lucrative than those found in our own soils. To reap the
promises of the foreign dream, our unsung heroes must endure homesickness, solitude,
discrimination, mental and emotional struggle, at times, physical turmoil, and, worse,
death. On the other side of the table is the growing number of foreign employers attracted
in hiring Filipino workers because of their reasonable compensations and globally-
competitive skills and qualifications. Between the dominant foreign employers and the
vulnerable and desperate OFWs, however, there is an inescapable truth that the latter are
in need of greater safeguard and protection.

In order to afford the full protection of labor to our OFWs, the State has vigorously
enacted laws, adopted regulations and policies, and established agencies to ensure that
their needs are satisfied and that they continue to work in a humane living environment
outside of the country. Despite these efforts, there are still issues left unsolved in the
realm of overseas employment. One existing question is posed before the Court -when
should an overseas labor contract be governed by a foreign law? To answer this burning
query, a review of the relevant laws and jurisprudence is warranted.

R.A. No. 8042, or the Migrant Workers Act, was enacted to institute the policies on
overseas employment and to establish a higher standard of protection and promotion of
the welfare of migrant workers.[28] It emphasized that while recognizing the significant
contribution of Filipino migrant workers to the national economy through their foreign
exchange remittances, the State does not promote overseas employment as a means to
sustain economic growth and achieve national development.[29] Although it acknowledged
claims arising out of law or contract involving Filipino workers,[30] it does not
categorically provide that foreign laws are absolutely and automatically applicable in
overseas employment contracts.
The issue of applying foreign laws to labor contracts was initially raised before the Court
in Pakistan International. It was stated in the labor contract therein (1) that it would be
governed by the laws of Pakistan, (2) that the employer have the right to terminate the
employee at any time, and (3) that the one-month advance notice in terminating the
employment could be dispensed with by paying the employee an equivalent one-month
salary. Therein, the Court elaborated on the parties' right to stipulate in labor contracts, to
wit:
A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. The principle of party autonomy in contracts is
not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem convenient,
"provided they are not contrary to law, morals, good customs, public order or
public policy." Thus, counterbalancing the principle of autonomy of contracting parties
is the equally general rule that provisions of applicable law, especially provisions relating
to matters affected with public policy, are deemed written into the contract. Put a little
differently, the governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily
impressed with public interest. The law relating to labor and employment is clearly
such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting
with each other. x x x[31]

[Emphases Supplied]
In that case, the Court held that the labor relationship between OFW and the foreign
employer is "much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon
some other law to govern their relationship."[32] Thus, the Court applied the Philippine
laws, instead of the Pakistan laws. It was also held that the provision in the employment
contract, where the employer could terminate the employee at any time for any ground
and it could even disregard the notice of termination, violates the employee's right to
security of tenure under Articles 280 and 281 of the Labor Code.

In EDI-Staffbuilders, the case heavily relied on by the petitioners, it was reiterated that,
"[i]n formulating the contract, the parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy."[33] In that case, the overseas
contract specifically stated that Saudi Labor Laws would govern matters not provided for
in the contract. The employer, however, failed to prove the said foreign law, hence, the
doctrine of processual presumption came into play and the Philippine labor laws were
applied. Consequently, the Court did not discuss any longer whether the Saudi labor laws
were contrary to Philippine labor laws.

The case of Becmen Service Exporter and Promotion, Inc. v. Spouses Cuaresma,
  though not an illegal termination case, elucidated on the effect of foreign laws on
[34]

employment. It involved a complaint for insurance benefits and damages arising from the
death of a Filipina nurse from Saudi Arabia. It was initially found therein that there was
no law in Saudi Arabia that provided for insurance arising from labor accidents.
Nevertheless, the Court concluded that the employer and the recruiter in that case
abandoned their legal, moral and social obligation to assist the victim's family in
obtaining justice for her death, and so her family was awarded P5,000,000.00 for moral
and exemplary damages.

In ATCI Overseas Corporation v. Echin[35] (ATCI Overseas), the private recruitment

agency invoked the defense that the foreign employer was immune from suit and that it
did not sign any document agreeing to be held jointly and solidarily liable. Such defense,
however, was rejected because R.A. No. 8042 precisely afforded the OFWs with a
recourse against the local agency and the foreign employer to assure them of an
immediate and sufficient payment of what was due. Similar to EDI-Staffbuilders, the
local agency therein failed to prove the Kuwaiti law specified in the labor contract,
pursuant to Sections 24 and 25 of Rule 132 of the Revised Rules of Court.

Also, in the recent case of Sameer Overseas Placement Agency, Inc. v.

Cabiles[36] (Sameer Overseas), it was declared that the security of tenure for labor was
guaranteed by our Constitution and employees were not stripped of the same when they
moved to work in other jurisdictions. Citing PCL Shipping Phils., Inc. v. NLRC[37] (PCL
Shipping), the Court held that the principle of lex loci contractus (the law of the place
where the contract is made) governed in this jurisdiction. As it was established therein
that the overseas labor contract was executed in the Philippines, the Labor Code and the
fundamental procedural rights were observed. It must be noted that no foreign law was
specified in the employment contracts in both cases.

Lastly, in Saudi Arabian Airlines (Saudia) v. Rebesencio[38], the employer therein asserted
the doctrine of forum non conveniens because the overseas employment contracts
required the application of the laws of Saudi Arabia, and so, the Philippine courts were
not in a position to hear the case. In striking down such argument, the Court held that
while a Philippine tribunal was called upon to respect the parties' choice of governing
law, such respect must not be so permissive as to lose sight of considerations of law,
morals, good customs, public order, or public policy that underlie the contract central to
the controversy. As the dispute in that case related to the illegal termination of the
employees due to their pregnancy, then it involved a matter of public interest and public
policy. Thus, it was ruled that Philippine laws properly found application and that
Philippine tribunals could assume jurisdiction.

Based on the foregoing, the general rule is that Philippine laws apply even to overseas
employment contracts. This rule is rooted in the constitutional provision of Section 3,
Article XIII that the State shall afford full protection to labor, whether local or overseas.
Hence, even if the OFW has his employment abroad, it does not strip him of his rights to
security of tenure, humane conditions of work and a living wage under our Constitution.
[39]

As an exception, the parties may agree that a foreign law shall govern the employment
contract. A synthesis of the existing laws and jurisprudence reveals that this exception is
subject to the following requisites:

1. That it is expressly stipulated in the overseas employment contract that a

specific foreign law shall govern;

2. That the foreign law invoked must be proven before the courts pursuant to
the Philippine rules on evidence;

3. That the foreign law stipulated in the overseas employment contract must
not be contrary to law, morals, good customs, public order, or public policy
of the Philippines; and

4. That the overseas employment contract must be processed through the

POEA.

