FIRST DIVISION go, the secretary of Mr.
go, the secretary of Mr. Yahya Saddick took away her passport and told her to remain in
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, Petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and
HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial
Court of Quezon City, Respondents.
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. . . .
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 lune 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
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 plaintiffs
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 stood by as the police put pressure on her to make a statement dropping the case against
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 THIS 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.
xxx xxx xxx
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 reauested 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
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 sigh 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 manger, 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
Philippines 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:
Sec. 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:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and cots 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)
xxx xxx xxx
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) xxx xxx xxx
(b) Personal actions. - All other actions may be commenced and tried where the defendant
or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh heavily in
favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages
and obstacles to a fair trial are equally important. Plaintiff may not, by choice of an
inconvenient forum, "vex", "harass", or "oppress" the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the balance is strongly in favor of the defendant,
the plaintiffs choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear the case in
the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff
(private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi
Arabia where she no longer maintains substantial connections. That would have caused a
fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of the plaintiff
(now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By
filing her Complaint and Amended Complaint with the trial court, private respondent has
voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the
dismissal of 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 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed admitted 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 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 totality 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 complained 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, then 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 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.
Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary
of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON
T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND
BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE
GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their
representatives and agents from proceeding with the bidding for the sale of the 3,179
square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on
February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of
mandamus to compel the respondents to fully disclose to the public the basis of their
decision to push through with the sale of the Roppongi property inspire of strong public
opposition and to explain the proceedings which effectively prevent the participation of
Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on
March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the
respondents were required to file a comment by the Court's resolution dated February 22,
1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the
parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a
motion for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by
a second motion for an extension of another thirty (30) days which we granted on May 8,
1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion
for extension of time which we granted on June 5, 1990 but calling the attention of the
respondents to the length of time the petitions have been pending. After the comment
was filed, the petitioner in G.R. No. 92047 asked for thirty (30) days to file a reply. We
noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May
9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an
area of approximately 2,489.96 square meters, and is at present the site of the Philippine
Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72
square meters and categorized as a commercial lot now being used as a warehouse and
parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese government
for national development projects are part of the indemnification to the Filipino people for
their losses in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be
payable in twenty (20) years in accordance with annual schedules of procurements to be
fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep.
Act No. 1789, the Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are divided into those
for use by the government sector and those for private parties in projects as the then
National Economic Council shall determine. Those intended for the private sector shall be
made available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned
entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second
Year Schedule and listed under the heading "Government Sector", through Reparations
Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and
building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the
latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed
major repairs. Due to the failure of our government to provide necessary funds, the
Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine
Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation — which shall construct two (2)
buildings in Roppongi and one (1) building in Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The consideration of the construction would be the
lease to the foreign corporation of one (1) of the buildings to be constructed in Roppongi
and the two (2) buildings in Nampeidai. The other building in Roppongi shall then be used
as the Philippine Embassy Chancery. At the end of the lease period, all the three leased
buildings shall be occupied and used by the Philippine government. No change of
ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine
government retains the title all throughout the lease period and thereafter. However, the
government has not acted favorably on this proposal which is pending approval and
ratification between the parties. Instead, on August 11, 1986, President Aquino created a
committee to study the disposition/utilization of Philippine government properties in
Tokyo and Kobe, Japan through Administrative Order No. 3, followed by Administrative
Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino
citizens or entities to avail of separations' capital goods and services in the event of sale,
lease or disposition. The four properties in Japan including the Roppongi were specifically
mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one bidder qualified. The second one,
after postponements, has not yet materialized. The last scheduled bidding on February 21,
1990 was restrained by his Court. Later, the rules on bidding were changed such that the
$225 million floor price became merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in
G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while the
petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the
Philippine government in favor of selling the property to non-Filipino citizens and entities.
These petitions have been consolidated and are resolved at the same time for the
objective is the same - to stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to
sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to non-Filipino citizens and entities.
He also questions the bidding procedures of the Committee on the Utilization or
Disposition of Philippine Government Properties in Japan for being discriminatory against
Filipino citizens and Filipino-owned entities by denying them the right to be informed
about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots
were acquired as part of the reparations from the Japanese government for diplomatic and
consular use by the Philippine government. Vice-President Laurel states that the Roppongi
property is classified as one of public dominion, and not of private ownership under Article
420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for
public service" in paragraph 2 of the above provision. He states that being one of public
dominion, no ownership by any one can attach to it, not even by the State. The Roppongi
and related properties were acquired for "sites for chancery, diplomatic, and consular
quarters, buildings and other improvements" (Second Year Reparations Schedule). The
petitioner states that they continue to be intended for a necessary service. They are held
by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot
be appropriated, is outside the commerce of man, or to put it in more simple terms, it
cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v.
Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the
petitioner avers that the same remains property of public dominion so long as the
government has not used it for other purposes nor adopted any measure constituting a
removal of its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the
subject property is not governed by our Civil Code but by the laws of Japan where the
property is located. They rely upon the rule of lex situs which is used in determining the
applicable law regarding the acquisition, transfer and devolution of the title to a property.
They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of
Justice which used the lex situs in explaining the inapplicability of Philippine law regarding
a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased to become property of public dominion. It
has become patrimonial property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and
because the intention by the Executive Department and the Congress to convert it to
private use has been manifested by overt acts, such as, among others: (1) the transfer of
the Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the
possibility of alienating the four government properties in Japan; (3) the issuance of
Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the
Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision stating
that funds may be taken from the sale of Philippine properties in foreign countries; (5) the
holding of the public bidding of the Roppongi property but which failed; (6) the deferment
by the Senate in Resolution No. 55 of the bidding to a future date; thus an
acknowledgment by the Senate of the government's intention to remove the Roppongi
property from the public service purpose; and (7) the resolution of this Court dismissing
the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to enjoin
the second bidding of the Roppongi property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the
constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R. No.
87478 which the Court dismissed on August 1, 1989. He now avers that the executive order
contravenes the constitutional mandate to conserve and develop the national patrimony
stated in the Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public
domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of
Commonwealth Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions
covering the national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade
practices;
(4) The guarantee of the right of the people to information on all matters of public concern
(Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by
Filipino citizens of capital goods received by the Philippines under the Reparations Act
(Sections 2 and 12 of Rep. Act No. 1789); and
(6) The declaration of the state policy of full public disclosure of all transactions involving
public interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional
executive order is a misapplication of public funds He states that since the details of the
bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or
a few days before the scheduled bidding), the bidding guidelines are available only in
Tokyo, and the accomplishment of requirements and the selection of qualified bidders
should be done in Tokyo, interested Filipino citizens or entities owned by them did not
have the chance to comply with Purchase Offer Requirements on the Roppongi. Worse, the
Roppongi shall be sold for a minimum price of $225 million from which price capital gains
tax under Japanese law of about 50 to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi
site and the three related properties were through reparations agreements, that these
were assigned to the government sector and that the Roppongi property itself was
specifically designated under the Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is
dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the
property has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It
cannot be alienated. Its ownership is a special collective ownership for general use and
enjoyment, an application to the satisfaction of collective needs, and resides in the social
group. The purpose is not to serve the State as a juridical person, but the citizens; it is
intended for the common and public welfare and cannot be the object of appropration.
(Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the
Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private
ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks shores
roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development
of the national wealth.
ART. 421. All other property of the State, which is not of the
character stated in the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil
Code as property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed
because the lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co.
v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not
available for private appropriation or ownership until there is a formal declaration on the
part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108
Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials
insinuating a change of intention. We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be definite Abandonment cannot be
inferred from the non-use alone specially if the non-use was attributable not to the
government's own deliberate and indubitable will but to a lack of financial support to
repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368
[1988]). Abandonment must be a certain and positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of
the Roppongi property's original purpose. Even the failure by the government to repair the
building in Roppongi is not abandonment since as earlier stated, there simply was a
shortage of government funds. The recent Administrative Orders authorizing a study of the
status and conditions of government properties in Japan were merely directives for
investigation but did not in any way signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from
Japan for the government sector. The executive order does not declare that the properties
lost their public character. It merely intends to make the properties available to foreigners
and not to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates
the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino
citizens and one hundred (100%) percent Filipino-owned entities. The text of Executive
Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended,
and of other laws to the contrary notwithstanding, the above-
mentioned properties can be made available for sale, lease or any
other manner of disposition to non-Filipino citizens or to entities
owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi
and the three other properties were earlier converted into alienable real properties. As
earlier stated, Rep. Act No. 1789 differentiates the procurements for the government
sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector
properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It
is this nationality provision which was amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of
funds for its implementation, the proceeds of the disposition of the properties of the
Government in foreign countries, did not withdraw the Roppongi property from being
classified as one of public dominion when it mentions Philippine properties abroad.
Section 63 (c) refers to properties which are alienable and not to those reserved for public
use or service. Rep Act No. 6657, therefore, does not authorize the Executive Department
to sell the Roppongi property. It merely enumerates possible sources of future funding to
augment (as and when needed) the Agrarian Reform Fund created under Executive Order
No. 299. Obviously any property outside of the commerce of man cannot be tapped as a
source of funds.
The respondents try to get around the public dominion character of the Roppongi property
by insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the
ones to insist that in the sale of extremely valuable government property, Japanese law
and not Philippine law should prevail. The Japanese law - its coverage and effects, when
enacted, and exceptions to its provision — is not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese law should apply without stating what that
law provides. It is a ed on faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation
exists. A conflict of law situation arises only when: (1) There is a dispute over the title or
ownership of an immovable, such that the capacity to take and transfer immovables, the
formalities of conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See Salonga, Private
International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its
conveyance is asserted to conflict with a domestic law on the same matters. Hence, the
need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that
the property belongs to the Philippines. The issue is the authority of the respondent
officials to validly dispose of property belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex
situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of
the lex situs rule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority to
sell them. In discussing who are capable of acquiring the lots, the Secretary merely
explains that it is the foreign law which should determine who can acquire the
properties so that the constitutional limitation on acquisition of lands of the public domain
to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We see no point
in belaboring whether or not this opinion is correct. Why should we discuss who can
acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation
by the investigating committee to sell the Roppongi property was premature or, at the
very least, conditioned on a valid change in the public character of the Roppongi property.
Moreover, the approval does not have the force and effect of law since the President
already lost her legislative powers. The Congress had already convened for more than a
year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of
public dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the
Government is a party. — In cases in which the Government of the
Republic of the Philippines is a party to any deed or other
instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand
pesos, the respective Department Secretary shall prepare the
necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless
the Government of the Philippines unless the authority therefor
be expressly vested by law in another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of
1987 (Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. — Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following:
(1) For property belonging to and titled in the name of the
Republic of the Philippines, by the President, unless the authority
therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her
own sole will. Any such conveyance must be authorized and approved by a law enacted by
the Congress. It requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of
the Roppongi property does not withdraw the property from public domain much less
authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the
public character of the Roppongi property. In fact, the Senate Committee on Foreign
Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy
considerations and calls for a fact-finding investigation of the circumstances behind the
decision to sell the Philippine government properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon
the constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we
did not uphold the authority of the President to sell the Roppongi property. The Court
stated that the constitutionality of the executive order was not the real issue and that
resolving the constitutional question was "neither necessary nor finally determinative of
the case." The Court noted that "[W]hat petitioner ultimately questions is the use of the
proceeds of the disposition of the Roppongi property." In emphasizing that "the decision of
the Executive to dispose of the Roppongi property to finance the CARP ... cannot be
questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge
the fact that the property became alienable nor did it indicate that the President was
authorized to dispose of the Roppongi property. The resolution should be read to mean
that in case the Roppongi property is re-classified to be patrimonial and alienable by
authority of law, the proceeds of a sale may be used for national economic development
projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the
proposed 1990 sale of the Roppongi property. We are resolving the issues raised in these
petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property
from public domain to make it alienable and a need for legislative authority to allow the
sale of the property, we see no compelling reason to tackle the constitutional issues raised
by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions
are properly raised in appropriate cases and their resolution is necessary for the
determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon
a constitutional question although properly presented by the record if the case can be
disposed of on some other ground such as the application of a statute or general law (Siler
v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co.,
312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
The Roppongi property is not just like any piece of property. It
was given to the Filipino people in reparation for the lives and
blood of Filipinos who died and suffered during the Japanese
military occupation, for the suffering of widows and orphans who
lost their loved ones and kindred, for the homes and other
properties lost by countless Filipinos during the war. The Tokyo
properties are a monument to the bravery and sacrifice of the
Filipino people in the face of an invader; like the monuments of
Rizal, Quezon, and other Filipino heroes, we do not expect
economic or financial benefits from them. But who would think of
 selling these monuments? Filipino honor and national dignity
dictate that we keep our properties in Japan as memorials to the
countless Filipinos who died and suffered. Even if we should
become paupers we should not think of selling them. For it would
be as if we sold the lives and blood and tears of our countrymen.
(Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese
government in atonement for its past belligerence for the valiant
sacrifice of life and limb and for deaths, physical dislocation and
economic devastation the whole Filipino people endured in World
War II.
It is for what it stands for, and for what it could never bring back
to life, that its significance today remains undimmed, inspire of
the lapse of 45 years since the war ended, inspire of the passage
of 32 years since the property passed on to the Philippine
government.
Roppongi is a reminder that cannot — should not — be dissipated
... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much because of the inflated
prices fetched by real property in Tokyo but more so because of its symbolic value to all
Filipinos — veterans and civilians alike. Whether or not the Roppongi and related
properties will eventually be sold is a policy determination where both the President and
Congress must concur. Considering the properties' importance and value, the laws on
conversion and disposition of property of public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of
prohibition is issued enjoining the respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is
made PERMANENT.
SO ORDERED.
Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.
Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the
following observations only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell
the Roppongi property. When asked to do so at the hearing on these petitions, the
Solicitor General was at best ambiguous, although I must add in fairness that this was not
his fault. The fact is that there is -no such authority. Legal expertise alone cannot conjure
that statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain
such authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the
sale of our properties abroad to be used for the comprehensive agrarian reform program.
Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile
Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a
law. The sale of the said property may be authorized only by Congress through a duly
enacted statute, and there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of
men, where every public official, from the lowest to the highest, can act only by virtue of a
valid authorization. I am happy to note that in the several cases where this Court has ruled
against her, the President of the Philippines has submitted to this principle with becoming
grace.
PADILLA, J., concurring:
I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few
observations which could help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that
lays down or determines policies. The President executes such policies. The policies
determined by Congress are embodied in legislative enactments that have to be approved
by the President to become law. The President, of course, recommends to Congress the
approval of policies but, in the final analysis, it is Congress that is the policy - determining
branch of government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws
enacted by Congress and approved by the President, and presidential acts implementing
such laws, are in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the
reparations agreement between the Philippine and Japanese governments. Under such
agreement, this property was acquired by the Philippine government for a specific
purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan.
Consequently, Roppongi is a property of public dominion and intended for public service,
squarely falling within that class of property under Art. 420 of the Civil Code, which
provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development
of the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the
property is first transformed into private property of the state otherwise known as
patrimonial property of the state. 1 The transformation of public dominion property to
state patrimonial property involves, to my mind, a policy decision. It is a policy decision
because the treatment of the property varies according to its classification. Consequently,
it is Congress which can decide and declare the conversion of Roppongi from a public
dominion property to a state patrimonial property. Congress has made no such decision or
declaration.
Moreover, the sale of public property (once converted from public dominion to state
patrimonial property) must be approved by Congress, for this again is a matter of policy
(i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987
provides:
SEC. 48. Official Authorized to Convey Real Property. — Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following:
(1) For property belonging to and titled in
the name of the Republic of the
Philippines, by the President, unless the
authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the
Republic of the Philippines but titled in
the name of any political subdivision or
of any corporate agency or
instrumentality, by the executive head of
the agency or instrumentality. (Emphasis
supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The
record is likewise bare of any congressional authority extended to the President to sell
Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public
bidding or otherwise without a prior congressional approval, first, converting Roppongi
from a public dominion property to a state patrimonial property, and, second, authorizing
the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary
restraining order earlier issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the so-called "Roppongi property' has
lost its nature as property of public dominion, and hence, has become patrimonial
property of the State. I understand that the parties are agreed that it was property
intended for "public service" within the contemplation of paragraph (2), of Article 430, of
the Civil Code, and accordingly, land of State dominion, and beyond human commerce. The
lone issue is, in the light of supervening developments, that is non-user thereof by the
National Government (for diplomatic purposes) for the last thirteen years; the issuance of
Executive Order No. 296 making it available for sale to any interested buyer; the
promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making
available for the program's financing, State assets sold; the approval by the President of
the recommendation of the investigating committee formed to study the property's
utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for
the deferment of its disposition it, "Roppongi", is still property of the public dominion, and
if it is not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a
question our courts have debated early. In a 1906 decision, 1 it was held that property of
the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof
for purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has
been held that land, originally private property, has become of public dominion upon its
donation to the town and its conversion and use as a public plaza. 3 It is notable that under
these three cases, the character of the property, and any change occurring therein, depends
on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the
Government, through the executive department or the Legislative, to the effect that the land
. . . is no longer needed for [public] service- for public use or for special industries, [it]
continue[s] to be part of the public [dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case)
alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a land for legislative authority to allow
the sale of the property" 7 the majority lays stress to the fact that: (1) An affirmative act —
executive or legislative — is necessary to reclassify property of the public dominion, and (2) a
legislative decree is required to make it alienable. It also clears the uncertainties brought
about by earlier interpretations that the nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not used, and in the same breath, repudiates
the Government's position that the continuous non-use of "Roppongi", among other
arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other
things, that: (1) Property is presumed to be State property in the absence of any showing to
the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public
dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3)
All natural resources, under the Constitution, and subject to exceptional cases, belong to the
State. 10
I am elated that the Court has banished previous uncertainties.
FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E.
Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306
Roppongi, 5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi
property") may be characterized as property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public
use, and are intended for some public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the
confines of the simple threefold classification found in Article 420 of the Civil Code
("property for public use property "intended for some public service" and property intended
"for the development of the national wealth") all property owned by the Republic of the
Philippines whether found within the territorial boundaries of the Republic or located within
the territory of another sovereign State, is not self-evident. The first item of the classification
property intended for public use — can scarcely be properly applied to property belonging to
the Republic but found within the territory of another State. The third item of the
classification property intended for the development of the national wealth is illustrated, in
Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral
lands owned by a sovereign State are rarely, if ever, found within the territorial base of
another sovereign State. The task of examining in detail the applicability of the classification
set out in Article 420 of our Civil Code to property that the Philippines happens to own
outside its own boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the
present time, before this Court. The issues before us relate essentially to authority to sell the
Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has
been converted into patrimonial property or property of the private domain of the State; and
(b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose
of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some
public service, into property of the private domain of the Republic, it should be noted that
the Civil Code does not address the question of who has authority to effect such conversion.
Neither does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice
Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108
Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the
public domain, the trial court should have declared the same no longer necessary for public
use or public purposes and which would, therefore, have become disposable and available
for private ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion
of the shore is no longer washed by the waters of the sea and is not
necessary for purposes of public utility, or for the establishment of
special industries, or for coast-guard service, the government shall
declare it to be the property of the owners of the estates adjacent
thereto and as an increment thereof. We believe that only the
executive and possibly the legislative departments have the
authority and the power to make the declaration that any land so
gained by the sea, is not necessary for purposes of public utility, or
for the establishment of special industries, or for coast-guard
service. If no such declaration has been made by said departments,
the lot in question forms part of the public domain. (Natividad v.
Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in
the case of Vicente Joven y Monteverde v. Director of Lands, 93
Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon,
nor indeed in a position to determine whether any public land are
to be used for the purposes specified in Article 4 of the Law of
Waters. Consequently, until a formal declaration on the part of the
Government, through the executive department or the Legislature,
to the effect that the land in question is no longer needed for coast-
guard service, for public use or for special industries, they continue
to be part of the public domain not available for private
appropriation or ownership. (108 Phil. at 338-339; emphasis
supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may
convert property of the State of public dominion into patrimonial property of the State. No
particular formula or procedure of conversion is specified either in statute law or in case law.
Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the
State". I respectfully submit, therefore, that the only requirement which is legitimately
imposable is that the intent to convert must be reasonably clear from a consideration of the
acts or acts of the Executive Department or of the Legislative Department which are said to
have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion
belonging to municipal corporations, i.e., local governmental units, into patrimonial property
of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council
of Cebu by resolution declared a certain portion of an existing street as an abandoned road,
"the same not being included in the city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through
public bidding. Although there was no formal and explicit declaration of conversion of
property for public use into patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's
application for registration of title was withdrawn from public use,
it follows that such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of
public dominion, when no longer intended for public use of for
public service, shall form part of the patrimonial property of the
State."
Besides, the Revised Charter of the City of Cebu heretofore quoted,
in very clear and unequivocal terms, states that "Property thus
withdrawn from public servitude may be used or conveyed for any
purpose for which other real property belonging to the City may be
lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public
use and its subsequent sale to the petitioner is valid. Hence, the
petitioner has a registrable title over the lot in question. (66 SCRA
at 484-; emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property
owned by municipal corporations simple non-use or the actual dedication of public property
to some use other than "public use" or some "public service", was sufficient legally to
convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20
[1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal
corporations but also in respect of property of the State itself. Manresa in commenting on
Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil
Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el
momento en que los bienes de dominio publico dejan de serlo. Si la
Administracion o la autoridad competente legislative realizan qun
acto en virtud del cual cesa el destino o uso publico de los bienes de
que se trata naturalmente la dificultad queda desde el primer
momento resuelta. Hay un punto de partida cierto para iniciar las
relaciones juridicas a que pudiera haber lugar Pero puede ocurrir
que no haya taldeclaracion expresa, legislativa or administrativa, y,
sin embargo, cesar de hecho el destino publico de los bienes; ahora
bien, en este caso, y para los efectos juridicos que resultan de
entrar la cosa en el comercio de los hombres,' se entedera que se
ha verificado la conversion de los bienes patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte creemos que tal debe ser la
soluciion. El destino de las cosas no depende tanto de una
declaracion expresa como del uso publico de las mismas, y cuanda
el uso publico cese con respecto de determinados bienes, cesa
tambien su situacion en el dominio publico. Si una fortaleza en
ruina se abandona y no se repara, si un trozo de la via publica se
abandona tambien por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de estar Codigo, y leyes
especiales mas o memos administrativas. (3 Manresa, Comentarios
al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government
purported, expressly or definitely, to convert the Roppongi property into patrimonial
property — of the Republic. Assuming that to be the case, it is respectfully submitted
that cumulative effect of the executive acts here involved was to convert property originally
intended for and devoted to public service into patrimonial property of the State, that is,
property susceptible of disposition to and appropration by private persons. These executive
acts, in their totality if not each individual act, make crystal clear the intent of the Executive
Department to effect such conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study
the disposition/utilization of the Government's property in Japan, The Committee was
composed of officials of the Executive Department: the Executive Secretary; the Philippine
Ambassador to Japan; and representatives of the Department of Foreign Affairs and the
Asset Privatization Trust. On 19 September 1988, the Committee recommended to the
President the sale of one of the lots (the lot specifically in Roppongi) through public bidding.
On 4 October 1988, the President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese
Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi.
The Japanese Government through its Ministry of Foreign Affairs replied that it interposed
no objection to such disposition by the Republic. Subsequently, the President and the
Committee informed the leaders of the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming
that the majority opinion is right in saying that Executive Order No. 296 is insufficient
to authorize the sale of the Roppongi property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to indicate an intention to convert the
property previously devoted to public service into patrimonial property that is capable of
being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public
purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically
convert the property into patrimonial property. I respectfully urge that prolonged non-
use, conjoined with the other factors here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State. Actually, as already pointed out, case law
involving property of municipal corporations is to the effect that simple non-use or the actual
dedication of public property to some use other than public use or public service, was
sufficient to convert such property into patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa reached the same conclusion in respect of
conversion of property of the public domain of the State into property of the private domain
of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone
especially if the non-use was attributable not to the Government's own deliberate and
indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved
here, certainly no abandonment of property or of property rights. What is involved is the
charge of the classification of the property from property of the public domain into property
of the private domain of the State. Moreover, if for fourteen (14) years, the Government did
not see fit to appropriate whatever funds were necessary to maintain the property in
Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change
the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the
sale of the lot in Roppongi. The circumstance that this bidding was not successful certainly
does not argue against an intent to convert the property involved into property that is
disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole,
show at least the intent on the part of the Executive Department (with the knowledge of the
Legislative Department) to convert the property involved into patrimonial property that is
susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address
the second issue of whether or not there exists legal authority for the sale or disposition of
the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917
which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is
a party. — In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the
title to real estate or to any other property the value of which is in
excess of one hundred thousand pesos, the respective Department
Secretary shall prepare the necessary papers which, together with
the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless
the authority therefor be expressly vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in
Section 4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. — Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following:
(1) For property belonging to and titled in the name of the Republic
of the Philippines, by the President, unless the authority therefor is
expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific
approval of Congress when the price of the real property being disposed of is in excess of One
Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the
present Administrative Code refers to is authorization by law for the conveyance. Section 48
does not purport to be itself a source of legal authority for conveyance of real property of
the Government. For Section 48 merely specifies the official authorized to execute and sign
on behalf of the Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition
of real property of the private domain of the Government, has been granted by Congress
both in the form of (a) a general, standing authorization for disposition of patrimonial
property of the Government; and (b) specific legislation authorizing the disposition of
particular pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the
Philippines is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of
Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March
1922. The full text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the
same:
SECTION 1. The Secretary of Agriculture and Natural Resources
(now Secretary of the Environment and Natural Resources) is
hereby authorized to sell or lease land of the private domain of the
Government of the Philippine Islands, or any part thereof, to such
persons, corporations or associations as are, under the provisions
of Act Numbered Twenty-eight hundred and seventy-four, (now
Commonwealth Act No. 141, as amended) known as the Public
Land Act, entitled to apply for the purchase or lease or agricultural
public land.
SECTION 2. The sale of the land referred to in the preceding
section shall, if such land is agricultural, be made in the manner and
subject to the limitations prescribed in chapters five and six,
respectively, of said Public Land Act, and if it be classified
differently, in conformity with the provisions of chapter nine of said
Act: Provided, however, That the land necessary for the public
service shall be exempt from the provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of
the State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now
Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that
both statutes refer to: "any tract of land of the public domain which being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial or industrial
purposes other than agricultural" (Emphasis supplied).i•t•c-aüsl In other words, the statute
covers the sale or lease or residential, commercial or industrial land of the private domain of
the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No.
3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources
promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands
of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in
effect and has not been repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the
State is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on
26 April 1904, which provided for the disposition of the friar lands, purchased by the
Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or
to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were
held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28
February 1914, authorized the sale of the San Lazaro Estate located in the City of Manila,
which had also been purchased by the Government from the Roman Catholic Church. In
January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and
buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by
private persons, and which were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only
one statute authorizing the President to dispose of a specific piece of property. This statute is
Republic Act No. 905, enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the private domain of the National
Government to the National Press Club of the Philippines, and to other recognized national
associations of professionals with academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion of the property to the National
Government in case the National Press Club stopped using it for its headquarters. What
Republic Act No. 905 authorized was really a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative
authorization for disposition of the Roppongi property which, in my view, has been
converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of
the State located in the Philippines but also to patrimonial property found outside the
Philippines, may appear strange or unusual. I respectfully submit that such position is not any
more unusual or strange than the assumption that Article 420 of the Civil Code applies not
only to property of the Republic located within Philippine territory but also to property found
outside the boundaries of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments
are alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in
view of the constitutional power of control exercised by the President over department
heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the
function or duty that is specifically lodged in the Secretary of the Department of
Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very
least, the President retains the power to approve or disapprove the exercise of that function
or duty when done by the Secretary of Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the
austere question of existence of legal power or authority. They have nothing to do with
much debated questions of wisdom or propriety or relative desirability either of the
proposed disposition itself or of the proposed utilization of the anticipated proceeds of the
property involved. These latter types of considerations He within the sphere of responsibility
of the political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013
and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.
Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the
following observations only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the
Roppongi property. When asked to do so at the hearing on these petitions, the Solicitor
General was at best ambiguous, although I must add in fairness that this was not his fault.
The fact is that there is -no such authority. Legal expertise alone cannot conjure that
statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such
authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the sale of
our properties abroad to be used for the comprehensive agrarian reform program. Senate
Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi
property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale
of the said property may be authorized only by Congress through a duly enacted statute, and
there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of
men, where every public official, from the lowest to the highest, can act only by virtue of a
valid authorization. I am happy to note that in the several cases where this Court has ruled
against her, the President of the Philippines has submitted to this principle with becoming
grace.
PADILLA, J., concurring:
I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few
observations which could help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that
lays down or determines policies. The President executes such policies. The policies
determined by Congress are embodied in legislative enactments that have to be approved by
the President to become law. The President, of course, recommends to Congress the
approval of policies but, in the final analysis, it is Congress that is the policy - determining
branch of government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws
enacted by Congress and approved by the President, and presidential acts implementing
such laws, are in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the
reparations agreement between the Philippine and Japanese governments. Under such
agreement, this property was acquired by the Philippine government for a specific purpose,
namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently,
Roppongi is a property of public dominion and intended for public service, squarely falling
within that class of property under Art. 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development of
the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property
is first transformed into private property of the state otherwise known as patrimonial
property of the state. 1 The transformation of public dominion property to state patrimonial
property involves, to my mind, a policy decision. It is a policy decision because the treatment
of the property varies according to its classification. Consequently, it is Congress which can
decide and declare the conversion of Roppongi from a public dominion property to a state
patrimonial property. Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state
patrimonial property) must be approved by Congress, for this again is a matter of policy (i.e.
to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987
provides:
SEC. 48. Official Authorized to Convey Real Property. — Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following:
(1) For property belonging to and titled in
the name of the Republic of the
Philippines, by the President, unless the
authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic
of the Philippines but titled in the name of
any political subdivision or of any
corporate agency or instrumentality, by
the executive head of the agency or
instrumentality. (Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record
is likewise bare of any congressional authority extended to the President to sell Roppongi
thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public
bidding or otherwise without a prior congressional approval, first, converting Roppongi from
a public dominion property to a state patrimonial property, and, second, authorizing the
President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary
restraining order earlier issued by this Court.
SARMIENTO, J., concurring:
The central question, as I see it, is whether or not the so-called "Roppongi property' has lost
its nature as property of public dominion, and hence, has become patrimonial property of
the State. I understand that the parties are agreed that it was property intended for "public
service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and
accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the
light of supervening developments, that is non-user thereof by the National Government (for
diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296
making it available for sale to any interested buyer; the promulgation of Republic Act No.
6657, the Comprehensive Agrarian Reform Law, making available for the program's
financing, State assets sold; the approval by the President of the recommendation of the
investigating committee formed to study the property's utilization; and the issuance of
Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it,
"Roppongi", is still property of the public dominion, and if it is not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a
question our courts have debated early. In a 1906 decision, 1 it was held that property of the
public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for
purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been
held that land, originally private property, has become of public dominion upon its donation
to the town and its conversion and use as a public plaza. 3 It is notable that under these three
cases, the character of the property, and any change occurring therein, depends on the
actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the
Government, through the executive department or the Legislative, to the effect that the land
. . . is no longer needed for [public] service- for public use or for special industries, [it]
continue[s] to be part of the public [dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case)
alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a land for legislative authority to allow
the sale of the property" 7 the majority lays stress to the fact that: (1) An affirmative act —
executive or legislative — is necessary to reclassify property of the public dominion, and (2) a
legislative decree is required to make it alienable. It also clears the uncertainties brought
about by earlier interpretations that the nature of property-whether public or patrimonial is
predicated on the manner it is actually used, or not used, and in the same breath, repudiates
the Government's position that the continuous non-use of "Roppongi", among other
arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other
things, that: (1) Property is presumed to be State property in the absence of any showing to
the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public
dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3)
All natural resources, under the Constitution, and subject to exceptional cases, belong to the
State. 10
I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting
With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E.
Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306
Roppongi, 5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi
property") may be characterized as property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public
use, and are intended for some public service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the
confines of the simple threefold classification found in Article 420 of the Civil Code
("property for public use property "intended for some public service" and property intended
"for the development of the national wealth") all property owned by the Republic of the
Philippines whether found within the territorial boundaries of the Republic or located within
the territory of another sovereign State, is not self-evident. The first item of the classification
property intended for public use — can scarcely be properly applied to property belonging to
the Republic but found within the territory of another State. The third item of the
classification property intended for the development of the national wealth is illustrated, in
Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral
lands owned by a sovereign State are rarely, if ever, found within the territorial base of
another sovereign State. The task of examining in detail the applicability of the classification
set out in Article 420 of our Civil Code to property that the Philippines happens to own
outside its own boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the
present time, before this Court. The issues before us relate essentially to authority to sell the
Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has
been converted into patrimonial property or property of the private domain of the State; and
(b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose
of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some
public service, into property of the private domain of the Republic, it should be noted that
the Civil Code does not address the question of who has authority to effect such conversion.
Neither does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice
Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108
Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the
public domain, the trial court should have declared the same no longer necessary for public
use or public purposes and which would, therefore, have become disposable and available
for private ownership. Mr. Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion
of the shore is no longer washed by the waters of the sea and is not
necessary for purposes of public utility, or for the establishment of
special industries, or for coast-guard service, the government shall
declare it to be the property of the owners of the estates adjacent
thereto and as an increment thereof. We believe that only the
executive and possibly the legislative departments have the
authority and the power to make the declaration that any land so
gained by the sea, is not necessary for purposes of public utility, or
for the establishment of special industries, or for coast-guard
service. If no such declaration has been made by said departments,
the lot in question forms part of the public domain. (Natividad v.
Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in
the case of Vicente Joven y Monteverde v. Director of Lands, 93
Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon,
nor indeed in a position to determine whether any public land are
to be used for the purposes specified in Article 4 of the Law of
Waters. Consequently, until a formal declaration on the part of the
Government, through the executive department or the Legislature,
to the effect that the land in question is no longer needed for coast-
guard service, for public use or for special industries, they continue
to be part of the public domain not available for private
appropriation or ownership. (108 Phil. at 338-339; emphasis
supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may
convert property of the State of public dominion into patrimonial property of the State. No
particular formula or procedure of conversion is specified either in statute law or in case law.
Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the
State". I respectfully submit, therefore, that the only requirement which is legitimately
imposable is that the intent to convert must be reasonably clear from a consideration of the
acts or acts of the Executive Department or of the Legislative Department which are said to
have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion
belonging to municipal corporations, i.e., local governmental units, into patrimonial property
of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council
of Cebu by resolution declared a certain portion of an existing street as an abandoned road,
"the same not being included in the city development plan". Subsequently, by another
resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through
public bidding. Although there was no formal and explicit declaration of conversion of
property for public use into patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's
application for registration of title was withdrawn from public use,
it follows that such withdrawn portion becomes patrimonial
property which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of
public dominion, when no longer intended for public use of for
public service, shall form part of the patrimonial property of the
State."