The Court is of the view that these four (4) requisites must be complied with before the
employer could invoke the applicability of a foreign law to an overseas employment
contract. With these requisites, the State would be able to abide by its constitutional
obligation to ensure that the rights and well-being of our OFWs are fully protected. These
conditions would also invigorate the policy under R.A. No. 8042 that the State shall, at
all times, uphold the dignity of its citizens whether in country or overseas, in general, and
the Filipino migrant workers, in particular.[40] Further, these strict terms are pursuant to
the jurisprudential doctrine that "parties may not contract away applicable provisions of
law especially peremptory provisions dealing with matters heavily impressed with public
interest,"[41] such as laws relating to labor. At the same time, foreign employers are not at
all helpless to apply their own laws to overseas employment contracts provided that they
faithfully comply with these requisites.

If the first requisite is absent, or that no foreign law was expressly stipulated in the
employment contract which was executed in the Philippines, then the domestic labor laws
shall apply in accordance with the principle of lex loci contractus. This is based on the
cases of Sameer Overseas and PCL Shipping.

If the second requisite is lacking, or that the foreign law was not proven pursuant to
Sections 24 and 25 of Rule 132 of the Revised Rules of Court, then the international law
doctrine of processual presumption operates. The said doctrine declares that "[w]here a
foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that
foreign law is the same as ours."[42] This was observed in the cases of EDI-
Staffbuilders and ATCI Overseas.

If the third requisite is not met, or that the foreign law stipulated is contrary to law,
morals, good customs, public order or public policy, then Philippine laws govern. This
finds legal bases in the Civil Code, specifically: (1) Article 17, which provides that laws
which have, for their object, public order, public policy and good customs shall not be
rendered ineffective by laws of a foreign country; and (2) Article 1306, which states that
the stipulations, clauses, terms and conditions in a contract must not be contrary to law,
morals, good customs, public order, or public policy. The said doctrine was applied in the
case of Pakistan International.

Finally, if the fourth requisite is missing, or that the overseas employment contract was
not processed through the POEA, then Article 18 of the Labor Code is violated. Article
18 provides that no employer may hire a Filipino worker for overseas employment except
through the boards and entities authorized by the Secretary of Labor. In relation thereto,
Section 4 of R.A. No. 8042, as amended, declares that the State shall only allow the
deployment of overseas Filipino workers in countries where the rights of Filipino migrant
workers are protected. Thus, the POEA, through the assistance of the Department of
Foreign Affairs, reviews and checks whether the countries have existing labor and social
laws protecting the rights of workers, including migrant workers.[43] Unless processed
through the POEA, the State has no effective means of assessing the suitability of the
foreign laws to our migrant workers. Thus, an overseas employment contract that was not
scrutinized by the POEA definitely cannot be invoked as it is an unexamined foreign law.

In other words, lacking any one of the four requisites would invalidate the application of
the foreign law, and the Philippine law shall govern the overseas employment contract.

As the requisites of the applicability of foreign laws in overseas labor contract have been
settled, the Court can now discuss the merits of the case at bench.

A judicious scrutiny of the records of the case demonstrates that the petitioners were able
to observe the second requisite, or that the foreign law must be proven before the court
pursuant to the Philippine rules on evidence. The petitioners were able to present the
ESA, duly authenticated by the Canadian authorities and certified by the Philippine
Embassy, before the LA. The fourth requisite was also followed because Arriola's
employment contract was processed through the POEA.[44]

Unfortunately for the petitioners, those were the only requisites that they complied with.
As correctly held by the CA, even though an authenticated copy of the ESA was
submitted, it did not mean that said foreign law could be automatically applied to this
case. The petitioners miserably failed to adhere to the two other requisites, which shall be
discussed in seratim.
The foreign law was not expressly specified in the employment contract

The petitioners failed to comply with the first requisite because no foreign law was
expressly stipulated in the overseas employment contract with Arriola. In its pleadings,
the petitioners did not directly cite any specific provision or stipulation in the said labor
contract which indicated the applicability of the Canadian labor laws or the ESA. They
failed to show on the face of the contract that a foreign law was agreed upon by the
parties. Rather, they simply asserted that the terms and conditions of Arriola's
employment were embodied in the Expatriate Policy, Ambatovy Project - Site, Long
Term.[45] Then, they emphasized provision 8.20 therein, regarding interpretation of the
contract, which provides that said policy would be governed and construed with the laws
of the country where the applicable SNC-Lavalin, Inc. office was located. [46] Because of
this provision, the petitioners insisted that the laws of Canada, not of Madagascar or the
Philippines, should apply. Then, they finally referred to the ESA.

It is apparent that the petitioners were simply attempting to stretch the overseas
employment contract of Arriola, by implication, in order that the alleged foreign law
would apply. To sustain such argument would allow any foreign employer to improperly
invoke a foreign law even if it is not anymore reasonably contemplated by the parties to
control the overseas employment. The OFW, who is susceptible by his desire and
desperation to work abroad, would blindly sign the labor contract even though it is not
clearly established on its face which state law shall apply. Thus, a better rule would be to
obligate the foreign employer to expressly declare at the onset of the labor contract that a
foreign law shall govern it. In that manner, the OFW would be informed of the applicable
law before signing the contract.

Further, it was shown that the overseas labor contract was executed by Arriola at his
residence in Batangas and it was processed at the POEA on May 26, 2008. [47] Considering
that no foreign law was specified in the contract and the same was executed in the
Philippines, the doctrine of lex loci celebrationis applies and the Philippine laws shall
govern the overseas employment of Arriola.

The foreign law invoked is contrary to the Constitution and the Labor Code

Granting arguendo that the labor contract expressly stipulated the applicability of
Canadian law, still, Arriola's employment cannot be governed by such foreign law
because the third requisite is not satisfied. A perusal of the ESA will show that some of
its provisions are contrary to the Constitution and the labor laws of the Philippines.

First, the ESA does not require any ground for the early termination of employment.
[48]
 Article 54 thereof only provides that no employer should terminate the employment of
an employee unless a written notice had been given in advance.[49] Necessarily, the
employer can dismiss any employee for any ground it so desired. At its own pleasure, the
foreign employer is endowed with the absolute power to end the employment of an
employee even on the most whimsical grounds.