Besides, the Revised Charter of the City of Cebu heretofore quoted,
in very clear and unequivocal terms, states that "Property thus
withdrawn from public servitude may be used or conveyed for any
purpose for which other real property belonging to the City may be
lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public
use and its subsequent sale to the petitioner is valid. Hence, the
petitioner has a registrable title over the lot in question. (66 SCRA
at 484-; emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property
owned by municipal corporations simple non-use or the actual dedication of public property
to some use other than "public use" or some "public service", was sufficient legally to
convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20
[1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of
Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal
corporations but also in respect of property of the State itself. Manresa in commenting on
Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil
Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el
momento en que los bienes de dominio publico dejan de serlo. Si la
Administracion o la autoridad competente legislative realizan qun
acto en virtud del cual cesa el destino o uso publico de los bienes de
que se trata naturalmente la dificultad queda desde el primer
momento resuelta. Hay un punto de partida cierto para iniciar las
relaciones juridicas a que pudiera haber lugar Pero puede ocurrir
que no haya taldeclaracion expresa, legislativa or administrativa, y,
sin embargo, cesar de hecho el destino publico de los bienes; ahora
bien, en este caso, y para los efectos juridicos que resultan de
entrar la cosa en el comercio de los hombres,' se entedera que se
ha verificado la conversion de los bienes patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano,
por la afirmativa, y por nuestra parte creemos que tal debe ser la
soluciion. El destino de las cosas no depende tanto de una
 declaracion expresa como del uso publico de las mismas, y cuanda
el uso publico cese con respecto de determinados bienes, cesa
tambien su situacion en el dominio publico. Si una fortaleza en
ruina se abandona y no se repara, si un trozo de la via publica se
abandona tambien por constituir otro nuevo an mejores
condiciones....ambos bienes cesan de estar Codigo, y leyes
especiales mas o memos administrativas. (3 Manresa, Comentarios
al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)
The majority opinion says that none of the executive acts pointed to by the Government
purported, expressly or definitely, to convert the Roppongi property into patrimonial
property — of the Republic. Assuming that to be the case, it is respectfully submitted
that cumulative effect of the executive acts here involved was to convert property originally
intended for and devoted to public service into patrimonial property of the State, that is,
property susceptible of disposition to and appropration by private persons. These executive
acts, in their totality if not each individual act, make crystal clear the intent of the Executive
Department to effect such conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study
the disposition/utilization of the Government's property in Japan, The Committee was
composed of officials of the Executive Department: the Executive Secretary; the Philippine
Ambassador to Japan; and representatives of the Department of Foreign Affairs and the
Asset Privatization Trust. On 19 September 1988, the Committee recommended to the
President the sale of one of the lots (the lot specifically in Roppongi) through public bidding.
On 4 October 1988, the President approved the recommendation of the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese
Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi.
The Japanese Government through its Ministry of Foreign Affairs replied that it interposed
no objection to such disposition by the Republic. Subsequently, the President and the
Committee informed the leaders of the House of Representatives and of the Senate of the
Philippines of the proposed disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming
that the majority opinion is right in saying that Executive Order No. 296 is insufficient
to authorize the sale of the Roppongi property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to indicate an intention to convert the
property previously devoted to public service into patrimonial property that is capable of
being sold or otherwise disposed of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public
purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically
convert the property into patrimonial property. I respectfully urge that prolonged non-
use, conjoined with the other factors here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State. Actually, as already pointed out, case law
involving property of municipal corporations is to the effect that simple non-use or the actual
dedication of public property to some use other than public use or public service, was
sufficient to convert such property into patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa reached the same conclusion in respect of
conversion of property of the public domain of the State into property of the private domain
of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone
especially if the non-use was attributable not to the Government's own deliberate and
indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved
here, certainly no abandonment of property or of property rights. What is involved is the
charge of the classification of the property from property of the public domain into property
of the private domain of the State. Moreover, if for fourteen (14) years, the Government did
not see fit to appropriate whatever funds were necessary to maintain the property in
Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change
the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the
sale of the lot in Roppongi. The circumstance that this bidding was not successful certainly
does not argue against an intent to convert the property involved into property that is
disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole,
show at least the intent on the part of the Executive Department (with the knowledge of the
Legislative Department) to convert the property involved into patrimonial property that is
susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address
the second issue of whether or not there exists legal authority for the sale or disposition of
the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917
which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is
a party. — In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the
title to real estate or to any other property the value of which is in
excess of one hundred thousand pesos, the respective Department
Secretary shall prepare the necessary papers which, together with
the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless
the authority therefor be expressly vested by law in another officer.
(Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in
Section 4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. — Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of
the government by the following:
(1) For property belonging to and titled in the name of the Republic
of the Philippines, by the President, unless the authority therefor is
expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific
approval of Congress when the price of the real property being disposed of is in excess of One
Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the
present Administrative Code refers to is authorization by law for the conveyance. Section 48
does not purport to be itself a source of legal authority for conveyance of real property of
the Government. For Section 48 merely specifies the official authorized to execute and sign
on behalf of the Government the deed of conveyance in case of such a conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition
of real property of the private domain of the Government, has been granted by Congress
both in the form of (a) a general, standing authorization for disposition of patrimonial
property of the Government; and (b) specific legislation authorizing the disposition of
particular pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the
Philippines is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of
Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March
1922. The full text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the
Philippines in Legislature assembled and by the authority of the
same:
SECTION 1. The Secretary of Agriculture and Natural Resources
(now Secretary of the Environment and Natural Resources) is
hereby authorized to sell or lease land of the private domain of the
Government of the Philippine Islands, or any part thereof, to such
persons, corporations or associations as are, under the provisions
of Act Numbered Twenty-eight hundred and seventy-four, (now
Commonwealth Act No. 141, as amended) known as the Public
Land Act, entitled to apply for the purchase or lease or agricultural
public land.
SECTION 2. The sale of the land referred to in the preceding
section shall, if such land is agricultural, be made in the manner and
subject to the limitations prescribed in chapters five and six,
respectively, of said Public Land Act, and if it be classified
 differently, in conformity with the provisions of chapter nine of said
Act: Provided, however, That the land necessary for the public
service shall be exempt from the provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of
the State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now
Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that
both statutes refer to: "any tract of land of the public domain which being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial or industrial
purposes other than agricultural" (Emphasis supplied). In other words, the statute covers the
sale or lease or residential, commercial or industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No.
3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources
promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the
Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands
of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in
effect and has not been repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the
State is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on
26 April 1904, which provided for the disposition of the friar lands, purchased by the
Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or
to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were
held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28
February 1914, authorized the sale of the San Lazaro Estate located in the City of Manila,
which had also been purchased by the Government from the Roman Catholic Church. In
January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and
buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by
private persons, and which were also acquired by the Philippine Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only
one statute authorizing the President to dispose of a specific piece of property. This statute is
Republic Act No. 905, enacted on 20 June 1953, which authorized the
President to sell an Identified parcel of land of the private domain of the National
Government to the National Press Club of the Philippines, and to other recognized national
associations of professionals with academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was not an outright disposition in
perpetuity of the property involved- it provided for reversion of the property to the National
Government in case the National Press Club stopped using it for its headquarters. What
Republic Act No. 905 authorized was really a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative
authorization for disposition of the Roppongi property which, in my view, has been
converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of
the State located in the Philippines but also to patrimonial property found outside the
Philippines, may appear strange or unusual. I respectfully submit that such position is not any
more unusual or strange than the assumption that Article 420 of the Civil Code applies not
only to property of the Republic located within Philippine territory but also to property found
outside the boundaries of the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments
are alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in
view of the constitutional power of control exercised by the President over department
heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the
function or duty that is specifically lodged in the Secretary of the Department of
Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very
least, the President retains the power to approve or disapprove the exercise of that function
or duty when done by the Secretary of Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the
austere question of existence of legal power or authority. They have nothing to do with
much debated questions of wisdom or propriety or relative desirability either of the
proposed disposition itself or of the proposed utilization of the anticipated proceeds of the
property involved. These latter types of considerations He within the sphere of responsibility
of the political departments of government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013
and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.
THIRD DIVISION
[G.R. NO. 149177 : November 23, 2007]
KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO.,
LTD., Petitioners, v. 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 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827,
and the July 25, 2001 Resolution2 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. Frank14 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 Decision22 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 Certiorari25 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 verification28 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 period30 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 judicataeffect,
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 Authorization35 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 Reply38 an updated Authorization39 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 Dismiss48 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.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
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 contract66 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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 156759 June 5, 2013
ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET BAY,
JESUS R. GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.
DECISION
BERSAMIN, J.:
To warrant the substituted service of the summons and copy of the complaint, the serving
officer must first attempt to effect the same upon the defendant in person. Only after the
attempt at personal service has become futile or impossible within a reasonable time may
the officer resort to substituted service.
The Case
Petitioners – defendants in a suit for libel brought by respondent – appeal the decision
promulgated on March 8, 20021 and the resolution promulgated on January 13,
2003,2 whereby the Court of Appeals (CA) respectively dismissed their petition for certiorari,
prohibition and mandamus and denied their motion for reconsideration. Thereby, the CA
upheld the order the Regional Trial Court (RTC), Branch 51, in Manila had issued on March
12, 2001 denying their motion to dismiss because the substituted service of the summons
and copies of the complaint on each of them had been valid and effective. 3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in
Manila, sued Abante Tonite, a daily tabloid of general circulation; its Publisher Allen A.
Macasaet; its Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its
Editors Janet Bay, Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes
(petitioners), claiming damages because of an allegedly libelous article petitioners published
in the June 6, 2000 issue of Abante Tonite. The suit, docketed as Civil Case No. 00-97907, was
raffled to Branch 51 of the RTC, which in due course issued summons to be served on each
defendant, including Abante Tonite, at their business address at Monica Publishing
Corporation, 301-305 3rd Floor, BF Condominium Building, Solana Street corner A. Soriano
Street, Intramuros, Manila.4
In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated
address to effect the personal service of the summons on the defendants. But his efforts to
personally serve each defendant in the address were futile because the defendants were
then out of the office and unavailable. He returned in the afternoon of that day to make a
second attempt at serving the summons, but he was informed that petitioners were still out
of the office. He decided to resort to substituted service of the summons, and explained why
in his sheriff’s return dated September 22, 2005,5 to wit:
SHERIFF’S RETURN
This is to certify that on September 18, 2000, I caused the service of summons together with
copies of complaint and its annexes attached thereto, upon the following:
1. Defendant Allen A. Macasaet, President/Publisher of defendant
AbanteTonite, at Monica Publishing Corporation, Rooms 301-305 3rd Floor, BF
Condominium Building, Solana corner A. Soriano Streets, Intramuros, Manila,
thru his secretary Lu-Ann Quijano, a person of sufficient age and discretion
working therein, who signed to acknowledge receipt thereof. That effort (sic) to
serve the said summons personally upon said defendant were made, but the
same were ineffectual and unavailing on the ground that per information of Ms.
Quijano said defendant is always out and not available, thus, substituted service
was applied;
2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann
Quijano, who signed to acknowledge receipt thereof. That effort (sic) to serve
the said summons personally upon said defendant were made, but the same
were ineffectual and unavailing on the ground that per information of (sic) his
wife said defendant is always out and not available, thus, substituted service
was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily
Reyes, at the same address, thru Rene Esleta, Editorial Assistant of defendant
AbanteTonite, a person of sufficient age and discretion working therein who
signed to acknowledge receipt thereof. That effort (sic) to serve the said
summons personally upon said defendants were made, but the same were
ineffectual and unavailing on the ground that per information of (sic) Mr. Esleta
said defendants is (sic) always roving outside and gathering news, thus,
substituted service was applied.
Original copy of summons is therefore, respectfully returned duly served.
Manila, September 22, 2000.
On October 3, 2000, petitioners moved for the dismissal of the complaint through counsel’s
special appearance in their behalf, alleging lack of jurisdiction over their persons because of
the invalid and ineffectual substituted service of summons. They contended that the sheriff
had made no prior attempt to serve the summons personally on each of them in accordance
with Section 6 and Section 7, Rule 14 of the Rules of Court. They further moved to drop
Abante Tonite as a defendant by virtue of its being neither a natural nor a juridical person
that could be impleaded as a party in a civil action.
At the hearing of petitioners’ motion to dismiss, Medina testified that he had gone to the
office address of petitioners in the morning of September 18, 2000 to personally serve the
summons on each defendant; that petitioners were out of the office at the time; that he had
returned in the afternoon of the same day to again attempt to serve on each defendant
personally but his attempt had still proved futile because all of petitioners were still out of
the office; that some competent persons working in petitioners’ office had informed him
that Macasaet and Quijano were always out and unavailable, and that Albano, Bay, Galang,
Hagos and Reyes were always out roving to gather news; and that he had then resorted to
substituted service upon realizing the impossibility of his finding petitioners in person within
a reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file
their answers to the complaint within the remaining period allowed by the Rules of
Court,6 relevantly stating:
Records show that the summonses were served upon Allen A. Macasaet, President/Publisher
of defendant AbanteTonite, through LuAnn Quijano; upon defendants Isaias Albano, Janet
Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of
defendant Abante Tonite (p. 12, records). It is apparent in the Sheriff’s Return that on several
occasions, efforts to served (sic) the summons personally upon all the defendants were
ineffectual as they were always out and unavailable, so the Sheriff served the summons by
substituted service.
Considering that summonses cannot be served within a reasonable time to the persons of all
the defendants, hence substituted service of summonses was validly applied. Secretary of
the President who is duly authorized to receive such document, the wife of the defendant
and the Editorial Assistant of the defendant, were considered competent persons with
sufficient discretion to realize the importance of the legal papers served upon them and to
relay the same to the defendants named therein (Sec. 7, Rule 14, 1997 Rules of Civil
Procedure).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of
merit..
Accordingly, defendants are directed to file their Answers to the complaint within the period
still open to them, pursuant to the rules.
SO ORDERED.
Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately
resorted to substituted service of the summons upon being informed that they were not
around to personally receive the summons, and that Abante Tonite, being neither a natural
nor a juridical person, could not be made a party in the action.
On June 29, 2001, the RTC denied petitioners’ motion for reconsideration. 7 It stated in
respect of the service of summons, as follows:
The allegations of the defendants that the Sheriff immediately resorted to substituted
service of summons upon them when he was informed that they were not around to
personally receive the same is untenable. During the hearing of the herein motion, Sheriff
Raul Medina of this Branch of the Court testified that on September 18, 2000 in the morning,
he went to the office address of the defendants to personally serve summons upon them but
they were out. So he went back to serve said summons upon the defendants in the
afternoon of the same day, but then again he was informed that the defendants were out
and unavailable, and that they were always out because they were roving around to gather
news. Because of that information and because of the nature of the work of the defendants
that they are always on field, so the sheriff resorted to substituted service of summons.
There was substantial compliance with the rules, considering the difficulty to serve the
summons personally to them because of the nature of their job which compels them to be
always out and unavailable. Additional matters regarding the service of summons upon
defendants were sufficiently discussed in the Order of this Court dated March 12, 2001.
Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People all over the country could buy
a copy of "Abante Tonite" and read it, hence, it is for public consumption. The persons who
organized said publication obviously derived profit from it. The information written on the
said newspaper will affect the person, natural as well as juridical, who was stated or
implicated in the news. All of these facts imply that "Abante Tonite" falls within the provision
of Art. 44 (2 or 3), New Civil Code. Assuming arguendo that "Abante Tonite" is not registered
with the Securities and Exchange Commission, it is deemed a corporation by estoppels
considering that it possesses attributes of a juridical person, otherwise it cannot be held
liable for damages and injuries it may inflict to other persons.
Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin the CA to
nullify the orders of the RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned decision,8 dismissing the petition for
certiorari, prohibition, mandamus, to wit:
We find petitioners’ argument without merit. The rule is that certiorari will prosper only if
there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction
committed by the respondent Judge. A judicious reading of the questioned orders of
respondent Judge would show that the same were not issued in a capricious or whimsical
exercise of judgment. There are factual bases and legal justification for the assailed orders.
From the Return, the sheriff certified that "effort to serve the summons personally xxx were
made, but the same were ineffectual and unavailing xxx.
and upholding the trial court’s finding that there was a substantial compliance with the rules
that allowed the substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners that "Abante Tonite is neither a natural or juridical
person who may be a party in a civil case," and therefore the case against it must be
dismissed and/or dropped, is untenable.
The respondent Judge, in denying petitioners’ motion for reconsideration, held that:
xxxx
Abante Tonite’s newspapers are circulated nationwide, showing ostensibly its being a
corporate entity, thus the doctrine of corporation by estoppel may appropriately apply.
An unincorporated association, which represents itself to be a corporation, will be estopped
from denying its corporate capacity in a suit against it by a third person who relies in good
faith on such representation.
There being no grave abuse of discretion committed by the respondent Judge in the exercise
of his jurisdiction, the relief of prohibition is also unavailable.
WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are
AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied petitioners’ motion for reconsideration.10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT
THE TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE
INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE. 11
Ruling
The petition for review lacks merit.
Jurisdiction over the person, or jurisdiction in personam –the power of the court to render a
personal judgment or to subject the parties in a particular action to the judgment and other
rulings rendered in the action – is an element of due process that is essential in all actions,
civil as well as criminal, except in actions in rem or quasi in rem. Jurisdiction over the
defendantin an action in rem or quasi in rem is not required, and the court acquires
jurisdiction over an actionas long as it acquires jurisdiction over the resthat is thesubject
matter of the action. The purpose of summons in such action is not the acquisition of
jurisdiction over the defendant but mainly to satisfy the constitutional requirement of due
process.12
The distinctions that need to be perceived between an action in personam, on the one hand,
and an action inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v.
Jensen,13 thusly:
The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its
nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce
personal rights and obligations brought against the person and is based on the jurisdiction of
the person, although it may involve his right to, or the exercise of ownership of, specific
property, or seek to compel him to control or dispose of it in accordance with the mandate
of the court. The purpose of a proceeding in personam is to impose, through the judgment of
a court, some responsibility or liability directly upon the person of the defendant. Of this
character are suits to compel a defendant to specifically perform some act or actions to
fasten a pecuniary liability on him. An action in personam is said to be one which has for its
object a judgment against the person, as distinguished from a judgment against the property
to determine its state. It has been held that an action in personam is a proceeding to enforce
personal rights or obligations; such action is brought against the person. As far as suits for
injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In
Combs v. Combs, the appellate court held that proceedings to enforce personal rights and
obligations and in which personal judgments are rendered adjusting the rights and
obligations between the affected parties is in personam. Actions for recovery of real
property are in personam.