Second, the ESA allows the employer to dispense with the prior notice of termination to
an employee. Article 65(4) thereof indicated that the employer could terminate the
employment without notice by simply paying the employee a severance pay computed on
the basis of the period within which the notice should have been given. [50] The employee
under the ESA could be immediately dismissed without giving him the opportunity to
explain and defend himself.

The provisions of the ESA are patently inconsistent with the right to security of tenure.
Both the Constitution[51] and the Labor Code[52] provide that this right is available to any
employee. In a host of cases, the Court has upheld the employee's right to security of
tenure in the face of oppressive management behavior and management prerogative.
Security of tenure is a right which cannot be denied on mere speculation of any unclear
and nebulous basis.[53]

Not only do these provisions collide with the right to security of tenure, but they also
deprive the employee of his constitutional right to due process by denying him of any
notice of termination and the opportunity to be heard.[54] Glaringly, these disadvantageous
provisions under the ESA produce the same evils which the Court vigorously sought to
prevent in the cases of Pakistan International and Sameer Overseas. Thus, the Court
concurs with the CA that the ESA is not applicable in this case as it is against our
fundamental and statutory laws.

In fine, as the petitioners failed to meet all the four (4) requisites on the applicability of a
foreign law, then the Philippine labor laws must govern the overseas employment
contract of Arriola.

No authorized cause for dismissal was proven

Article 279 of our Labor Code has construed security of tenure to mean that the employer
shall not terminate the services of an employee except for a just cause or when authorized
by law.[55] Concomitant to the employer's right to freely select and engage an employee is
the employer's right to discharge the employee for just and/or authorized causes. To
validly effect terminations of employment, the discharge must be for a valid cause in the
manner required by law. The purpose of these two-pronged qualifications is to protect the
working class from the employer's arbitrary and unreasonable exercise of its right to
dismiss.[56]

Some of the authorized causes to terminate employment under the Labor Code would be
installation of labor-saving devices, redundancy, retrenchment to prevent losses and the
closing or cessation of operation of the establishment or undertaking.[57] Each authorized
cause has specific requisites that must be proven by the employer with substantial
evidence before a dismissal may be considered valid.

Here, the petitioners assert that the economy of Madagascar weakened due to the global
financial crisis. Consequently, SNC-Lavalin's business also slowed down. To prove its
sagging financial standing, SNC-Lavalin presented a copy of a news item in the Financial
Post, dated March 5, 2009. They insist that SNC-Lavalin had no choice but to minimize
its expenditures and operational expenses.[58] In addition, the petitioners argued that the
government of Madagascar prioritized the employment of its citizens, and not foreigners.
Thus, Arriola was terminated because there was no more job available for him. [59]

The Court finds that Arriola was not validly dismissed. The petitioners simply argued that
they were suffering from financial losses and Arriola had to be dismissed. It was not even
clear what specific authorized cause, whether retrenchment or redundancy, was used to
justify Arriola's dismissal. Worse, the petitioners did not even present a single credible
evidence to support their claim of financial loss. They simply offered an unreliable news
article which deserves scant consideration as it is undoubtedly hearsay. Time and again
the Court has ruled that in illegal dismissal cases like the present one, the onus of proving
that the employee was dismissed and that the dismissal was not illegal rests on the
employer, and failure to discharge the same would mean that the dismissal is not justified
and, therefore, illegal.[60]

As to the amount of backpay awarded, the Court finds that the computation of the CA
was valid and proper based on the employment contract of Arriola. Also, the issue of
whether the petitioners had made partial payments on the backpay is a matter best
addressed during the execution process.

WHEREFORE, the petition is DENIED. The January 24, 2013 Decision of the Court of
Appeals in CA-G.R. SP No. 118869 is AFFIRMED in toto.

SO ORDERED.

FIRST DIVISION
[ G.R. No. 205727, January 18, 2017 ]
RUTCHER T. DAGASDAS, PETITIONER, VS. GRAND PLACEMENT AND
GENERAL SERVICES CORPORATION, RESPONDENT.

DECISION
DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the September 26, 2012

Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set
aside the March 29, 2010[2] and June 2, 2010[3] Resolutions of the National Labor
Relations Commission (NLRC) in NLRC LAC OFW-L-02-000071-10, and concomitantly
reinstated the November 27, 2009 Decision[4] of the Labor Arbiter (LA) dismissing the
Complaint for lack of merit.

Also challenged is the January 28, 2013 Resolution[5] denying the Motion for
Reconsideration filed by Rutcher T. Dagasdas (Dagasdas).

Factual Antecedents

Grand Placement and General Services Corp. (GPGS) is a licensed recruitment or

placement agency in the Philippines while Saudi Aramco (Aramco) is its counter part in
Saudi Arabia. On the other hand, Industrial & Management Technology Methods Co.
Ltd. (ITM) is the principal of GPGS, a company existing in Saudi Arabia. [6]

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one year contract [7] with a
monthly salary of Saudi Riyal (SR) 5,112.00. Before leaving the Philippines, Dagasdas
underwent skill training[8] and pre departure orientation as Network Technician.
[9]
 Nonetheless, his Job Offer[10] indicated that he was accepted by Aramco and ITM for
the position of "Supt" Dagasdas contended that although his position under his contract
was as a Network Technician, he actually applied for and was engaged as a Civil
Engineer considering that his transcript of records, [11] diploma[12] as well as his
curriculum vitae[13] showed that he had a degree in Civil Engineering, and his work
experiences were all related to this field. Purportedly, the position of Network
Technician was only for the purpose of securing a visa for Saudi Arabia because ITM
could not support visa application for Civil Engineers. [14]

On February 8, 2008, Dagasdas arrived in Saudi Arabia.[15] Thereafter, he signed with ITM

a new employment contract[16] which stipulated that the latter contracted him as
Superintendent or in any capacity within the scope of his abilities with salary of
SR5,112.00 and allowance of SR2,045.00 per month. Under this contract, Dagasdas shall
be placed under a three month probationary period; and, this new contract shall cancel
all contracts prior to its date from any source.

On February 11, 2008, Dagasdas reported at ITM's worksite in Khurais, Saudi Arabia.
[17]
 There, he was allegedly given tasks suited for a Mechanical Engineer, which were
foreign to the job he applied for and to his work experience. Seeing that he would not
be able to perform well in his work, Dagasdas raised his concern to his Supervisor in the
Mechanical Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil Construction
Engineer, and was issued an identification card good for one month. Dagasdas averred
that on March 9, 2008, he was directed to exit the worksite but Rashid H. Siddiqui
(Siddiqui), the Site Coordinator Manager, advised him to remain in the premises, and
promised to secure him the position he applied for. However, before Dagasdas' case
was investigated, Siddiqui had severed his employment with ITM. [18]

In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office. [19] Later, ITM
gave him a termination notice[20] indicating that his last day of work was on April 30,
2008, and he was dismissed pursuant to clause 17.4.3 of his contract, which provided
that ITM reserved the right to terminate any employee within the three-month
probationary period without need of any notice to the employee. [21]

Before his repatriation, Dagasdas signed a Statement of Quitclaim [22] with Final

Settlement[23] stating that ITM paid him all the salaries and benefits for his services from
February 11, 2008 to April 30, 2008 in the total amount of SR7,156.80, and ITM was
relieved from all financial obligations due to Dagasdas.

On June 24, 2008, Dagasdas returned to the Philippines. [24] Thereafter, he filed an illegal
dismissal case against GPGS, ITM, and Aramco.

Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the
mismatch in the work assigned to him. He contended that such claim was supported by
exchanges of electronic mail (e-mail) establishing that GPGS, ITM, and Aramco were
aware of the job mismatch that had befallen him.[25] He also argued that although he
was engaged as a project employee, he was still entitled to security of tenure for the
duration of his contract. He maintained that GPGS, ITM, and Aramco merely invented
"imaginary cause/s" to terminate him. Thus, he claimed that he was dismissed without
cause and due process of law.[26]
GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained
that Dagasdas was aware that he was employed as Network Technician but he could not
perform his work in accordance with the standards of his employer. They added that
Dagasdas was informed of his poor performance, and he conformed to his termination
as evidenced by his quitclaim.[27] They also stressed that Dagasdas was only a
probationary employee since he worked for ITM for less than three months. [28]

Ruling of the Labor Arbiter

On November 27, 2009, the LA dismissed the case for lack of merit.

The LA pointed out that when Dagasdas signed his new employment contract in Saudi
Arabia, he accepted its stipulations, including the fact that he had to undergo
probationary status. She declared that this new contract was more advantageous for
Dagasdas as his position was upgraded to that of a Superintendent, and he was likewise
given an allowance of SR2,045.00 aside from his salary of SR5,112.00 per month.
According to the LA, for being more favorable, this new contract was not prohibited by
law. She also decreed that Dagasdas fell short of the expected work pe1formance; as
such, his employer dismissed him as part of its management prerogative.

Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas' dismissal illegal. The
decretal portion of the NLRC Resolution reads:
WHEREFORE, the decision appealed from is hereby REVERSED, and the
respondent[s] are hereby ordered to pay the complainant the salaries corresponding to
the unexpired portion of his contract amounting to SR46,008 (SR5112 x 9 months, or
from May 1, 2008 to January 31, 2009), plus ten percent (10%) thereof as attorney's
fees. The respondents are jointly and severally liable for the judgment awards, which
are payable in Philippine currency converted on the basis of the exchange rate
prevailing at the time of actual payment.

SO ORDERED.[29]
The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was
"recruited on paper" by GPGS as Network Technician but the real understanding
between the parties was to hire him as Superintendent. It held that GPGS erroneously
recruited Dagasdas, and tailed to inform him that he was hired as a "Mechanical
Superintendent" meant for a Mechanical Engineer. It declared that while ITM has the
prerogative to continue the employment of individuals only if they were qualified,
Dagasdas' dismissal amounted to illegal termination since the mismatch between his
qualifications and the job given him was no fault of his.

The NLRC added that Dagasdas should not be made to suffer the consequences of the
miscommunication between GPGS and ITM considering that the government obligates
employment agencies recruiting Filipinos for overseas work to "select only medically
and technically qualified recruits."[30]

On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution
dated March 29, 2010.

Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of

discretion on the part of the NLRC in ruling that Dagasdas was illegally dismissed.

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA
Decision dismissing the case for lack of merit.

The CA could not accede to the conclusion that the real agreement between the parties
was to employ Dagasdas as Superintendent. It stressed that Dagasdas left the
Philippines pursuant to his employment contract indicating that he was to work as a
Network Technician; when he arrived in Saudi Arabia and signed a new contract for the
position of a Superintendent, the agreement was with no participation of GPGS, and
said new contract was only between Dagasdas and ITM. It emphasized that after
commencing work as Superintendent, Dagasdas realized that he could not perform his
tasks, and "[s]eemingly, it was [Dagasdas] himself who voluntarily withdrew from his
assigned work for lack of competence."[31] It faulted the NLRC for failing to consider that
Dagasdas backed out as Superintendent on the excuse that the same required the skills
of a Mechanical Engineer.

In holding that Dagasdas' dismissal was legal, the CA gave credence to Dagasdas'
Statement of Quitclaim and Final Settlement. It ruled that for having voluntarily
accepted money from his employer, Dagasdas accepted his termination and released his
employer from future financial obligations arising from his past employment with it.

On January 28, 2013, the CA denied Dagasdas' Motion for Reconsideration.

Hence, Dagasdas filed this Petition raising these grounds:

[1] THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR
WHEN IT REVERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS
COMMISSION.[32]

[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS THAT
THE CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE ADVANTAGEOUS TO THE
LATTER AND THAT IT WAS [H]IS PERSONAL ACT OR DECISION [TO SIGN] THE SAME. [33]

[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE NLRC
FOR HS FAILURE TO INVALID ARE OR DISCUSS THE FINAL SETTLEMENT AND STATEMENT
OF QUITCLAIM SIGNED BY [DAGASDAS].[34]
Dagasdas reiterates that he was only recruited "on paper" as a Network
Technician but the real agreement between him and his employer was to engage him as
Superintendent in the field of Civil Engineering, he being a Civil Engineering graduate
with vast experience in said field. He stresses that he was terminated because of a
"discipline mismatch" as his employer actually needed a Mechanical (Engineer)
Superintendent, not a Civil Engineer.

In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for
the discipline mismatch, he could have performed his job as was expected of him. He
also denies that the new employment contract he signed while in Saudi Arabia was
more advantageous to him since the basic salary and allowance stipulated therein are
just the same with that in his Job Offer. He argues that the new contract was even
disadvantageous because it was inserted therein that he still had to undergo
probationary status for three months.

Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was
void because it was not approved by the Philippine Overseas Employment
Administration (POEA). He also claims that CA should have closely examined his
quitclaim because he only signed it to afford his plane ticket for his repatriation.
On the other hand, GPGS maintains that Dagasdas was fully aware that he applied for
and was accepted as Network Technician. It also stresses that it was Dagasdas hirnself
who decided to accept from ITM a new job offer when he arrived in Saudi Arabia. It
further declares that Dagasdas' quitclaim is valid as there is no showing that he was
compelled to sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.