On the other hand, a proceeding quasi in rem is one brought against persons seeking to
subject the property of such persons to the discharge of the claims assailed. In an action
quasi in rem, an individual is named as defendant and the purpose of the proceeding is to
subject his interests therein to the obligation or loan burdening the property. Actions quasi
in rem deal with the status, ownership or liability of a particular property but which are
intended to operate on these questions only as between the particular parties to the
proceedings and not to ascertain or cut off the rights or interests of all possible claimants.
The judgments therein are binding only upon the parties who joined in the action.
As a rule, Philippine courts cannot try any case against a defendant who does not reside and
is not found in the Philippines because of the impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court; but when the case is an action in rem or quasi
in rem enumerated in Section 15, Rule 14 of the Rules of Court, Philippine courts have
jurisdiction to hear and decide the case because they have jurisdiction over the res, and
jurisdiction over the person of the non-resident defendant is not essential. In the latter
instance, extraterritorial service of summons can be made upon the defendant, and such
extraterritorial service of summons is not for the purpose of vesting the court with
jurisdiction, but for the purpose of complying with the requirements of fair play or due
process, so that the defendant will be informed of the pendency of the action against him
and the possibility that property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take
steps to protect his interest if he is so minded. On the other hand, when the defendant in an
action in personam does not reside and is not found in the Philippines, our courts cannot try
the case against him because of the impossibility of acquiring jurisdiction over his person
unless he voluntarily appears in court.14
As the initiating party, the plaintiff in a civil action voluntarily submits himself to the
jurisdiction of the court by the act of filing the initiatory pleading. As to the defendant, the
court acquires jurisdiction over his person either by the proper service of the summons, or by
a voluntary appearance in the action.15
Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of
court forthwith issues the corresponding summons to the defendant. 16 The summons is
directed to the defendant and signed by the clerk of court under seal. It contains the name of
the court and the names of the parties to the action; a direction that the defendant answers
within the time fixed by the Rules of Court; and a notice that unless the defendant so
answers, the plaintiff will take judgment by default and may be granted the relief applied
for.17 To be attached to the original copy of the summons and all copies thereof is a copy of
the complaint (and its attachments, if any) and the order, if any, for the appointment of a
guardian ad litem.18
The significance of the proper service of the summons on the defendant in an action in
personam cannot be overemphasized. The service of the summons fulfills two fundamental
objectives, namely: (a) to vest in the court jurisdiction over the person of the defendant; and
(b) to afford to the defendant the opportunity to be heard on the claim brought against
him.19 As to the former, when jurisdiction in personam is not acquired in a civil action
through the proper service of the summons or upon a valid waiver of such proper service,
the ensuing trial and judgment are void. 20 If the defendant knowingly does an act
inconsistent with the right to object to the lack of personal jurisdiction as to him, like
voluntarily appearing in the action, he is deemed to have submitted himself to the
jurisdiction of the court.21 As to the latter, the essence of due process lies in the reasonable
opportunity to be heard and to submit any evidence the defendant may have in support of
his defense. With the proper service of the summons being intended to afford to him the
opportunity to be heard on the claim against him, he may also waive the process. 21 In other
words, compliance with the rules regarding the service of the summons is as much an issue
of due process as it is of jurisdiction.23
Under the Rules of Court, the service of the summons should firstly be effected on the
defendant himself whenever practicable. Such personal service consists either in handing a
copy of the summons to the defendant in person, or, if the defendant refuses to receive and
sign for it, in tendering it to him.24 The rule on personal service is to be rigidly enforced in
order to ensure the realization of the two fundamental objectives earlier mentioned. If, for
justifiable reasons, the defendant cannot be served in person within a reasonable time, the
service of the summons may then be effected either (a) by leaving a copy of the summons at
his residence with some person of suitable age and discretion then residing therein, or (b) by
leaving the copy at his office or regular place of business with some competent person in
charge thereof.25 The latter mode of service is known as substituted service because the
service of the summons on the defendant is made through his substitute.
It is no longer debatable that the statutory requirements of substituted service must be
followed strictly, faithfully and fully, and any substituted service other than that authorized
by statute is considered ineffective. 26 This is because substituted service, being in derogation
of the usual method of service, is extraordinary in character and may be used only as
prescribed and in the circumstances authorized by statute. 27 Only when the defendant
cannot be served personally within a reasonable time may substituted service be resorted to.
Hence, the impossibility of prompt personal service should be shown by stating the efforts
made to find the defendant himself and the fact that such efforts failed, which statement
should be found in the proof of service or sheriff’s return. 28 Nonetheless, the requisite
showing of the impossibility of prompt personal service as basis for resorting to substituted
service may be waived by the defendant either expressly or impliedly. 29
There is no question that Sheriff Medina twice attempted to serve the summons upon each
of petitioners in person at their office address, the first in the morning of September 18,
2000 and the second in the afternoon of the same date. Each attempt failed because
Macasaet and Quijano were "always out and not available" and the other petitioners were
"always roving outside and gathering news." After Medina learned from those present in the
office address on his second attempt that there was no likelihood of any of petitioners going
to the office during the business hours of that or any other day, he concluded that further
attempts to serve them in person within a reasonable time would be futile. The
circumstances fully warranted his conclusion. He was not expected or required as the serving
officer to effect personal service by all means and at all times, considering that he was
expressly authorized to resort to substituted service should he be unable to effect the
personal service within a reasonable time. In that regard, what was a reasonable time was
dependent on the circumstances obtaining. While we are strict in insisting on personal
service on the defendant, we do not cling to such strictness should the circumstances already
justify substituted service instead. It is the spirit of the procedural rules, not their letter, that
governs.30
In reality, petitioners’ insistence on personal service by the serving officer was demonstrably
superfluous. They had actually received the summonses served through their substitutes, as
borne out by their filing of several pleadings in the RTC, including an answer with compulsory
counterclaim ad cautelam and a pre-trial brief ad cautelam. They had also availed themselves
of the modes of discovery available under the Rules of Court. Such acts evinced their
voluntary appearance in the action.
Nor can we sustain petitioners’ contention that Abante Tonite could not be sued as a
defendant due to its not being either a natural or a juridical person. In rejecting their
contention, the CA categorized Abante Tonite as a corporation by estoppel as the result of its
having represented itself to the reading public as a corporation despite its not being
incorporated. Thereby, the CA concluded that the RTC did not gravely abuse its discretion in
holding that the non-incorporation of Abante Tonite with the Securities and Exchange
Commission was of no consequence, for, otherwise, whoever of the public who would suffer
any damage from the publication of articles in the pages of its tabloids would be left without
recourse. We cannot disagree with the CA, considering that the editorial box of the daily
tabloid disclosed that basis, nothing in the box indicated that Monica Publishing Corporation
had owned Abante Tonite.
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and ORDERS
petitioners to pay the costs of suit.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 175334 : March 26, 2008]
SPS. DOMINGO M. BELEN and DOMINGA P. BELEN, herein represented by their attorney-
in-fact NERY B. AVECILLA, Petitioners, v. HON. PABLO R. CHAVEZ, Presiding Judge, RTC-
Branch 87, Rosario, Batangas and all other persons acting under his orders and SPS.
SILVESTRE N. PACLEB and PATRICIA A. PACLEB, represented herein by their attorney-in-fact
JOSELITO RIOVEROS, Respondents.
DECISION
TINGA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure
assailing the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 88731. The
appellate court's decision dismissed the petition for certiorari which sought to nullify the
orders of the Regional Trial Court (RTC) of Rosario, Batangas, Branch 87, denying herein
petitioners' motion to quash writ of execution and their motion for reconsideration. The
Court of Appeals' resolution denied petitioners' motion for reconsideration of the decision.
The instant petition originated from the action for the enforcement of a foreign judgment
against herein petitioners, spouses Domingo and Dominga Belen, filed by private respondent
spouses Silvestre and Patricia Pacleb, represented by their attorney-in-fact, Joselito Rioveros,
before the RTC of Rosario, Batangas.
The complaint alleged that private respondents secured a judgment by default in Case No.
NC021205 rendered by a certain Judge John W. Green of the Superior Court of the State of
California. The judgment ordered petitioners to pay private respondents the amount of
$56,204.69 representing loan repayment and share in the profits plus interest and costs of
suit. The summons was served on petitioners' address in San Gregorio, Alaminos, Laguna, as
was alleged in the complaint, and received by a certain Marcelo M. Belen.
On 5 December 2000, Atty. Reynaldo Alcantara entered his appearance as counsel for
petitioners, stating that his legal services were retained at the instance of petitioners'
relatives. Atty. Alcantara subsequently filed an answer, alleging that contrary to private
respondents' averment, petitioners were actually residents of California, USA. The answer
also claimed that petitioners' liability had been extinguished via a release of abstract
judgment issued in the same collection case.
In view of petitioners' failure to attend the scheduled pre-trial conference, the RTC ordered
the ex parte presentation of evidence for private respondents before the branch clerk of
court. On 16 March 2001, before the scheduled ex parte presentation of evidence, Atty.
Alcantara filed a motion to dismiss, citing the judgment of dismissal issued by the Superior
Court of the State of California, which allegedly dismissed Case No. NC021205. The RTC held
in abeyance the ex parte presentation of evidence of private respondents and the resolution
of Atty. Alcantara's motion pending the submission of a copy of the judgment of dismissal.
For failure to present a copy of the alleged judgment of dismissal, the RTC denied the motion
to dismiss in an Order dated 19 February 2002. Through a motion, Atty. Alcantara sought the
reinstatement of the motion to dismiss by attaching a copy of the said foreign judgment.
For their part, private respondents filed a motion for the amendment of the complaint. The
amended complaint attached to the motion averred that private respondents were
constrained to withdraw their complaint against petitioners from the California court
because of the prohibitive cost of litigation, which withdrawal was favorably considered by
said court. The amended complaint prayed for judgment ordering petitioners to satisfy their
obligation to private respondents in the amount of P2,810,234.50.
The answer to the amended complaint raised the defenses of lack of cause of action, res
judicataand lack of jurisdiction over the subject matter and over the persons of the
defendants since the amended complaint had raised an entirely new cause of action which
should have been ventilated in another complaint.
Petitioners and Atty. Alcantara failed to appear at the rescheduled pre-trial conference.
Thus, the RTC declared petitioners in default and allowed private respondents to present
evidence ex parte. On 15 March 2003, Atty. Alcantara passed away without the RTC being
informed of such fact until much later.
On 5 August 2003, the RTC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the defendants are hereby directed to pay the
plaintiffs the following, to wit:
a) The amount of P656,688.00 (equivalent to $27,362.00) in an exchange ratio of One (1)
dollar is to P24.00 Philippine Currency;
b) Plus 30% of P656,688.00 which is P197,006.40;
c) Plus P1,576,051.20 (30% for eight (8) years, 1995-2003); andcralawlibrary
d) Plus 12% per annum as interest of the principal obligation (P656,688.00) from 1995 to
2003;
SO ORDERED.3
A copy of the RTC decision intended for Atty. Alcantara was returned with the notation
"Addressee Deceased." A copy of the RTC decision was then sent to the purported address of
petitioners in San Gregorio, Alaminos, Laguna and was received by a certain Leopoldo
Avecilla on 14 August 2003. Meanwhile, immediately after the promulgation of the RTC
decision, private respondents filed an ex-parte motion for preliminary attachment which the
RTC granted in its Order dated 15 September 2003.
On 24 November 2003, private respondents sought the execution of the RTC decision. In its
Order dated 10 December 2003, the RTC directed the issuance of a writ of execution. Upon
the issuance of a writ of execution, the real properties belonging to petitioners were levied
upon and the public auction scheduled on 15 January 2004.
On 16 December 2003, Atty. Carmelo B. Culvera entered his appearance as counsel for
petitioners. On 22 December 2003, Atty. Culvera filed a Motion to Quash Writ of Execution
(With Prayer to Defer Further Actions). On 6 January 2004, he filed a Notice of Appeal from
the RTC Decision averring that he received a copy thereof only on 29 December 2003.
In an Order dated 7 July 2004, the RTC denied the motion seeking the quashal of the writ of
execution.4 Subsequently, the RTC denied Atty. Culvera's motion for reconsideration of said
order.
Thus, petitioners filed a Rule 65 petition before the Court of Appeals, imputing on the RTC
grave abuse of discretion tantamount to lack or excess of jurisdiction (1) in rendering its
decision although it had not yet acquired jurisdiction over their persons in view of the
improper service of summons; (2) in considering the decision final and executory although a
copy thereof had not been properly served upon petitioners; (3) in issuing the writ of
execution before the decision had become final and executory and despite private
respondents' failure to comply with the procedural requirements in filing the motion for the
issuance of the said writ; and (4) in denying petitioners' motion to quash the writ of
execution and notice of appeal despite sufficient legal bases in support thereof.
On 31 July 2006, the Court of Appeals rendered the assailed Decision dismissing the petition
for certiorari . On 3 November 2006, it issued the assailed Resolution denying petitioners'
motion for reconsideration.
Hence, the instant petition, attributing to the Court of Appeals the following errors:
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW IN RULING THAT THE TRIAL
COURT ACTED WITHIN ITS JURISDICTION OR DID NOT COMMIT GRAVE ABUSE OF
DISCRETION WHEN IT CONSIDERED THE APPEARANCE OF THE COUNSEL AS THEIR
SUBMISSION TO THE JURISDICTION OF THE TRIAL COURT ALTHOUGH SUCH APPEARANCE OF
THE SAID COUNSEL WAS WITHOUT THEIR EXPRESS AUTHORITY BUT WAS DONE BY THEIR
ALLEGED RELATIVES.
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW WHEN IT RULED THAT THE
DECISION OF THE TRIAL COURT WAS DULY SERVED UPON THE PETITIONERS THROUGH THEIR
ALLEGED RELATIVES ALTHOUGH THE RECORDS OF THIS CASE CLEARLY SHOWS THAT THE
SAID PETITIONERS ARE RESIDENTS OF UNITED STATES OF AMERICA.5
In a Resolution dated 22 January 2007, the Court denied the petition because it is not
accompanied by a valid verification and certification of non-forum shopping. Petitioners
sought reconsideration, which the Court granted in a Resolution dated 16 April 2007. The
Court also ordered the reinstatement of the petition and the filing of a comment.
The instant petition raises two issues, thus: (1) whether the RTC acquired jurisdiction over
the persons of petitioners through either the proper service of summons or the appearance
of the late Atty. Alcantara on behalf of petitioners and (2) whether there was a valid service
of the copy of the RTC decision on petitioners.
On one hand, courts acquire jurisdiction over the plaintiffs upon the filing of the complaint.
On the other hand, jurisdiction over the defendants in a civil case is acquired either through
the service of summons upon them or through their voluntary appearance in court and their
submission to its authority. As a rule, if defendants have not
been summoned, the court acquires no jurisdiction over their person, and a judgment
rendered against them is null and void. To be bound by a decision, a party should first be
subject to the court's jurisdiction.6
In Asiavest Limited v. Court of Appeals,7 the Court underscored the necessity of determining
first whether the action is in personam, in rem or quasi in rem because the rules on service of
summons under Rule 14 of the Rules of Court of the Philippines apply according to the
nature of the action.8 The Court elaborated, thus:
In an action in personam, jurisdiction over the person of the defendant is necessary for the
court to validly try and decide the case. Jurisdiction over the person of a resident defendant
who does not voluntarily appear in court can be acquired by personal service of summons as
provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served
with summons within a reasonable time, substituted service may be made in accordance
with Section 8 of said Rule. If he is temporarily out of the country, any of the following
modes of service may be resorted to: (1) substituted service set forth in Section 8; (2)
personal service outside the country, with leave of court; (3) service by publication, also with
leave of court; or (4) any other manner the court may deem sufficient.
However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons
within the state is essential to the acquisition of jurisdiction over her person. This method
of service is possible if such defendant is physically present in the country. If he is
not found therein, the court cannot acquire jurisdiction over his person and therefore
cannot validly try and decide the case against him. An exception was laid down
in Gemperle v. Schenker wherein a non-resident was served with summons through his
wife, who was a resident of the Philippines and who was his representative and attorney-
in-fact in a prior civil case filed by him; moreover, the second case was a mere offshoot of
the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Nonetheless, summons must be served upon the
defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying
the due process requirements. Thus, where the defendant is a non-resident who is not found
in the Philippines and (1) the action affects the personal status of the plaintiff; (2) the action
relates to, or the subject matter of which is property in the Philippines in which the
defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant
from any interest in the property located in the Philippines; or (4) the property of the
defendant has been attached in the Philippines' service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of
court; or (c) any other manner the court may deem sufficient. 9
The action filed against petitioners, prior to the amendment of the complaint, is for the
enforcement of a foreign judgment in a complaint for breach of contract whereby petitioners
were ordered to pay private respondents the monetary award. It is in the nature of an
action in personam because private respondents are suing to enforce their personal rights
under said judgment.
Applying the foregoing rules on the service of summons to the instant case, in an action in
personam, jurisdiction over the person of the defendant who does not voluntarily submit
himself to the authority of the court is necessary for the court to validly try and decide the
case through personal service or, if this is not possible and he cannot be personally served,
substituted service as provided in Rule 14, Sections 6-7.10
In an action strictly in personam, personal service on the defendant is the preferred mode of
service, that is, by handing a copy of the summons to the defendant in person. If the
defendant, for justifiable reasons, cannot be served with the summons within a reasonable
period, then substituted service can be resorted to. While substituted service of summons is
permitted, "it is extraordinary in character and in derogation of the usual method of
service."11
If defendant cannot be served with summons because he is temporarily abroad, but
otherwise he is a Philippine resident, service of summons may, by leave of court, be effected
out of the Philippines under Rule 14, Section 15. In all of these cases, it should be noted,
defendant must be a resident of the Philippines, otherwise an action in personam cannot be
brought because jurisdiction over his person is essential to make a binding decision. 12
However, the records of the case reveal that herein petitioners have been permanent
residents of California, U.S.A. since the filing of the action up to the present. From the time
Atty. Alcantara filed an answer purportedly at the instance of petitioners' relatives, it has
been consistently maintained that petitioners were not physically present in the Philippines.