As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of
Court. However, this rule allows certain exceptions, including a situation where the
findings of fact of the courts or tribunals below are conflicting. [35] In this case, the CA and
the NLRC arrived at divergent factual findings anent Dagasdas' termination. As such, the
Court deems it necessary to re-examine these findings and determine whether the CA
has sufficient basis to annul the NLRC Decision, and set aside its finding that Dagasdas
was illegally dismissed from work.

Moreover, it is well-settled that employers have the prerogative to impose standards on

the work quantity and quality of their employees and provide measures to ensure
compliance therewith. Non-compliance with work standards may thus be a valid cause
for dismissing an employee. Nonetheless, to ensure that employers will not abuse their
prerogatives, the same is tempered by security of tenure whereby the employees are
guaranteed substantive and procedural due process before they are dismissed from
work.[36]

Security of tenure remains even if employees, particularly the overseas Filipino workers
(OFW), work in a different jurisdiction. Since the employment contracts of OFWs are
perfected in the Philippines, and following the principle of lex loci contractus (the law of
the place where the contract is made), these contracts are governed by our laws,
primarily the Labor Code of the Philippines and its implementing rules and regulations,
[37]
 At the same time, our laws generally apply even to employment contracts of OFWs as
our Constitution explicitly provides that the State shall afford full protection to labor,
whether local or overseas.[38] Thus, even if a Filipino is employed abroad, he or she is
entitled to security of tenure, among other constitutional rights. [39]

In this case, prior to his deployment and while still in the Philippines, Dagasdas was
made to sign a POEA-approved contract with GPGS, on behalf of ITM; and, upon arrival
in Saudi Arabia, ITM made him sign a new employment contract. Nonetheless, this new
contract, which was used as basis for dismissing Dagasdas, is void.

First, Dagasdas' new contract is in clear violation of his right to security of tenure.

Under the Labor Code of the Philippines the following are the just causes for dismissing
an employee:
ARTICLE 297. [282] Termination by Employer. - An employer may terminate an
employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the 1ntst reposed in him by his employer
or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and

(e) Other causes analogous to the foregoing.[40]

However, per the notice of termination given to Dagasdas, ITM tem1inated him
for violating clause 17.4.3 of his new contract, viz.:
17.4 The Company reserves the right to terminate this agreement without
serving any notice to the Consultant in the following cases:

x x x          x x x          x x x

17.4.3 If the Consultant is terminated by company or its client within the probation
period of 3 months.[41]
Based on the foregoing, there is no clear justification for the dismissal of
Dagasdas other than the exercise of ITM's right to terminate him within the
probationary period.

While our Civil Code recognizes that parties may stipulate in their contracts such terms
and conditions as they may deem convenient, these terms and conditions must not be
contrary to law, morals, good customs, public order or policy.[42] The above-cited clause
is contrary to law because as discussed, our Constitution guarantees that employees,
local or overseas, are entitled to security of tenure. To allow employers to reserve a
right to terminate employees without cause is violative of this guarantee of security of
tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause. As regards a probationary
employee, his or her dismissal may be allowed only if there is just cause or such reason
to conclude that the employee fails to qualify as regular employee pursuant to
reasonable standards made known to the employee at the time of engagement. [43]

Here, ITM failed to prove that it informed Dagasdas of any predetermined standards
from which his work will be gauged.[44] In the contract he signed while still in the
Philippines, Dagsadas was employed as Network Technician; on the other hand, his new
contract indicated that he was employed as Superintendent. However, no job
description - or such duties and responsibilities attached to either position - was
adduced in evidence. It thus means that the job for which Dagasdas was hired was not
definite from the beginning.

Indeed, Dagasdas was not sufficiently informed of the work standards for which his
performance will be measured. Even his position based on the job title given him was
not fully explained by his employer. Simply put, ITM failed to show that it set and
communicated work standards for Dagasdas to follow, and on which his efficiency (or
the lack thereof) may be determined.

Second, the new contract was not shown to have been processed through the POEA.
Under our Labor Code, employers hiring OFWs may only do so through entities
authorized by the Secretary of the Department of Labor and Employment. [45] Unless the
employment contract of an OFW is processed through the POEA, the same does not
bind the concerned OFW because if the contract is not reviewed by the POEA, certainly
the State has no means of determining the suitability of foreign laws to our overseas
workers.[46]
This new contract also breached Dagasdas' original contract as it was entered into even
before the expiration of the original contract approved by the POEA. Therefore, it
cannot supersede the original contract; its terms and conditions, induding reserving in
favor of the employer the right to terminate an employee without notice during the
probationary period, are void.[47]

Third, under this new contract, Dagasdas was not afforded procedural due process
when he was dismissed from work.

As cited above, a valid dismissal requires substantive and procedural due process. As
regards the latter, the employer must give the concerned employee at least two notices
before his or her ten11ination. Specifically, the employer must inform the employee of
the cause or causes for his or her termination, and thereafter, the employer's decision
to dismiss him. Aside from the notice requirement, the employee must be accorded the
opportunity to be heard.[48]

Here, no prior notice of purported infraction, and such opportunity to explain on any
accusation against him was given to Dagasdas. He was simply given a notice of
termination. In fact, it appears that ITM intended not to comply with the twin notice
requirement. As above-quoted, under the new contract, ITM reserved in its favor the
right to terminate the contract without serving any notice to Dagasdas in specified
cases, which included such situation where the employer decides to dismiss the
employee within the probationary period. Without doubt, ITM violated the due process
requirement in dismissing an employee.

Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the
same does not preclude him from filing this suit.

Generally, the employee's waiver or quitclaim cannot prevent the employee from
demanding benefits to which he or she is entitled, and from filing an illegal dismissal
case. This is because waiver or quitclaim is looked upon with disfavor, and is frowned
upon for being contrary to public policy. Unless it can be established that the person
executing the waiver voluntarily did so, with full understanding of its contents, and with
reasonable and credible consideration, the same is not a valid and binding undertaking.
Moreover, the burden to prove that the waiver or quitclaim was voluntarily executed is
with the employer.[49]
In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its
burden. GPGS and/or ITM failed to show that Dagasdas indeed voluntarily waived his
claims against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely
and voluntarily agreed to waive all his claims against his employer. Besides, there was
no reasonable consideration stipulated in said quitclaim considering that it only
determined the actual payment due to Dagasdas from February 11, 2008 to April 30,
2008. Verily, this quitclaim, under the semblance of a final settlement, cannot absolve
GPGS nor ITM from liability arising from the employment contract of Dagasdas. [50]

All told, the dismissal of Dagasdas was without any valid cause and due process of law.
Hence, the NLRC properly ruled that Dagasdas was illegally dismissed. Evidently, it was
an error on the part of the CA to hold that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when the NLRC ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and
Resolution dated January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396
are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2, 2010
Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-000071-
10 are REINSTATED.