In the answer, Atty. Alcantara had already averred that petitioners were residents of
California, U.S.A. and that he was appearing only upon the instance of petitioners'
relatives.13 In addition, private respondents' attorney-in-fact, Joselito Rioveros, testified
during the ex parte presentation of evidence that he knew petitioners to be former
residents of Alaminos, Laguna but are now living in California, U.S.A. 14 That being the case,
the service of summons on petitioners' purported address in San Gregorio, Alaminos, Laguna
was defective and did not serve to vest in court jurisdiction over their persons.
Nevertheless, the Court of Appeals correctly concluded that the appearance of Atty.
Alcantara and his filing of numerous pleadings were sufficient to vest jurisdiction over the
persons of petitioners. Through certain acts, Atty. Alcantara was impliedly authorized by
petitioners to appear on their behalf. For instance, in support of the motion to dismiss the
complaint, Atty. Alcantara attached thereto a duly authenticated copy of the judgment of
dismissal and a photocopy
of the identification page of petitioner Domingo Belen's U.S. passport. These documents
could have been supplied only by petitioners, indicating that they have consented to the
appearance of Atty. Alcantara on their behalf. In sum, petitioners voluntarily submitted
themselves through Atty. Alcantara to the jurisdiction of the RTC.
We now come to the question of whether the service of a copy of the RTC decision on a
certain Teodoro Abecilla is the proper reckoning point in determining when the RTC decision
became final and executory.
The Court of Appeals arrived at its conclusion on the premise that Teodoro Abecilla acted as
petitioners' agent when he received a copy of the RTC decision. For their part, private
respondents contend that the service of a copy of the RTC decision on Atty. Alcantara,
notwithstanding his demise, is valid. On the other hand, petitioners reiterate that they are
residents of California, U.S.A. and thus, the service of the RTC decision of a residence which is
not theirs is not proper.
As a general rule, when a party is represented by counsel of record, service of orders and
notices must be made upon said attorney and notice to the client and to any other lawyer,
not the counsel of record, is not notice in law. The exception to this rule is when service
upon the party himself has been ordered by the court. 15 In cases where service was made on
the counsel of record at his given address, notice sent to petitioner itself is not even
necessary.16
The following provisions under Rule 13 of the Rules of Court define the proper modes of
service of judgments:
SEC. 2. Filing and service, defined. x x x
Service is the act of providing a party with a copy of the pleading or paper concerned. x x x
SEC. 5. Modes of service.'Service of pleadings, motions, notices, orders, judgments and other
papers shall be made either personally or by mail.
SEC. 9. Service of judgments, final orders or resolutions. 'Judgments, final orders or
resolutions shall be served either personally or by registered mail. When a party summoned
by publication has failed to appear in the action, judgments, final orders or resolutions
against him shall be served upon him also by publication at the expense of the prevailing
party.
SEC. 6. Personal service. 'Service of the papers may be made by delivering personally a copy
to the party or his counsel, or by leaving it in his office with his clerk or with a person having
charge thereof. If no person is found in his office, or his office is not known, or he has no
office, then by leaving the copy, between the hours of eight in the morning and six in the
evening, at the party's or counsel's residence, if known, with a person of sufficient age and
discretion then residing therein.
SEC. 7. Service by mail. 'Service by registered mail shall be made by depositing the copy in
the post office, in a sealed envelope, plainly addressed to the party or his counsel at his
office, if known, otherwise at his residence, if known, with postage fully pre-paid, and with
instructions to the postmaster to return the mail to the sender after ten (10) days if
undelivered. If no registry service is available in the locality of either the sender or the
addressee, service may be done by ordinary mail.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
SEC. 8. Substituted service. 'If service of pleadings, motions, notices, resolutions, orders and
other papers cannot be made under the two preceding sections, the office and place of
residence of the party or his counsel being unknown, service may be made by delivering the
copy to the clerk of court, with proof of failure of both personal service and service by mail.
The service is complete at the time of such delivery.
In the instant case, a copy of the RTC decision was sent first to Atty. Alcantara, petitioners'
counsel of record. However, the same was returned unserved in view of the demise of Atty.
Alcantara. Thus, a copy was subsequently sent to petitioners' "last known address in San
Gregorio, Alaminos, Laguna," which was received by a certain Leopoldo Avecilla.
Undoubtedly, upon the death of Atty. Alcantara, the lawyer-client relationship between him
and petitioners has ceased, thus, the service of the RTC decision on him is ineffective and did
not bind petitioners.
The subsequent service on petitioners' purported "last known address" by registered mail is
also defective because it does not comply with the requisites under the aforequoted Section
7 of Rule 13 on service by registered mail. Section 7 of Rule 13 contemplates service at
the present address of the party and not at any other address of the party. Service at the
party's former address or his last known address or any address other than his present
address does not qualify as substantial compliance with the requirements of Section 7, Rule
13. Therefore, service by registered mail presupposes that the present address of the party is
known and if the person who receives the same is not the addressee, he must be duly
authorized by the former to receive the paper on behalf of the party.
Since the filing of the complaint, petitioners could not be physically found in the country
because they had already become permanent residents of California, U.S.A. It has been
established during the trial that petitioners are former residents of Alaminos, Laguna,
contrary to the averment in the complaint that they reside and may be served with court
processes thereat. The service of the RTC decision at their former address in Alaminos,
Laguna is defective and does not bind petitioners.
On many occasions,17 the Court has strictly construed the requirements of the proper service
of papers and judgments. Both in Heirs of Delos Santos v. Del Rosario 18 and Tuazon v.
Molina,19 the service of the trial court's decision at an adjacent office and the receipt thereof
by a person not authorized by the counsel of record was held ineffective. Likewise, the
service of the decision made at the ground floor instead of at the 9th floor of a building in
the address on record of petitioners' counsel, was held invalid in PLDT v. NLRC.20 In these
cases, there was no constructive service of the decision even if
the service was made at the offices adjacent to the address on record of the parties' counsels
and even if the copies eventually found their way to persons duly authorized to receive
them.
In view of the foregoing, the running of the fifteen-day period for appeal did not commence
upon the service of the RTC decision at the address on record of Atty. Alcantara or at the
Laguna address. It is deemed served on petitioners only upon its receipt by Atty. Culvera on
29 December 2003. Therefore, the filing of the Notice of Appeal on 06 January 2004 is within
the reglementary period and should be given due course.
WHEREFORE, the instant Petition for Review on Certiorari is GRANTED and the Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 88731 are REVERSED and SET ASIDE.
Accordingly, the orders dated 7 July 2004 and 2 February 2005 of the Regional Trial Court of
Rosario. Batangas, Branch 87 are SET ASIDE. The RTC is also ordered to GIVE DUE COURSE to
the Notice of Appeal filed by Atty. Culvera on 06 January 2004 . Costs against private
respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18164 January 23, 1967
WILLIAM F. GEMPERLE, plaintiff-appellant,
vs.
HELEN SCHENKER and PAUL SCHENKER as her husband, defendants-appellees.
Gamboa & Gamboa for plaintiff-appellant.
A. R. Narvasa for defendants-appellees.
CONCEPCION, C. J.:
Appeal, taken by plaintiff, William F. Gemperle, from a decision of the Court of First Instance
of Rizal dismissing this case for lack of jurisdiction over the person of defendant Paul
Schenker and for want of cause of action against his wife and co-defendant, Helen Schenker
said Paul Schenker "being in no position to be joined with her as party defendant, because he
is beyond the reach of the magistracy of the Philippine courts."
The record shows that sometime in 1952, Paul Schenker-hereinafter referred to as Schenker
— acting through his wife and attorney-in-fact, Helen Schenker — herein-after referred to as
Mrs. Schenker — filed with the Court of First Instance of Rizal, a complaint — which was
docketed as Civil Case No. Q-2796 thereof — against herein plaintiff William F. Gemperle, for
the enforcement of Schenker's allegedly initial subscription to the shares of stock of the
Philippines-Swiss Trading Co., Inc. and the exercise of his alleged pre-emptive rights to the
then unissued original capital stock of said corporation and the increase thereof, as well as
for an accounting and damages. Alleging that, in connection with said complaint, Mrs.
Schenker had caused to be published some allegations thereof and other matters, which
were impertinent, irrelevant and immaterial to said case No. Q-2796, aside from being false
and derogatory to the reputation, good name and credit of Gemperle, "with the only
purpose of attacking" his" honesty, integrity and reputation" and of bringing him "into public
hatred, discredit, disrepute and contempt as a man and a businessman", Gemperle
commenced the present action against the Schenkers for the recovery of P300,000 as
damages, P30,000 as attorney's fees, and costs, in addition to praying for a judgment
ordering Mrs. Schenker "to retract in writing the said defamatory expressions". In due
course, thereafter, the lower court, rendered the decision above referred to. A
reconsiderating thereof having been denied, Gemperle interposed the present appeal.
The first question for determination therein is whether or not the lower court had acquired
jurisdiction over the person of Schenker. Admittedly, he, a Swiss citizen, residing in Zurich,
Switzerland, has not been actually served with summons in the Philippines, although the
summons address to him and Mrs. Schenker had been served personally upon her in the
Philippines. It is urged by plaintiff that jurisdiction over the person of Schenker has been
secured through voluntary appearance on his part, he not having made a special appearance
to assail the jurisdiction over his person, and an answer having been filed in this case, stating
that "the defendants, by counsel, answering the plaintiff's complaint, respectfully aver",
which is allegedly a general appearance amounting to a submission to the jurisdiction of the
court, confirmed, according to plaintiff, by a P225,000 counterclaim for damages set up in
said answer; but this counterclaim was set up by Mrs. Schenker alone, not including her
husband. Moreover, said answer contained several affirmative defenses, one of which was
lack of jurisdiction over the person of Schenker, thus negating the alleged waiver of this
defense. Nevertheless, We hold that the lower court had acquired jurisdiction over said
defendant, through service of the summons addressed to him upon Mrs. Schenker, it
appearing from said answer that she is the representative and attorney-in-fact of her
husband aforementioned civil case No. Q-2796, which apparently was filed at her behest, in
her aforementioned representative capacity. In other words, Mrs. Schenker had authority to
sue, and had actually sued on behalf of her husband, so that she was, also, empowered to
represent him in suits filed against him, particularly in a case, like the of the one at bar,
which is consequence of the action brought by her on his behalf.
Inasmuch as the alleged absence of a cause of action against Mrs. Schenker is premised upon
the alleged lack of jurisdiction over the person of Schenker, which cannot be sustained, it
follows that the conclusion drawn therefore from is, likewise, untenable.
Wherefore, the decision appealed from should be, is hereby, reversed, and the case
remanded to the lower court for proceedings, with the costs of this instance defendants-
appellees. It is so ordered.
Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ.,
concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 168747 October 19, 2007
VICTORIA REGNER, Petitioner,
vs.
CYNTHIA R. LOGARTA, TERESA R. TORMIS and CEBU COUNTRY CLUB, Inc., Respondents.
DECISION
CHICO-NAZARIO, J.:
This Petition for Review on Certiorari seeks to reverse the Decision 1 dated 6 May 2005 of the
Court of Appeals in CA-G.R. CV No. 71028 entitled, "Victoria Regner v. Cynthia Logarta,
Teresa R. Tormis and Cebu Country Club, Inc.," which affirmed the Order dated 9 November
2000 of the Regional Trial Court (RTC) of Cebu, granting herein respondents’ motion to
dismiss Civil Case No. CEB 23927. The Order dated 9 November 2000 of the RTC dismissed
herein petitioner’s complaint for declaration of nullity of a deed of donation, for failure to
serve summons on Cynthia Logarta, an indispensable party therein.
Civil Case No. CEB. 23927 arose from the following factual antecedents:
Luis Regner (Luis) had three daughters with his first wife, Anicita C. Regner, namely, Cynthia
Logarta (Cynthia) and Teresa Tormis (Teresa), the respondents herein, and Melinda Regner-
Borja (Melinda).
Herein petitioner Victoria Regner (Victoria) is the second wife of Luis.
During the lifetime of Luis, he acquired several properties, among which is a share at Cebu
Country Club Inc., evidenced by Proprietary Ownership Certificate No. 0272. On 15 May
1998, Luis executed a Deed2 of Donation in favor of respondents Cynthia and Teresa covering
Proprietary Ownership Certificate No. 0272 of the Cebu Country Club, Inc.
Luis passed away on 11 February 1999.
On 15 June 1999, Victoria filed a Complaint3 for Declaration of Nullity of the Deed of
Donation with Prayer for Issuance of a Writ of Preliminary Injunction and Temporary
Restraining Order against Cynthia and Teresa with the RTC, docketed as Civil Case No. CEB.
23927. Victoria alleged in her complaint that: on 17 March 1997, Luis made a written
declaration wherein he stated that due to his illness and forgetfulness, he would not sign any
document without the knowledge of his lawyer, Atty. Francis Zosa; on 15 May 1998, when
Luis was already very ill and no longer of sound and disposing mind, Cynthia and Teresa ,
conspiring and confederating with each other, fraudulently made or caused to be
fraudulently made a Deed of Donation whereby they made it appear that Luis donated to
them Proprietary Ownership Certificate No. 0272; since Luis no longer had the ability to write
or affix his signature, Melinda, acting under the influence of her sisters, Cynthia and Teresa,
fraudulently manipulated the hand of Luis so that he could affix his thumbmark on the
assailed Deed of Donation; on 8 February 1998, or three days before the death of Luis, and
when he was already in comatose condition at the Cebu Doctors’ Hospital, Melinda, Teresa,
and Cynthia caused the preparation of an affidavit to the effect that Luis affirmed the Deed
of Donation he allegedly executed earlier by lifting his hand to affix his thumbmark on the
said affidavit.
Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa at the Borja Family
Clinic in Tagbilaran City wherein Melinda worked as a doctor, but Melinda refused to receive
the summonses for her sisters and informed the sheriff that their lawyer, Atty. Francis Zosa,
would be the one to receive the same.
Upon her arrival in the Philippines, on 1 June 2000, Teresa was personally served the
summons at Room 304, Regency Crest Condominium, Banilad, Cebu City. She filed her
Answer4 with counterclaim with the RTC on 6 June 2000.
Subsequently, on 12 September 2002, Teresa filed a motion to dismiss Civil Case No. CEB
23927 because of petitioner’s failure to prosecute her action for an unreasonable length of
time.
Petitioner opposed5 the motion and filed her own motion to set the case for pre-trial, to
which Teresa filed her rejoinder on the ground that their sister, Cynthia, an indispensable
party, had not yet been served a summons. Thus, Teresa prayed for the dismissal of
petitioner’s complaint, as the case would not proceed without Cynthia’s presence.
On 9 November 2000, the RTC issued an Order6 granting respondent Teresa’s motion to
dismiss, pertinent portions of which read:
Considering that the donees in the Deed of Donation are Cynthia R. Logarta and Teresa R.
Tormis, they are therefore an (sic) indispensable party (sic). In the case of Quisumbing vs.
Court of Appeals, 189 SCRA 325, indispensable parties are those with such an interest in the
controversy that a final decree would necessarily affect their rights so that the court could
not proceed without their presence
Wherefore, in view of the foregoing, the instant case is hereby dismissed without prejudice.
A motion for reconsideration was filed by petitioner, but the same was denied in an Order
dated 14 February 2001.
Aggrieved, petitioner appealed to the Court of Appeals. On 6 May 2005, the Court of Appeals
rendered a Decision denying the appeal and affirming in toto the order of dismissal of the
complaint by the RTC and the denial of the motion for reconsideration thereof. The Court of
Appeals ratiocinated that petitioner’s failure to move for an extraterritorial service of
summons constitutes failure to prosecute for an unreasonable length of time, thus:
[T]he plaintiff-appellant [Victoria Regner] should have moved for the extraterritorial service
of summons for both defendants-appellees Teresa R. Tormis and Cynthia R. Logarta as they
were not residing and were not found in the Philippines when plaintiff-appellant [Victoria
Regner] filed this case below. Although defendant-appellant Teresa Tormis was personally
served with summons on June 1, 2000 when she came to the Philippines but the same was
only effected after a long wait or after the lapse of almost one year from the date the
complaint was filed on June 15, 1999. To allow this practice would be to make the
continuation of like proceedings before the courts dependent on when the defendants
would be personally served with summons by the time they would come to the Philippines,
which would only unnecessarily delay the proceedings and clog the court dockets as well.
The afore-cited rule was precisely crafted to meet situations similar to the present case to
avoid unnecessary delays.
It has to be emphasized that it is incumbent upon the plaintiff [Victoria Regner] to move with
leave of court for the extraterritorial service of summons. Taking into account the
considerable time that had elapsed from the filing of the complaint on June 15, 1999 until
defendant-appellee Teresa R. Tormis, through counsel, filed a motion to dismiss on
September 12, 2000, or approximately fifteen (15) months, without any act on the part of
plaintiff-appellant [Victoria Regner] to move for extraterritorial service of summons upon the
person of defendant-appellee Cynthia Logarta renders plaintiff-appellant’s [Victoria Regner]
complaint dismissible for failure to prosecute her action for unreasonable length of time
under Section 3, Rule 17, Revised Rules of Court, x x x. 7
Hence, this appeal via petition8 for review on certiorari filed by petitioner raising the
following assignment of errors:
THE COURT OF APPEALS ERRED IN HOLDING THAT THE DELAY IN SERVING SUMMONS ON
ONE OF THE DEFENDANTS CONSTITUTES A FAILURE TO PROSECUTE NOTWITHSTANDING
THAT THE REST OF THE CO-DEFENDANTS WERE DULY SERVED WITH SUMMONSES
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE ANSWER FILED BY ONE
INDIVIDUAL DEFENDANT REDOUNDS TO THE BENEFIT OF THE OTHER DEFENDANT WHO HAS
NOT BEEN SERVED WITH SUMMONS, THE NATURE OF ACTION BEING ADMITTEDLY
COMMON AMONG ALL DEFENDANTS.9
From the foregoing, this Court identifies the issues to be resolved in this petition as: (1)
Whether a co-donee is an indispensable party in an action to declare the nullity of the deed
of donation, and (2) whether delay in the service of summons upon one of the defendants
constitutes failure to prosecute that would warrant dismissal of the complaint.