SO ORDERED.

FIRST DIVISION
[ G.R. No. 209072, July 24, 2019 ]
ARLENE A. CUARTOCRUZ, PETITIONER, VS. ACTIVE WORKS, INC.,
AND MA. ISABEL E. HERMOSA, BRANCH MANAGER, RESPONDENTS.

DECISION

JARDELEZA, J.:**
 In this petition for review, we reiterate that any doubt concerning the rights of
labor should be resolved in its favor pursuant to the social justice policy espoused by the
Constitution.[1] Moreover, the proviso in Section 10, Republic Act No. (RA) 8042 [2] which
prescribes the award of "salaries for the unexpired portion of [the] employment
contract or for three (3) months for every year of the unexpired term, whichever is less"
to illegally-dismissed overseas workers has been declared unconstitutional by the Court
as early as 2009,[3] and thus should no longer be a source of confusion by litigants and
the courts.

On June 4, 2007, Arlene A. Cuartocruz (petitioner) and Cheng Chi Ho, [4] a Hong Kong
national, entered into a contract of employment whereby petitioner shall work as the
latter's domestic helper for a period of two years. Petitioner was tasked to do household
chores and baby-sitting, among others, for a monthly salary of HK$3,400.00 and other
emoluments and benefits provided under the contract. Respondent Active Works, Inc.
(AWI), a Philippine corporation engaged in the recruitment of domestic helpers in Hong
Kong, is petitioner's agency, and respondent Ma. Isabel Hermosa is its Branch Manager.
[5]

On August 3, 2007, petitioner arrived in Hong Kong. The following day, she proceeded to
the residence of her employer.[6]

On August 11, 2007, petitioner received a warning letter from her employer, [7] stating
that she is required to improve her attentiveness in performing her work within one
month, failing which the letter shall serve as a written notice of the termination of her
employment contract effective September 11, 2007. On the same day, petitioner wrote
a reply, apologizing for giving false information by stating in her bio-data that she is
single when in fact she is a single parent. She also asked for a chance to improve so she
can continue with her work.[8]

However, in a letter dated August 16, 2007, Cheng Chi Ho informed the Immigration
Department of Wangchai, Hong Kong that he is terminating the contract with petitioner
effective immediately for the following reasons: "disobey order (sic),  unmatch the
contract which she submit before (sic),  [and] refuse to care my baby (sic)."[9]

Petitioner filed a case against her employer before the Minor Employment Claims
Adjudication Board, but it was eventually dismissed and petitioner was repatriated at
the instance of AWI.[10] Petitioner alleged that while in Manila, AWI offered her
P15,000.00 as a settlement fee but she declined it, believing that she is entitled to a
higher amount.[11]

Consequently, petitioner filed a complaint before the Labor Arbiter (LA) for illegal
dismissal, payment of unpaid salaries and salaries corresponding to the unexpired
portion of the contract of employment, reimbursement of placement fee and other fees
incident to petitioner's deployment to Hong Kong, and moral and exemplary damages.
[12]
 Petitioner denied committing the acts imputed to her by Cheng Chi Ho, and claimed
that those were baseless and fabricated. Further, at no time was her attention called
with respect to those acts that she allegedly committed. [13]

On June 16, 2008, the Executive LA (ELA) rendered a Decision[14] finding the termination
of petitioner's employment contract without notice as valid and legal. [15] The ELA held
that petitioner was already warned by her employer to improve her work, yet she did
not show improvement in her work performance and attitude. She also misrepresented
herself to be single, but later on admitted that she was separated with a child. This
information does not match with the information stated in her employment contract
and constitutes dishonesty on her part. Moreover, the termination of her employment
contract was in accordance with Hong Kong's Employment Ordinance Chapter 57,
Section 9 of which states that "[a]n employer may terminate a contract of employment
without notice or payment in lieu x x x if an employee, in relation to his employment x x
x wilfully disobeys a lawful and reasonable order; x x x misconducts himself such
conduct being inconsistent with the due and faithful discharge of his duties; x x x is
guilty of fraud or dishonesty."[16] This provision being part of petitioner's employment
contract, it must be respected as the law between the parties.

With regard to money claims, the ELA held that petitioner is not entitled to salaries
corresponding to the unexpired portion of her contract since she was dismissed for
cause. However, she is entitled to be paid salaries for the six days that she has rendered
service to her employer, or the total amount of HK$679.98. [17] Since petitioner was
dismissed for cause, this amount shall be set off against the repatriation expenses
incurred by AWT in the amount of HK$750.00.[18] Petitioner appealed the Decision with
the National Labor Relations Commission (NLRC).

On May 29, 2009, the NLRC issued a Resolution[19] nullifying and setting aside the ELA
Decision. It held that there is insufficient proof of petitioner's alleged poor work
performance. The August 11, 2017 warning letter that petitioner received from her
employer did not even specify what work needs improvement. It was only on August 16,
2007, when petitioner's employment contract was terminated, that she was criticized
for disobeying orders. Petitioner was not given notice of specific violations that she
allegedly committed and a chance to explain her side. She was also denied due process
when the warning letter gave her one month to improve her work performance, but she
was dismissed five days after.[20] With respect to petitioner's alleged dishonesty in
concealing her civil status, jurisprudence has settled that this is a form of dishonesty so
trivial that it will not warrant the penalty of dismissal. Consequently, the NLRC found
petitioner to have been illegally dismissed and awarded her full reimbursement of her
placement fee of P45,000.00 with 12% interest per annum  pursuant to RA 8042,
reimbursement of P2,500.00 medical examination fee, and unpaid salaries equivalent to
three months for every year of the unexpired portion of the contract, or a total period
of six months.[21]

Respondents filed a motion for reconsideration, but it was denied. [22] Hence, they filed a
petition for certiorari[23] with the Court of Appeals (CA).