A Court must acquire jurisdiction over the persons of indispensable parties before it can
validly pronounce judgments personal to the parties. Courts acquire jurisdiction over a party
plaintiff upon the filing of the complaint. On the other hand, jurisdiction over the person of a
party defendant is assured upon the service of summons in the manner required by law or
otherwise by his voluntary appearance. As a rule, if a defendant has not been summoned,
the court acquires no jurisdiction over his person, and a personal judgment rendered against
such defendant is null and void.10 A decision that is null and void for want of jurisdiction on
the part of the trial court is not a decision in the contemplation of law and, hence, it can
never become final and executory.11
Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest
without whom there can be no final determination of an action. As such, they must be joined
either as plaintiffs or as defendants. The general rule with reference to the making of parties
in a civil action requires, of course, the joinder of all necessary parties where possible, and
the joinder of all indispensable parties under any and all conditions, their presence being a
sine qua non for the exercise of judicial power. 12 It is precisely "when an indispensable party
is not before the court [that] the action should be dismissed." 13 The absence of an
indispensable party renders all subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even as to those present. 14
As we ruled in Alberto v. Mananghala15 :
In an action for recovery of property against a person who purchased it from another who in
turn acquired it from others by the same means or by donation or otherwise, the
predecessors of defendants are indispensable parties if the transfers, if not voided, may bind
plaintiff. (Garcia vs. Reyes, 17 Phil. 127.) In the latter case, this Court held:
In order to bring this suit duly to a close, it is imperative to determine the only question
raised in connection with the pending appeal, to wit, whether all the persons who intervened
in the matter of the transfers and donation herein referred to, are or are not necessary
parties to this suit, since it is asked in the complaint that the said transfers and donation be
declared null and void – an indispensable declaration for the purpose, in a proper case, of
concluding the plaintiff to be the sole owner of the house in dispute.
If such a declaration of annulment can directly affect the persons who made and who were
concerned in the said transfers, nothing could be more proper and just than to hear them in
the litigation, as parties interested in maintaining the validity of those transactions, and
therefore, whatever be the nature of the judgment rendered, Francisco Reyes, Dolores
Carvajal, Alfredo Chicote, Vicente Miranda, and Rafael Sierra, besides the said minors, must
be included in the case as defendants." (Garcia vs. Reyes, 17 Phil., 130-131.)
It takes no great degree of legal sophistication to realize that Cynthia and Teresa are
indispensable parties to Civil Case No. CEB 23927. Cynthia and Teresa allegedly derived their
rights to the subject property by way of donation from their father Luis. The central thrust of
the petitioner’s complaint in Civil Case No. CEB 23927 was that Luis could not have donated
Proprietary Ownership Certificate No. 0272 to his daughters Cynthia and Teresa, as Luis was
already very ill and no longer of sound and disposing mind at the time of donation on 15 May
1997. Accordingly, the prayer in petitioner’s complaint was for the trial court to declare null
and void the Deed of Donation and to restrain the Cebu Country Club, Inc. from transferring
title and ownership of Proprietary Ownership Certificate No. 0272 to Cynthia and Teresa.
Thus, based on the Deed of Donation, Teresa and Cynthia are co-owners of Proprietary
Membership Certificate No. 0272 of Cebu Country Club, Inc. The country club membership
certificate is undivided and it is impossible to pinpoint which specific portion of the property
belongs to either Teresa or Cynthia. Indeed, both Teresa and Cynthia are indispensable
parties in Civil Case No. CEB 23927.
An indispensable party has been defined as follows:
An indispensable party is a party who has such an interest in the controversy or subject
matter that a final adjudication cannot be made, in his absence, without injuring or affecting
that interest, a party who has not only an interest in the subject matter of the controversy,
but also has an interest of such nature that a final decree cannot be made without affecting
his interest or leaving the controversy in such a condition that its final determination may be
wholly inconsistent with equity and good conscience. It has also been considered that an
indispensable party is a person in whose absence there cannot be a determination between
the parties already before the court which is effective, complete, or equitable. Further, an
indispensable party is one who must be included in an action before it may properly go
forward.
A person is not an indispensable party, however, if his interest in the controversy or subject
matter is separable from the interest of the other parties, so that it will not necessarily be
directly or injuriously affected by a decree which does complete justice between them. Also,
a person is not an indispensable party if his presence would merely permit complete relief
between him and those already parties to the action, or if he has no interest in the subject
matter of the action. It is not a sufficient reason to declare a person to be an indispensable
party that his presence will avoid multiple litigation. 16
In Servicewide Specialists, Incorporated v. Court of Appeals, 17 this Court held that no final
determination of a case could be made if an indispensable party is not legally present
therein:
An indispensable party is one whose interest will be affected by the court’s action in the
litigation, and without whom no final determination of the case can be had. The party’s
interest in the subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties that his legal presence as a party to the proceeding is an
absolute necessity. In his absence there cannot be a resolution of the dispute of the parties
before the court which is effective, complete, or equitable.
The rationale for treating all the co-owners of a property as indispensable parties in a suit
involving the co-owned property is explained in Arcelona v. Court of Appeals 18 :
As held by the Supreme Court, were the courts to permit an action in ejectment to be
maintained by a person having merely an undivided interest in any given tract of land, a
judgment in favor of the defendants would not be conclusive as against the other co-owners
not parties to the suit, and thus the defendant in possession of the property might be
harassed by as many succeeding actions of ejectment, as there might be co-owners of the
title asserted against him. The purpose of this provision was to prevent multiplicity of suits
by requiring the person asserting a right against the defendant to include with him, either as
co-plaintiffs or as co-defendants, all persons standing in the same position, so that the whole
matter in dispute may be determined once and for all in one litigation.
Applying the foregoing definitions and principles to the present case, this Court finds that
any decision in Civil Case No. CEB 23927 cannot bind Cynthia, and the Court cannot nullify
the donation of the property she now co-owns with Teresa, even if limited only to the
portion belonging to Teresa, to whom summons was properly served, since ownership of the
property is still pro indiviso. Obviously, Cynthia is an indispensable party in Civil Case No. CEB
23927 without whom the lower court is barred from making a final adjudication as to the
validity of the entire donation. Without the presence of indispensable parties to a suit or
proceeding, a judgment therein cannot attain finality.19
Being an indispensable party in Civil Case No. CEB 23927, the trial court must also acquire
jurisdiction over Cynthia’s person through the proper service of summons.
Based on the foregoing disquisitions, the issue of whether the answer filed by Teresa should
benefit Cynthia who was not served summons need not be discussed.
As to determine whether Cynthia was properly served a summons, it will be helpful to
determine first the nature of the action filed against Cynthia and Teresa by petitioner
Victoria, whether it is an action in personam, in rem or quasi in rem. This is because the rules
on service of summons embodied in Rule 14 apply according to whether an action is one or
the other of these actions.
In a personal action, the plaintiff seeks the recovery of personal property, the enforcement
of a contract or the recovery of damages. 20 In contrast, in a real action, the plaintiff seeks the
recovery of real property; or, as indicated in Section 2(a), Rule 4 of the then Rules of Court, a
real action is an action affecting title to real property or for the recovery of possession, or for
partition or condemnation of, or foreclosure of mortgage on, real property. An action in
personam is an action against a person on the basis of his personal liability, while an action in
rem is an action against the thing itself, instead of against the person.21
In an action in personam, personal service of summons or, if this is not possible and he
cannot be personally served, substituted service, as provided in Section 7, Rule 14 of the
Rules of Court,22 is essential for the acquisition by the court of jurisdiction over the person of
a defendant who does not voluntarily submit himself to the authority of the court. 23 If
defendant cannot be served a summons because he is temporarily abroad, but is otherwise a
Philippine resident, service of summons may, by leave of court, be made by
publication.24 Otherwise stated, a resident defendant in an action in personam, who cannot
be personally served a summons, may be summoned either by means of substituted service
in accordance with Section 7, Rule 14 of the Rules of Court, or by publication as provided in
Sections 15 and 16 of the same Rule.
In all of these cases, it should be noted, defendant must be a resident of the Philippines;
otherwise an action in personam cannot be brought because jurisdiction over his person is
essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires
jurisdiction over the res. If the defendant is a nonresident and he is not found in the country,
summons may be served extraterritorially in accordance with Section 15, Rule 14 of the
Rules of Court, which provides:
Section 15. Extraterritorial service. - When the defendant does not reside and is not found in
the Philippines, and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under Section 6; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.
As stated above, there are only four instances wherein a defendant who is a non-resident
and is not found in the country may be served a summons by extraterritorial service, to wit:
(1) when the action affects the personal status of the plaintiff; (2) when the action relates to,
or the subject of which is property within the Philippines, on which the defendant claims a
lien or an interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in property located
in the Philippines; and (4) when the defendant non-resident’s property has been attached
within the Philippines. In these instances, service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of
court; or (c) any other manner the court may deem sufficient.25
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it
has jurisdiction over the res, i.e., the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached. Service of summons in the manner provided
in Section 15, Rule 14 of the Rules of Court is not for the purpose of vesting the court with
jurisdiction, but for complying with the requirements of fair play or due process, so that the
defendant will be informed of the pendency of the action against him; and the possibility
that property in the Philippines belonging to him, or in which he has an interest, might be
subjected to a judgment in favor of the plaintiff and he can thereby take steps to protect his
interest if he is so minded.26
In petitioner’s Complaint in Civil Case No. CEB No. 23427, she alleged that Cynthia is residing
at 462 West Vine No. 201, Glendale, California, 912041, U.S.A.; while Teresa is residing at
2408 South Hacienda Boulevard, Hacienda Heights, California, but they usually visit here in
the Philippines and can be served summonses and other processes at the Borja Family Clinic,
Bohol. Pertinent portions of the Complaint read:
2. Defendant Cynthia R. Logarta is a Filipino, of legal age, married to Ramon
Logarta, resident (sic) 463 West Vine No.201, Glendale, California, 912041, USA.
She however usually visits in the Philippines and can be served with summons
 and other processes of this Honorable Court at Borja Family Clinic, Tagbilaran,
Bohol;
3. Defendant Teresa R. Tormis is likewise a Filipino, of legal age, married to
Antonio Tormis, and a resident of 2408 South Hacienda Heights, California,
19745, U.S.A. She however usually visits in the Philippines and can be served
with summons and other processes of this Honorable Court at Borja Family
Clinic, Tagbilaran, Bohol.27
Petitioner prayed for a declaration of nullity of the deed of donation, to restrain Cebu
Country Club, Inc. from transferring title and ownership of Proprietary Ownership Certificate
No. 0272 to Cynthia and Teresa, and for moral and exemplary damages. Civil Case No. CEB
23927 is evidently an action against Cynthia and Teresa on the basis of their personal liability
for the alleged fraudulent transfer of the subject Country Club membership from Luis to their
name. In this sense, petitioner questions the participation and shares of Cynthia and Teresa
in the transferred Country Club membership. Moreover, the membership certificate from the
Cebu Country Club, Inc. is a personal property. Thus, the action instituted by petitioner
before the RTC is in personam.
Being an action in personam, the general rule requires the personal service of summons on
Cynthia within the Philippines, but this is not possible in the present case because Cynthia is
a non-resident and is not found within the Philippines.
As Cynthia is a nonresident who is not found in the Philippines, service of summons on her
must be in accordance with Section 15, Rule 14 of the Rules of Court. Such service, to be
effective outside the Philippines, must be made either (1) by personal service; (2) by
publication in a newspaper of general circulation in such places and for such time as the
court may order, in which case a copy of the summons and order of the court should be sent
by registered mail to the last known address of the defendant; or (3) in any other manner
which the court may deem sufficient. The third mode, like the first two, must be made
outside the Philippines, such as through the Philippine Embassy in the foreign country where
Cynthia resides.
Since in the case at bar, the service of summons upon Cynthia was not done by any of the
authorized modes, the trial court was correct in dismissing petitioner’s complaint.
Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states –
SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to
appear on the date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply with these Rules or any
order of the court, the complaint may be dismissed upon motion of the defendant or upon
the court's own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an
adjudication upon the merits, unless otherwise declared by the court.
As can be gleaned from the rule, there are three instances when the complaint may be
dismissed due to the plaintiff's fault: (1) if he fails to appear during a scheduled trial,
especially on the date for the presentation of his evidence in chief; (2) if he fails to prosecute
his action for an unreasonable length of time; and (3) if he fails to comply with the rules or
any order of the court.28
Considering the circumstances of the case, it can be concluded that the petitioner failed to
prosecute the case for an unreasonable length of time. There is failure to prosecute when
the plaintiff, being present, is not ready or is unwilling to proceed with the scheduled trial or
when postponements in the past were due to the plaintiff's own making, intended to be
dilatory or caused substantial prejudice on the part of the defendant. 29
While a court can dismiss a case on the ground of failure to prosecute, the true test for the
exercise of such power is whether, under the prevailing circumstances, the plaintiff is
culpable for want of due diligence in failing to proceed with reasonable promptitude. 30 As to
what constitutes an "unreasonable length of time," within the purview of the above-quoted
provision, the Court has ruled that it "depends upon the circumstances of each particular
case," and that "the sound discretion of the court" in the determination of said question "will
not be disturbed, in the absence of patent abuse"; and that "the burden of showing abuse of
judicial discretion is upon the appellant since every presumption is in favor of the correctness
of the court's action."31 Likewise, the concept of promptness is a relative term and must not
unnecessarily be an inflexible one. It connotes an action without hesitation and loss of time.
As to what constitutes the term is addressed to the consideration of the trial court, bearing
in mind that while actions must be disposed of with dispatch, the essential ingredient is the
administration of justice and not mere speed.32
It is well to quote the doctrine laid in Padua v. Ericta,33 as accentuated in the subsequent
case Marahay v. Melicor34 :
Courts should not brook undue delays in the ventilation and determination of causes. It
should be their constant effort to assure that litigations are prosecuted and resolved with
dispatch. Postponements of trials and hearings should not be allowed except on meritorious
grounds; and the grant or refusal thereof rests entirely in the sound discretion of the Judge.
It goes without saying, however, that discretion must be reasonably and wisely exercised, in
the light of the attendant circumstances. Some reasonable deferment of the proceedings
may be allowed or tolerated to the end that cases may be adjudged only after full and free
presentation of evidence by all the parties, especially where the deferment would cause no
substantial prejudice to any part. The desideratum of a speedy disposition of cases should
not, if at all possible, result in the precipitate loss of a party’s right to present evidence and
either in plaintiff's being non-suited or the defendant's being pronounced liable under an ex
parte judgment.
"[T]rial courts have x x x the duty to dispose of controversies after trial on the merits
whenever possible. It is deemed an abuse of discretion for them, on their own motion, ‘to
enter a dismissal which is not warranted by the circumstances of the case’ (Municipality of
Dingras v. Bonoan, 85 Phil. 458-59 [1950]). While it is true that the dismissal of an action on
grounds specified under Section 3, Rule 17 of the Revised Rules of Court is addressed to their
discretion (Flores v. Phil. Alien Property Administrator, 107 Phil. 778 [1960]; Montelibano v.
Benares, 103 Phil. 110 [1958]; Adorable v. Bonifacio, 105 Phil. 1269 [1959]; Inter-Island Gas
Service, Inc. v. De la Gerna, L-17631, October 19, 1966, 18 SCRA 390), such discretion must
be exercised soundly with a view to the circumstances surrounding each particular case
(Vernus-Sanciangco v. Sanciangco, L-12619, April 28, 1962, 4 SCRA 1209). If facts obtain that
serve as mitigating circumstances for the delay, the same should be considered and dismissal
denied or set aside (Rudd v. Rogerson, 15 ALR 2d 672; Cervi v. Greenwood, 147 Colo. 190,
362 P.2d 1050 [1961]), especially where the suit appears to be meritorious and the plaintiff
was not culpably negligent and no injury results to defendant (27 C.J.S. 235-36; 15 ALR 3rd
680)." (Abinales vs. Court of First Instance of Zamboanga City, Br. I, 70 SCRA 590, 595).
"It is true that the allowance or denial of petitions for postponement and the setting aside of
orders previously issued, rest principally upon the sound discretion of the judge to whom
they are addressed, but always predicated on the consideration that more than the mere
convenience of the courts or of the parties of the case, the ends of justice and fairness would
be served thereby (Camara Vda. de Zubiri v. Zubiri, et al., L-16745, December 17, 1966).
When no substantial rights are affected and the intention to delay is not manifest, the
corresponding motion to transfer the hearing having been filed accordingly, it is sound
judicial discretion to allow them (Rexwell Corp. v. Canlas, L-16746, December 30, 1961)." x x
x.
This Court recalls that the complaint herein was filed on 15 June 1999. The summonses for
Cynthia and Teresa were served on their sister Melinda at the Borja Family Clinic in
Tagbilaran City, but the latter refused to receive the same. It was only on 1 June 2000 that
summons was served on Teresa at Room 304, Regency Crest Condominium, Banilad, Cebu
City, when she was in the Philippines for a visit. However, the summons for Cynthia was
never served upon her.1âwphi1
Although Section 1, Rule 14 of the Rules, imposes upon the clerk of court the duty to serve
summons, this does not relieve the petitioner of her own duty as the plaintiff in a civil case to
prosecute the case diligently. If the clerk had been negligent, it was petitioner’s duty to call
the court’s attention to that fact. It must be noted that it was not even petitioner who called
the court’s attention that summons had not been served on Cynthia, but Teresa. This despite
the fact that petitioner was aware, as early as 15 June 1999, when she filed her complaint,
that the summonses could not be served on Teresa and Cynthia, as she admitted therein that
Teresa and Cynthia were residing abroad. Petitioner as plaintiff should have asked that
Cynthia and Teresa be summoned by publication at the earliest possible time. She cannot
idly sit by and wait till this is done. She cannot afterwards wash her hands and say that the
delay was not her fault. She cannot simply "fold [her] hands" and say that it is the duty of the
clerk of court to have the summonses served on Cynthia and Teresa for the prompt
disposition of her case. If there were no means of summoning any of the defendants,
petitioner should have so informed the court within a reasonable period of time, so that the
case could be disposed of one way or another and the administration of justice would not
suffer delay. The non-performance of that duty by petitioner as plaintiff is an express ground
for dismissing an action. For, indeed, this duty imposed upon her was precisely to spur on the
slothful.
For failure to diligently pursue the complaint, petitioner trifled with the right of the
respondents to speedy trial. It also sorely tried the patience of the court and wasted its
precious time and attention. To allow petitioner to wait until such time that summonses
were served on respondents would frustrate the protection against unreasonable delay in
the prosecution of cases and violate the constitutional mandate of speedy dispensation of
justice which would in time erode the people’s confidence in the judiciary. We take a dim
view of petitioner’s complacent attitude. Ex nihilo nihil fit. 35
Likewise, petitioner’s counsel inexplicably failed to diligently pursue the service of
summonses on respondents. These were acts of negligence, laxity and truancy which the
court could have very easily avoided or timely remedied. Petitioner and her counsel could
not avail themselves of this Court’s sympathy, considering their apparent complacency, if not
delinquency, in the conduct of their litigation.
Considering the foregoing, we sustain the dismissal by the trial court of the petitioner’s
complaint for failure to prosecute for a period of more than one year (from the time of filing
thereof on 15 June 1997 until Teresa’s filing of a motion to dismiss).
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit and the
assailed Decision dated 6 May 2005 of the Court of Appeals in CA-G.R. CV No. 71028 is
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
FIRST DIVISION
G.R. No. 128803. September 25, 1998
ASIAVEST LIMITED, Petitioner, v. THE COURT OF APPEALS AND ANTONIO
HERAS, Respondents.
DECISION
DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision1 of Branch 107 of the Regional Trial Court of
Quezon City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant
Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts
awarded by the Hong Kong Court Judgment dated December 28, 1984 and amended on April
13, 1987, to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at
the time of payment with legal interest from
December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum
from October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorneys fees, litigation
expenses and cost, with interest thereon from the
date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could
resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11,
1988 totally destroyed the office of this Court, together with all its records, equipment and
properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution
of Case Records. The Court, after allowing the defendant to react thereto, granted the said
Motion and admitted the annexes attached thereto as the reconstituted records of this case
per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of
which had been deferred, was denied by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial
conference. At the conference, the parties could not arrive at any settlement. However, they
agreed on the following stipulations of facts:
1) The defendant admits the existence of the judgment dated
December 28, 1984 as well as its amendment dated
April 13, 1987, but not necessarily the authenticity or
validity thereof;
2) The plaintiff is not doing business and is not licensed to do
business in the Philippines;
3) The residence of defendant, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong Kong
Court has been repelled by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud or clear mistake of law or fact, such as to overcome the presumption
established in Section 50, Rule 39 of the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the aforementioned judgment
(Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of
January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in
paragraph (b), Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper officials concerned
(Pls. See Exhibits A thru B, with their submarkings). In addition, the plaintiff presented
testimonial and documentary evidence to show its entitlement to attorneys fees and other
expenses of litigation.
On the other hand, the defendant presented two witnesses, namely, Fortunata dela Vega
and Russel Warren Lousich.
The gist of Ms. dela Vegas testimony is to the effect that no writ of summons or copy of a
statement of claim of Asiavest Limited was ever served in the office of the Navegante
Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of
summons was either served on the defendant at his residence in New Manila, Quezon City.
Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during
his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping
business in Hong Kong; that she was in-charge of all his letters and correspondence, business
commitments, undertakings, conferences and appointments, until October 1984 when Mr.
Heras left Hong Kong for good; that she was also the Officer-in-Charge or Office Manager of
Navegante Shipping Agency LTD, a Hong Kong registered and based company acting as ships
agent, up to and until the company closed shop sometime in the first quarter of 1985, when
shipping business collapsed worldwide; that the said company held office at 34-35
Connaught Road, Central Hong Kong and later transferred to Caxton House at Duddel Street,
Hong Kong, until the company closed shop in 1985; and that she was certain of such facts
because she held office at Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of
the law office of the defendants counsel who made a verification of the record of the case
filed by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving
Court processes in Hong Kong.
In his affidavit (Exh. 2) which constitutes his direct testimony, the said witness stated that:
The defendant was sued on the basis of his personal guarantee
of the obligations of Compania Hermanos de Navegacion S.A.
There is no record that a writ of summons was served on the
person of the defendant in Hong Kong, or that any such
attempt at service was made. Likewise, there is no record that
a copy of the judgment of the High Court was furnished or
served on the defendant; anyway, it is not a legal requirement
to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the
solicitor (lawyer) of the claimant or plaintiff. In
Hong Kong there are no Court personnel who
serve writs of summons and/or most other
processes.
b) If the writ of summons or claim (or complaint) is not
contested, the claimant or the plaintiff is not
required to present proof of his claim or
complaint nor present evidence under oath of
the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment
or decision rendered by the Court in Hong Kong
[to] make a recitation of the facts or the law
upon which the claim is based.
d) There is no necessity to furnish the defendant with a
copy of the Judgment or decision rendered
against him.
e) In an action based on a guarantee, there is no
established legal requirement or obligation
under Hong Kong laws that the creditor must
first bring proceedings against the principal
debtor. The creditor can immediately go against
the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned
by the law firm of the defendants counsel as an expert witness and to verify
the records of the Hong Kong case, he had been acting as counsel for the
defendant in a number of commercial matters; that there was an application
for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras
outside of Hong Kong, particularly in Manila or any other place in the
Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of service
of summons, otherwise the Hong Kong Court will refuse to render judgment
(p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment,
it can be presumed that there was service of summons; that in this case, it is
not just a presumption because there was an affidavit stating that service was
effected in [sic] a particular man here in Manila; that such affidavit was filed
 by one Jose R. Fernandez of the firm Sycip Salazar on the 21 st of December
1984, and stated in essence that on Friday, the 23rd of November 1984 he
served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that
address with Mr. Dionisio Lopez, the son-in-law of the 4th defendant the copy
of the writ and Mr. Lopez informed me and I barely believed that he would
bring the said writ to the attention of the 4th defendant (pp. 11-12, ibid.); that
upon filing of that affidavit, the Court was asked and granted judgment
against the 4th defendant; and that if the summons or claim is not contested,
the claimant of the plaintiff is not required to present proof of his claim or
complaint or present evidence under oath of the claim in order to obtain
judgment; and that such judgment can be enforced in the same manner as a
judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had
the burden to prove want of jurisdiction over his person. HERAS failed to discharge that
burden. He did not testify to state categorically and under oath that he never received
summons. Even his own witness Lousich admitted that HERAS was served with summons in
his Quezon City residence. As to De la Vegas testimony regarding non-service of summons,
the same was hearsay and had no probative value.
As to HERAS contention that the Hong Kong court judgment violated the Constitution and
the procedural laws of the Philippines because it contained no statements of the facts and
the law on which it was based, the trial court ruled that since the issue related to procedural
matters, the law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert
witness Lousich, such legalities were not required under Hong Kong laws. The trial court also
debunked HERAS contention that the principle of excussion under Article 2058 of the Civil
Code of the Philippines was violated. It declared that matters of substance are subject to the
law of the place where the transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given
effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of
the foreign judgment. It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to
the plaintiff the following sums or their equivalents in Philippine currency at
the time of payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December
28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorneys fees in the sum
of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs
and an increase in attorneys fees in the amount of US$19,346.45 with interest until full
payment of the said obligations. On the other hand, HERAS no longer opposed the motion
and instead appealed the decision to the Court of Appeals, which docketed the appeal as CA-
G.R. CV No. 29513.
In its order2 November 1990, the trial court granted ASIAVESTs motion for reconsideration by
increasing the award of attorneys fees to US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE
CURRENCY, AND TO PAY THE COSTS OF THIS SUIT, provided that ASIAVEST would pay the
corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior
payment of filing fees. However, it later withdrew its appeal and paid the additional filing
fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial
court and dismissing ASIAVESTs complaint without prejudice. It underscored the fact that a
foreign judgment does not of itself have any extraterritorial application. For it to be given
effect, the foreign tribunal should have acquired jurisdiction over the person and the subject
matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such
as those relating to service of summons upon the defendant are governed by the lex fori,
which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousichs
testimony that under the Hong Kong law, the substituted service of summons upon HERAS
effected in the Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would
be valid provided that it was done in accordance with Philippine laws. It then stressed that
where the action is in personam and the defendant is in the Philippines, the summons should
be personally served on the defendant pursuant to Section 7, Rule 14 of the Rules of
Court.4 Substituted service may only be availed of where the defendant cannot be promptly
served in person, the fact of impossibility of personal service should be explained in the
proof of service. It also found as persuasive HERAS argument that instead of directly using
the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by
the judge of the court issuing the summons, ASIAVEST should have asked for leave of the
local courts to have the foreign summons served by the sheriff or other court officer of the
place where service was to be made, or for special reasons by any person authorized by the
judge.
The Court of Appeals agreed with HERAS that notice sent outside the state to a non-resident
is unavailing to give jurisdiction in an action against him personally for money recovery.
Summons should have been personally served on HERAS in Hong Kong, for, as claimed by
ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was
not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme
Court did not acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the
claim of ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVESTs]
claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the
foregoing discussion, there is a need to deviate from the findings of the lower court in the
interest of justice and fair play. This, however, is without prejudice to whatever action
[ASIAVEST] might deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted, and that our courts are not
bound to give effect to foreign judgments which contravene our laws and the principle of
sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling
that
I.
IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE SUPPORTING THE
VALIDITY OF THE JUDGMENT;
II.
THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINE
LAW;
III.
SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG
KONG;
IV.
THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF
PHILIPPINE COURTS;
V.
THE FOREIGN JUDGMENT CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES
OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing
law at the time this case was decided by the trial court and respondent Court of Appeals, a
foreign judgment against a person rendered by a court having jurisdiction to pronounce the
judgment is presumptive evidence of a right as between the parties and their successors in
interest by the subsequent title. However, the judgment may be repelled by evidence of
want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of
proof to the contrary, a court, or judge acting as such, whether in the Philippines or
elsewhere, is presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on
grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the
party challenging the foreign judgment -- HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On
the other hand, ASIAVEST presented evidence to prove rendition, existence, and
authentication of the judgment by the proper officials. The judgment is thus presumed to be
valid and binding in the country from which it comes, until the contrary is
shown.6 Consequently, the first ground relied upon by ASIAVEST has merit. The presumption
of validity accorded foreign judgment would be rendered meaningless were the party
seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme
Court did not acquire jurisdiction over the person of HERAS. This involves the issue of
whether summons was properly and validly served on HERAS. It is settled that matters of
remedy and procedure such as those relating to the service of process upon the defendant
are governed by the lex fori or the law of the forum,7 i.e., the law of Hong Kong in this case.
HERAS insisted that according to his witness Mr. Lousich, who was presented as an expert on
Hong Kong laws, there was no valid service of summons on him.
In his counter-affidavit,8 which served as his direct testimony per agreement of the
parties,9 Lousich declared that the record of the Hong Kong case failed to show that a writ of
summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither
did the record show that a copy of the judgment of the court was served on HERAS. He
stated further that under Hong Kong laws (a) a writ of summons could be served by the
solicitor of the claimant or plaintiff; and (b) where the said writ or claim was not contested,
the claimant or plaintiff was not required to present proof under oath in order to obtain
judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court
authorized service of summons on HERAS outside of its jurisdiction, particularly in the
Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the
Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons
on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERASs
son-in-law Dionisio Lopez.10 On redirect examination, Lousich declared that such service of
summons would be valid under Hong Kong laws provided that it was in accordance with
Philippine laws.11cräläwvirtualibräry
We note that there was no objection on the part of ASIAVEST on the qualification of Mr.
Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New
Rules of Evidence, the record of public documents of a sovereign authority, tribunal, official
body, or public officer may be proved by (1) an official publication thereof or (2) a copy
attested by the officer having the legal custody thereof, which must be accompanied, if the
record is not kept in the Philippines, with a certificate that such officer has the custody. The
certificate may be issued by a secretary of the embassy or legation, consul general, consul,
vice consul, or consular agent, or any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of
his office. The attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under the official seal of
the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An
authority12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v.
Muzzal,13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does
not exclude the presentation of other competent evidence to prove the existence of a
foreign law. In that case, the Supreme Court considered the testimony under oath of an
attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil
Code and who stated that the same was in force at the time the obligations were contracted,
as sufficient evidence to establish the existence of said law. Accordingly, in line with this
view, the Supreme Court in the Collector of Internal Revenue v. Fisher et al.,14 upheld the Tax
Court in considering the pertinent law of California as proved by the respondents witness. In
that case, the counsel for respondent testified that as an active member of the California Bar
since 1951, he is familiar with the revenue and taxation laws of the State of California. When
asked by the lower court to state the pertinent California law as regards exemption of
intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the
California Internal and Revenue Code as published in Derrings California Code, a publication
of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited
section was offered in evidence by respondents. Likewise, in several naturalization cases, it
was held by the Court that evidence of the law of a foreign country on reciprocity regarding
the acquisition of citizenship, although not meeting the prescribed rule of practice, may be
allowed and used as basis for favorable action, if, in the light of all the circumstances, the
Court is satisfied of the authenticity of the written proof offered.15 Thus, in a number of
decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate
General of Manila was held to be competent proof of that law.16cräläwvirtualibräry
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law
of Hong Kong in respect of service of summons either in actions in rem or in personam, and
where the defendant is either a resident or nonresident of Hong Kong. In view of the
absence of proof of the Hong Kong law on this particular issue, the presumption of identity
or similarity or the so-called processual presumption shall come into play. It will thus be
presumed that the Hong Kong law on the matter is similar to the Philippine
law.17cräläwvirtualibräry
As stated in Valmonte vs. Court of Appeals,18 it will be helpful to determine first whether the
action is in personam, in rem, or quasi in rem because the rules on service of summons under
Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person. 19 An
action quasi in rem is one wherein an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation or lien burdening the
property.20cräläwvirtualibräry
In an action in personam, jurisdiction over the person of the defendant is necessary for the
court to validly try and decide the case. Jurisdiction over the person of a resident defendant
who does not voluntarily appear in court can be acquired by personal service of summons as
provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served
with summons within a reasonable time, substituted service may be made in accordance
with Section 8 of said Rule. If he is temporarily out of the country, any of the following
modes of service may be resorted to: (1) substituted service set forth in Section 8; 21 (2)
personal service outside the country, with leave of court; (3) service by publication, also with
leave of court;22 or (4) any other manner the court may deem sufficient. 23cräläwvirtualibräry
However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons within
the state is essential to the acquisition of jurisdiction over her person. 24 This method of
service is possible if such defendant is physically present in the country. If he is not found
therein, the court cannot acquire jurisdiction over his person and therefore cannot validly try
and decide the case against him.25 An exception was laid down in Gemperle v.
Schenker26 wherein a non-resident was served with summons through his wife, who was a
resident of the Philippines and who was his representative and attorney-in-fact in a prior civil
case filed by him; moreover, the second case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Nonetheless, summons must be served upon the
defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying
the due process requirements.27 Thus, where the defendant is a non-resident who is not
found in the Philippines and (1) the action affects the personal status of the plaintiff; (2) the
action relates to, or the subject matter of which is property in the Philippines in which the
defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant
from any interest in the property located in the Philippines; or (4) the property of the
defendant has been attached in the Philippines -- service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of
court; or (c) any other manner the court may deem sufficient. 28cräläwvirtualibräry
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was
based on his personal guarantee of the obligation of the principal debtor. Before we can
apply the foregoing rules, we must determine first whether HERAS was a resident of Hong
Kong.
Fortunata de la Vega, HERASs personal secretary in Hong Kong since 1972 until
1985,29 testified that HERAS was the President and part owner of a shipping company in
Hong Kong during all those times that she served as his secretary. He had in his employ a
staff of twelve.30 He had business commitments, undertakings, conferences, and
appointments until October 1984 when [he] left Hong Kong for good. 31 HERASs other
witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS for a
number of commercial matters.32 ASIAVEST then infers that HERAS was a resident of Hong
Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss,33 as well as in his Answer34 to ASIAVESTs
complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the fundamental rule is that
jurisdiction in personam over non-resident defendants, so as to sustain a money judgment,
must be based upon personal service of summons within the state which renders the
judgment.35cräläwvirtualibräry
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: The question
of Hong Kong courts want of jurisdiction is therefore a triable issue if it is to be pleaded by
the defendant to repel the foreign judgment. Facts showing jurisdictional lack (e.g. that the
Hong Kong suit was in personam, that defendant was not a resident of Hong Kong when the
suit was filed or that he did not voluntarily submit to the Hong Kong courts jurisdiction)
should be alleged and proved by the defendant.37chanroblesvirtuallawlibrary
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of
jurisdiction over his person was corroborated by ASIAVESTs allegation in the complaint that
he has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines. He then
concluded that such judicial admission amounted to evidence that he was and is not a
resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts,
among which was that the residence of defendant, Antonio Heras, is New Manila, Quezon
City.39cräläwvirtualibräry
We note that the residence of HERAS insofar as the action for the enforcement of the Hong
Kong court judgment is concerned, was never in issue. He never challenged the service of
summons on him through a security guard in his Quezon City residence and through a lawyer
in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the
Philippine court over his person on the ground of invalid service of summons. What was in
issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude
that the stipulated fact that HERAS is a resident of New Manila, Quezon City, Philippines
refers to his residence at the time jurisdiction over his person was being sought by the Hong
Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was a
resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was,
indisputably, one in personam, summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer
on the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court
judgment cannot be given force and effect here in the Philippines for having been rendered
without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in
November 1984 when the extraterritorial service of summons was attempted to be made on
him. As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left
Hong Kong in October 1984 for good.40 His absence in Hong Kong must have been the reason
why summons was not served on him therein; thus, ASIAVEST was constrained to apply for
leave to effect service in the Philippines, and upon obtaining a favorable action on the
matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the
summons here in the Philippines.