On April 26, 2012, the CA rendered its Decision[24] affirming with modification the NLRC
Resolution. It held that AWI cannot evade responsibility for the money claims of
overseas Filipino workers (OFWs) whom it deploys abroad by the mere expediency of
claiming that its foreign principal is a government agency clothed with immunity from
suit, or that such foreign principal's liability must be established first before it, as agent,
can be held jointly and solidarily liable. Otherwise, the rule on joint and solidary liability
of the agent with the foreign principal would be rendered inutile. [25] Moreover, the
contention that Hong Kong law governs petitioner's employment contract lacks merit
since respondents failed to prove Hong Kong law. The rule is that where a foreign law is
not pleaded, or even if pleaded, is not proved, the presumption is that it is the same as
Philippine law. Thus, Philippine law should apply in resolving the issues in the case.
[26]
 Finally, petitioner was not afforded due process. The notice of termination was not
properly served on her and did not properly inform her of the grounds for termination.
In fact, petitioner was given one month from the date of the warning letter to improve
her work but her employment was terminated just four[27] days thereafter.[28] The CA
consequently awarded petitioner three-months' salary, refund of her placement fee
with 12% interest per annum,  and attorney's fees which shall be 10% of the total
monetary award.[29]

Petitioner filed a partial motion for reconsideration[30] pertaining to the award of three-

months' salary. She pointed out that the CA based this award on Section 10, RA 8042,
which provides that "[i]n case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract, the worker shall be entitled to x x x
his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less." However, the cases
of Serrano v. Gallant Maritime Services, Inc.[31] and Yap v. Thenamaris Ship's
Management[32] already declared this provision unconstitutional and awarded illegally
dismissed overseas workers with salaries equivalent to the entire unexpired portion of
their employment contract. Thus, petitioner claims that she is entitled to the award of
salaries equivalent to the entire unexpired portion of her unemployment contract.

On July 30, 2013, the CA issued a Resolution[33] denying petitioner's motion for

reconsideration. It held that the cases cited by petitioner are not on all fours with the
circumstances of this case. Particularly, in those cases there was a unanimous finding of
illegal dismissal by the LA, NLRC and CA. On the contrary, there is no unanimous finding
by the LA and NLRC that petitioner was illegally dismissed. Moreover, petitioner
rendered service for only six days. To award the monetary equivalent of the entire
unexpired portion of her contract would be inequitable considering that she gave false
information in her contract.[34]

Hence, this petition which raises the sole issue of whether or not the CA erred in
applying the provision in Section 10, RA 8042, which prescribes the award of salaries
equivalent to the "unexpired portion of [the] employment contract or x x x three (3)
months for every year of the unexpired term, whichever is less" to illegally dismissed
overseas employees.

At the outset, it is imperative that we set the parameters by which the review of this
case is being undertaken.

First,  even if petitioner raises only one issue in this case, which is a question of law, we
deem it necessary to review other issues that have not been settled as a result of the
conflicting rulings of the tribunals a quo. After all, it is settled that an appeal throws the
entire case open for review. The Court has the authority to review matters not
specifically raised or assigned as error by the parties if their consideration is necessary in
arriving at a just resolution of the case. [35]

Second,  while the general rule is that the jurisdiction of the Court under Rule 45, Section
1 of the Rules of Court is limited to the review of errors of law committed by the
appellate court, the Court may delve into the records and examine the facts for itself
when the factual findings of the LA, NLRC and the CA are conflicting. Such is the case
here. The ELA held that petitioner's employment contract was validly terminated, and
awarded her compensation equivalent to the six days that she worked with her
employer. The NLRC differed, and found neither just cause for the termination of
petitioner's employment nor observance of procedural due process. Finally, the CA is
convinced of the just cause for the termination of petitioner's employment, but not the
observance of procedural due process. These conflicting factual findings are not binding
on the Court, and the Court retains the authority to pass upon the evidence presented
and draw conclusions therefrom.[36]

Finally, Philippine law applies in this case. Although the employment contract is

punctuated with provisions referring to Hong Kong law as the applicable law that
governs the various aspects of employment, Hong Kong law was not proved.

Indeed, a contract freely entered into is considered the law between the parties who
can establish stipulations, clauses, terms and conditions as they may deem convenient,
including the laws which they wish to govern their respective obligations, as long as they
are not contrary to law, morals, good customs, public order or public policy. It is
hornbook principle, however, that the party invoking the application of a foreign law has
the burden of proving the law. The foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of
it. He is presumed to know only domestic or forum law. [37]

Here, respondent did not prove the pertinent Hong Kong law that governs the contract
of employment. Thus, the international law doctrine of presumed-identity approach or
processual presumption applies. Where a foreign law is not pleaded or, even if pleaded,
is not proved, the presumption is that foreign law is the same as ours. Consequently, we
apply Philippine labor laws in determining the issues in this case.[38]

We grant the petition.

I.

Under Philippine law, workers are entitled to substantive and procedural due process
before the termination of their employment. They may not be removed from
employment without a valid or just cause as determined by law, and without going
through the proper procedure.[39] The purpose of these two-pronged qualifications is to
protect the working class from the employer's arbitrary and unreasonable exercise of its
right to dismiss.[40]

In this case, respondents failed to prove by substantial evidence that there was just or
authorized cause for the termination of petitioner's employment. About a week into her
job, or on August 11, 2007, petitioner received a warning letter from her employer
requiring her "to improve [her] attentiveness on [her] performance within one month x
x x" failing which the letter shall serve "as a written notice x x x that the x x x contract
will be terminated with immediate effect on 11 September, 2007." [41] Nonetheless, after
five days, or on August 16, 2007, petitioner's contract was terminated for the following
reasons: "(1) disobey order (sic);  (2) unmatch the contract which she submit
before (sic);  and (3) refuse to care my baby (sic)."[42]

The grounds cited for the termination of petitioner's employment contract are
considered just causes under Article 282 of the Labor Code,[43] but only if respondents
were able to prove them. The burden of proving that there is just cause for termination
is on the employer, who must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause. Failure to show that there was valid or just cause
for termination would necessarily mean that the dismissal was illegal. [44]

Here, no evidence was presented to substantiate the employer's accusations. There was
no showing of particular instances when petitioner supposedly disobeyed her employer
and refused to take care of his baby. With respect to petitioner's alleged
misrepresentation that she was single when in fact she was a single parent, there is also
no showing how this affected her work as a domestic helper. In fact, being a mother
herself puts petitioner in a better position to care for her employer's child. Where there
is no showing of a clear, valid, and legal cause for the termination of employment, the
law considers the matter a case of illegal dismissal. [45]

Petitioner was likewise not afforded procedural due process.

Procedural due process requires the employer to give the concerned employee at least
two notices before terminating his employment. The first is the notice which apprises
the employee of the particular acts or omissions for which his dismissal is being sought
along with the opportunity for the employee to air his side, while the second is the
subsequent notice of the employer's decision to dismiss him. [46]
In this case, the August 11, 2007 warning letter would have very well served as the first
notice that satisfies the above requirement. However, while the warning letter states
that it will serve as notice of termination effective September 11, 2007 in case petitioner
failed to improve her work performance, petitioner's employment was terminated much
earlier and without further advice. Worse, the grounds stated in the August 16, 2007
termination letter were markedly different from the ground stated in the warning letter.
Specifically, while the warning letter complained of petitioner's inattentiveness, the
termination letter spoke of intentional acts allegedly committed by petitioner—
i.e.,  disobedience, misrepresentation and refusal to do her job. It appears that
petitioner's employer merely devised the reasons of termination to suit the
requirements of Hong Kong law. The employment contract provides:

10. Either party may terminate this contract by giving one month's notice in
writing or one month wages in lieu of notice.

11. Notwithstanding Clause 10, either party may in writing terminate this contract
without notice or payment in lieu of the circumstances permitted by the Employment
Ordinance, Chapter 57.[47]

On the other hand, Employment Ordinance, Chapter 57 provides:

9. Termination of contract without notice by employer

(1) An employer may terminate a contract of employment without notice or payment in
lieu— x x x
(a) if an employee, in relation to his employment—
(i) wilfully disobeys a lawful and reasonable order;
(ii) misconducts himself such conduct being inconsistent with the due and
faithful discharge of his duties;
(iii is guilty of fraud or dishonesty; or
)
(iv) is habitually neglectful in his duties; x x x[48] (Emphasis and italics in the
original.)

The termination letter expressed concerns that petitioner claimed she had never been
confronted with.[49] She was left in the dark as regards the real reason for the
termination of her employment, and was not given sufficient opportunity to rectify her
shortcomings or explain her side.

Equally repulsive is the fact that petitioner's employer did not furnish her a copy of the
August 16, 2007 termination letter,[50] which was submitted to the Immigration
Department of Wanchai, Hong Kong. Petitioner alleged that she learned of the
termination of her employment the following day, and that she was able to get a copy
of the termination letter only with the help of Helpers for Domestic Helpers, an
organization of Filipino helpers in Hong Kong.[51]

The provisions in the employment contract and the employer's conduct are patently
inconsistent with the right of security of tenure guaranteed to local or overseas Filipino
workers under the Constitution[52] and the Labor Code.[53] Security of tenure guarantees
workers substantive and procedural due process before they are dismissed from work.
[54]
 It is a right which cannot be denied on mere speculation of any unclear and nebulous
basis.[55] Undeniably, the NLRC properly ruled that petitioner was illegally dismissed on
both substantive and procedural grounds.

II.

Respondents cannot escape liability from petitioner's money claims. Section 10 of RA

8042 provides that the employer and the recruitment or placement agency are jointly
liable for money claims arising from the employment relationship or any contract
involving overseas Filipino workers. If the recruitment or placement agency is a juridical
being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarity liable with the corporation or partnership for the
aforesaid claims and damages. In providing for the joint and solidary liability of private
recruitment agencies with their foreign principals, RA 8042 precisely affords OFWs with
a recourse and assures them of immediate and sufficient payment of what is due them.
[56]

We now rule on the appropriate monetary award.

First, we note that both the NLRC and CA omitted to compute unpaid wages for services
rendered by petitioner. The ELA, on the other hand, awarded unpaid wages in the sum
of HK$679.98,[57] relying on respondents' allegation that petitioner worked for only six
days.[58] The ELA's computation is erroneous.

Petitioner's employment commenced on August 3, 2007, the day she arrived in Hong
Kong, as provided by her employment contract,[59] and ended on August 16, 2007, when
her employer unjustly terminated her employment contract. In total, petitioner is
considered to have worked for 14 days.

In her position paper, petitioner alleged that on August 6, 2007, she was sent by her
employer to a recruitment agency in Hong Kong supposedly for retraining, and returned
on August 12, 2007. However, no retraining was conducted. [60] We hold that the period
that petitioner was away from her workplace pursuant to her employer's instruction
should be considered as days worked for the employer. In the first place, retraining is
not provided for in the employment contract. Petitioner was even oblivious of the
reason why she had to undergo retraining.[61] Moreover, petitioner was ready, willing,
and able to work, but her employer prevented her from doing so by unreasonably
sending her away from her workplace. The employer's actions should not be taken to
prejudice petitioner. It is a time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence or, in the interpretation of
agreements and writings, should be resolved in the former's favor. [62]

Consequently, petitioner's salary for the 14-day period she is deemed to have worked is
computed as follows:

HK$3,400.00 per month/30 x 14 days = HK$1,586.67

Finally, as regards the issue of how much salary petitioner is entitled based on the
unexpired portion of her contract, the NLRC awarded petitioner six-months' salary while
the CA reduced this amount to three months, pursuant to Section 10, RA 8042, which
provides:

Sec. 10. Money Claims.  –

xxxx
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.
xxxx
The proviso "for three months for every year of the unexpired term [of the employment
contract], whichever is less" has been declared unconstitutional by this Court for
violating the equal protection clause and substantive due process. [63] In Serrano v.
Gallant Maritime Services, Inc.,[64] we explained that the said clause contains a suspect
classification in that, in the computation of the monetary benefits of fixed-term
employees who are illegally discharged, it imposes a three-month cap on the claim of
OFWs with an unexpired portion of one year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
[65]
 Moreover, there is no compelling state interest that the subject clause may possibly
serve.

Thus, following Serrano,  we rule that petitioner is entitled to her monthly salary of

HK$3,400.00, or its Philippine peso equivalent, for the entire unexpired portion of her
employment contract.

We reverse the CA's award of placement fee for being unsubstantiated.

WHEREFORE, the petition is GRANTED. The April 26, 2012 Decision and July 30, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 03292
are AFFIRMED with MODIFICATION. Petitioner is entitled to: 1) unpaid salaries for 14
days in the amount of HK$ 1,586.67; 2) salaries for the entire unexpired portion of her
employment contract consisting of one year, 11 months and 16 days at the rate of
HK$3,400.00 per month; and 3) attorney's fees equivalent to 10% of the total monetary
award. These amounts shall then earn 6% interest per annum  from the finality of this
Decision until full payment.

The case is REMANDED to the Labor Arbiter for the computation of the exact amounts
due to petitioner.

SO ORDERED.