In Brown v. Brown,41 the defendant was previously a resident of the Philippines. Several days
after a criminal action for concubinage was filed against him, he abandoned the Philippines.
Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was
served on the defendants attorney-in-fact at the latters address. The Court held that under
the facts of the case, it could not be said that the defendant was still a resident of the
Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the
Philippines. As such, he should have been summoned in the same manner as one who does
not reside and is not found in the Philippines.
Similarly, HERAS, who was also an absentee, should have been served with summons in the
same manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of
Court providing for extraterritorial service will not apply because the suit against him was in
personam. Neither can we apply Section 18, which allows extraterritorial service on a
resident defendant who is temporarily absent from the country, because even if HERAS be
considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong
not only temporarily but for good.
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this
case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.
EN BANC
G.R. No. L-1403 October 29, 1948
VICENTE CALUAG and JULIANA GARCIA Petitioners, vs. POTENCIANO PECSON and ANGEL H.
MOJICA, Judges of the Court of First Instance of Bulacan, and LEON ALEJO, Respondents.
Marcial G. Mendiola for petitioners.
Antonio Gonzalez for respondent L. Alejo.
The respondent Judge Pecson in his own behalf.
FERIA, J.: chanrobles virtual law library
This is a petition for certiorari and prohibition filed by the petitioners on the ground that the
respondent judge acted without or in excess of the jurisdiction of the court in rendering the
resolution dated April 1, 1947, which declares the petitioners guilty of contempt of court for
not complying or performing the order of the court of January 7, 1947, in case No. 5486 of
the Court of First Instance of Bulacan, requiring the petitioners to execute a deed of sale in
favor of plaintiff over one-half of the land pro indiviso in question, within ten days from the
receipt of copy of said resolution, and which orders that the petitioners be imprisoned until
they perform the said act.chanroblesvirtualawlibrary chanrobles virtual law library
The first ground on which the petition is based is that the judgment of the court which the
petitioners are ordered to perform has not yet become final. This ground is unfounded. From
the pleadings and annexes it appears that the judgment of the lower against the petitioners
was appealed to the Court of Appeals and was affirmed by the latter in its decision
promulgated on May 30, 1944; that the petition to appeal to the Supreme Court by certiorari
filed by the petitioners was denied on July 24, 1944; that a motion for reconsideration filed
by the petitioners was also denied on August 21, 1944; that the record of the case, having
been destroyed during the liberation, was reconstituted; that on September 24, 1945, the
Deputy Clerk of this Court wrote a letter to and notified the petitioners of the resolution of
the Court declaring said record reconstituted, together with the copies of the decision of the
Court of Appeals and resolutions of the Supreme Court during Japanese occupation of June
24 and August 21, 1944; and that on October 23, 1946, the clerk of Court of First Instance of
Bulacan notified the attorneys for both parties of the said decision of the Court of Appeals
and resolutions of the Supreme Court. There can be no question, therefore, that the
judgment of the Court of First Instance above-mentioned, as affirmed by the Court of
Appeals, has become final and executory.chanroblesvirtualawlibrary chanrobles virtual law
library
The other two grounds alleged by the petitioners in support of the present petition for
certiorari are: that plaintiff's action abated or was extinguished upon the death of the
plaintiff Fortunato Alejo, because his right of legal redemption was a personal one, and
therefore not transferable to his successors in interest; and that, even assuming that it is a
personal one and therefore transferable, his successors in interest have failed to secure the
substitution of said deceased by his legal representative under section 17, Rule 3. These
reasons or grounds do not deserve any serious consideration, not only because they are
without merits, but because the Court of First Instance of Bulacan, having jurisdiction to
render that judgment, the latter cannot be disobeyed however erroneous it may be
(Compañia General de Tabacos vs. Alhambra Cigar & Cigarette Mfg. Co., 33 Phil., 503;
Golding vs. Balatbat, 36 Phil., 941). And this Court cannot in this proceeding correct any error
which may have been committed by the lower court.chanroblesvirtualawlibrary chanrobles
virtual law library
However, although not alleged, we may properly take judicial notice of the fact that the
respondent Judges have acted without jurisdiction in proceeding against and declaring the
petitioners guilty of contempt of court.chanroblesvirtualawlibrary chanrobles virtual law
library
The contempt supposed to have been committed by the petitioners is not a direct contempt
under section 1, Rule 64, for it is not a misbehavior in the presence of or so near a court or
judge as to interrupt the administration of justice. It is an indirect contempt or disobedience
of a lawful order of the court, under section 3, Rule 64, of the Rules of Court. According to
sections 4 and 5 of said rule, where a contempt under section 3 has been committed against
a superior court or judge the charge may be filed with such superior court, and the accused
put under custody; but if the hearing is ordered to be had forthwith, the accused may be
released from custody upon filing a bond in an amount to be fixed by the court for his
appearance to answer the charge. From the record it appears that no charge for contempt
was filed against the petitioners nor was a trial held. The only proceeding had in this case
which led to the conviction of the defendants are: the order of January 7, 1947, issued by the
lower court requiring the defendants to execute the deed of conveyance as direct in the
judgment within ten days from the receipt of the copy of said order, with the admonition
that upon failure to do so said petitioners will be dealt with for contempt of court; the
motion of March 21, 1947, filed by the attorney for the respondent Leon Alejo, administrator
of the estate of Fortunato Alejo, that the petitioners be punished for contempt; and the
resolution of the court of April 1, 1947, denying the second motion for reconsideration of
March 17, 1947, of the order of January 7, 1947, filed by the petitioners, and ordering the
petitioners to be imprisoned in the provincial jail until they have complied with the order of
the court above mentioned.chanroblesvirtualawlibrary chanrobles virtual law library
It is well settled that jurisdiction of the subject matter of a particular case is something more
than the general power conferred by law upon a court to take cognizance of cases of the
general class to which the particular case belongs. It is not enough that a court has power in
abstract to try and decide the class of litigations to which a case belongs; it is necessary that
said power be properly invoked, or called into activity, by the filing of a petition, complaint or
other appropriate pleading. A Court of First Instance has an abstract jurisdiction or power to
try and decide criminal cases for homicide committed within its territorial jurisdiction; but it
has no power to try and decide a criminal case against a person for homicide committed
within its territory, unless a complaint or information against him be filed with the said court.
And it has also power to try civil cases involving title to real estate situated within its district;
but it has no jurisdiction to take cognizance of a dispute or controversy between two persons
over title of real property located in his province, unless a proper complaint be filed with its
court. So, although the Court of First Instance of Bulacan has power conferred by law to
punish as guilty of indirect contempt a party who disobeys its order or judgment, it did not
have or acquire jurisdiction of the particular case under consideration to declare the
petitioners guilty of indirect contempt, and order their confinement until they have executed
the deed of conveyance in question, because neither a charge has been filed against them
nor a hearing thereof held as required by law.chanroblesvirtualawlibrary chanrobles virtual
law library
The respondent Judge Angel Mojica acted not only without jurisdiction in proceeding against
and declaring the petitioners guilty of contempt, but also in excess of jurisdiction in ordering
the confinement of the petitioners, because it had no power to impose such punishment
upon the latter.chanroblesvirtualawlibrary chanrobles virtual law library
The respondent judge has no power under the law to order the confinement of the
petitioners until they have compiled with the order of the court. Section 9, Rule 39, in
connection with section 7 of Rule 64, provides that if a person is required by a judgment or
order of the court to perform any other act than the payment of money or sale or delivery of
real or personal property, and said person disobeys such judgment or order while it is yet in
his power to perform it, he may be punished for contempt and imprisoned until he performs
said order. This provision is applicable only to specific acts other than those provided for or
covered by section 10 of the same Rule, that is, it refers to a specific act which the party or
person must personally do, because his personal qualification and circumstances have been
taken into consideration in accordance with the provision of article 1161 of the Civil Code.
But if a judgment directs a party to execute a conveyance of land or to deliver deeds or other
documents or to perform any specific act which may be performed by some other person, or
in some other way provided by law with the same effect, as in the present case, section 10,
and not said section 9 of Rule 39 applies; and under the provision of said section 10, the
court may direct the act to be done at the cost of the disobedient party, by some other
person appointed or designated by the court, and the act when so done shall have like effect
as if done by the party himself.chanroblesvirtualawlibrary chanrobles virtual law library
It is also well settled by the authorities that a judgment may be void for want of power to
render the particular judgment, though the court may have had jurisdiction over the subject
matter and the parties. A wrong decision made within the limits of the court's authority is
erroneous and may be corrected on appeal or other direct review, but a wrong, or for that
matter a correct, decision is void, and may be set aside either directly or collaterally, where
the court exceeds its jurisdiction and power in rendering it. Hence though the court has
acquired jurisdiction over the subject matter and the particular case has been submitted
properly to it for hearing and decision, it will overstep its jurisdiction if it renders a judgment
which it has no power under the law to render. A sentence which imposes upon the
defendant in a criminal prosecution a penalty different from or in excess of the maximum
which the court is authorized by law to impose for the offense of which the defendant was
convicted, is void for want or excess of jurisdiction, as to the excess in the latter case. And a
judgment of imprisonment which the court has no constitutional or statutory power to
impose, as in the present case, may also be collaterally attacked for want or rather in excess
of jurisdiction.chanroblesvirtualawlibrary chanrobles virtual law library
In Cruz vs. Director of Prisons (17 Phil., 269, 272, 273), this Court said the following applicable
to punishment imposed for contempt of court:
. . . The courts uniformly hold that where a sentence imposes a punishment in excess of the
power of the court to impose, such sentence is void as to the excess, and some of the courts
hold that the sentence is void in toto; but the weight of authority sustains the proposition
that such a sentence is void only as to the excess imposed in case the parts are separable,
the rule being that the petitioner is not entitled to his discharge on a writ of habeas
corpus unless he has served out so much of the sentence as was valid. (Ex parte Erdmann, 88
Cal., 579; Lowrey vs. Hogue, 85 Cal., 600; Armstrong vs. People, 37 Ill., 459; State vs.
Brannon, 34 La Ann., 942; People vs. Liscomb, 19 Am. Rep., 211; In re Taylor, 7 S. D., 382, 45
L. R. A., 136; Ex parte Mooney, 26 W. Va., 36, 53 Am. Rep., 59; U. S. vs. Pridgeon, 153 U. S.,
48; In re Graham, 138 U. S., 461.)
In the present case, in view of the failure of the petitioners to execute the deed of
conveyance directed in the judgment of the court, the respondent may, under section 10,
Rule 39, either order its execution by some other person appointed or designated by the
court at the expense of the petitioners, or enter a judgment divesting the title of the
petitioner over the property in question and vesting it in Leon Alejo, administrator of estate
of the deceased Fortunato Alejo, and such judgment has the force and effect of a
conveyance executed in due form of law.chanroblesvirtualawlibrary chanrobles virtual law
library
In view of the foregoing, the order of the court of April 7, 1947, ordering the confinement of
the petitioners in the provincial jail until they have complied with the order of the court, is
set aside without costs. So ordered.
Moran, C.J., Pablo, Bengzon, Briones and Tuason, JJ., concur.
Paras, J., concurs in the result.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 47517 June 27, 1941
IDONAH SLADE PERKINS, petitioner,
vs.
MAMERTO ROXAS, ET AL., respondents.
Alva J. Hill for petitioner.
DeWitt, Perkins & Ponce Enrile for respondent Judge and respondent Perkins.
Ross, Lawrence, Selph & Carrascoso, Jr., for respondent Benguet Consolidated Mining Co.
LAUREL, J.:
On July 5, 1938, the respondent Eugene Arthur Perkins, filed a complaint in the Court of First
Instance of Manila against the Benguet Consolidated Mining Company for the recovery of
the sum of P71,379.90, consisting of dividends which have been declared and made payable
on 52,874 shares of stock registered in his name, payment of which was being withheld by
the company, and for the recognition of his right to the control and disposal of said shares,
to the exclusion of all others. To the complaint, the company filed its answer, alleging, by
way of defense, that the withholding of plaintiff's right to the disposal and control of the
shares was due to certain demands made with respect to said shares by the petitioner
herein. Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the
adverse claimants be made parties to the action and served with notice thereof by
publication, and that thereafter all such parties be required to interplead and settle the
rights among themselves.
On September 5, 1938, the trial court ordered the respondent, Eugene Arthur Perkins, to
include in his complaint as parties defendants petitioner, Idonah Slade Perkins, and George
H. Engelhard. The complaint was accordingly amended and in addition to the relief prayed
for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins
and George H. Engelhard be adjudged without interest in the shares of stock in question and
excluded from any claim they assert thereon. Thereafter, summons by publication were
served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard,
pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to
the amended complaint, and on January 8, 1940, petitioner's objection to the court's
jurisdiction over her person having been overruled by the trial court and by this court in G. R.
No. 46831, petitioner filed her answer with a cross-complaint in which she sets up a
judgment allegedly obtained by her against respondent, Eugene Arthur Perkins, from the
Supreme Court of the State of New York, wherein it is declared that she is the sole legal
owner and entitled to the possession and control of the shares of stock in question together
with all the cash dividends declared thereon by the Benguet Consolidated Mining Company,
and prays for various affirmative reliefs against the respondent. To the answer and cross-
complaint thus filed, the respondent, Eugene Arthur Perkins, filed a reply and an answer in
which he sets up several defenses to the enforcement in this jurisdiction of the judgment of
the Supreme Court of the State of New York above alluded to. Instead of demurring to the
reply on either of the two grounds specified in section 100 of the Code of Civil Procedure,
petitioner, Idonah Slade Perkins, on June 5, 1940, filed a demurrer thereto on the ground
that "the court has no jurisdiction of the subject of the action," because the alleged
judgment of the Supreme Court of the State of New York is res judicata.
Petitioner's demurrer having been overruled, she now filed in this court a petition entitled
"Certiorari, Prohibition and Mandamus," alleging that "the respondent judge is about to and
will render judgment in the above-mentioned case disregarding the constitutional rights of
this petitioner; contrary to and annulling the final, subsisting, valid judgment rendered and
entered in this petitioner's favor by the courts of the State of New York, ... which decision
is res judicata on all the questions constituting the subject matter of civil case No. 53317, of
the Court of First Instance of Manila; and which New York judgment the Court of First
Instance of Manila is without jurisdiction to annul, amend, reverse, or modify in any respect
whatsoever"; and praying that the order of the respondent judge overruling the demurrer be
annulled, and that he and his successors be permanently prohibited from taking any action
on the case, except to dismiss the same.
The only question here to be determined, therefore, is whether or not, in view of the alleged
judgment entered in favor of the petitioner by the Supreme Court of New York, and which is
claimed by her to be res judicata on all questions raised by the respondent, Eugene Arthur
Perkins, in civil case No. 53317 of the Court of First Instace of Manila, the local court has
jurisdiction over the subject matter of the action in the said case. By jurisdiction over the
subject matter is meant the nature of the cause of action and of the relief sought, and this is
conferred by the sovereign authority which organizes the court, and is to be sought for in
general nature of its powers, or in authority specially conferred. In the present case, the
amended complaint filed by the respondent, Eugene Arthur Perkins, in the court below
alleged the ownership in himself of the conjugal partnership between him and his wife,
Idonah Slade Perkins; that the petitioner, Idonah Slade Perkins, and George H. Engelhard
assert claims to and interests in the said stock adverse to Eugene Arthur Perkins; that such
claims are invalid, unfounded, and made only for the purpose of vexing, hindering and
delaying Eugene Arthur Perkins in the exercise of the lawful control over and use of said
shares and dividends accorded to him and by law and by previous orders and decrees of this
court; and the said amended complaint prays, inter alia, "that defendant Benguet
Consolidated Mining Company be required and ordered to recognize the right of the plaintiff
to the control and disposal of said shares so standing in his name to the exclusion of all
others; that the additional defendants, Idonah Slade Perkins and George H. Engelhard, be
each held to have no interest or claim in the subject matter of the controversy between
plaintiff and defendant Benguet Consolidated Mining Company, or in or under the judgment
to be rendered herein and that by said judgment they, and each of them be excluded
therefrom; and that the plaintiff be awarded the costs of this suit and general relief." The
respondent's action, therefore, calls for the adjudication of title to certain shares of stock of
the Benguet Consolidated Mining Company, and the granting of affirmative reliefs, which fall
within the general jurisdiction of the Court of First Instance of Manila. (Vide: sec. 146, et seq.,
Adm. Code, as amended by Commonwealth Act No. 145; sec. 56, Act No. 136, as amended by
Act No. 400.)
Similarly, the Court of First Instance of Manila is empowered to adjudicate the several
demands contained in petitioner's cross-complaint. The cross-complaint sets up a judgment
allegedly recovered by Idonah Slade Perkins against Eugene Arthur Perkins in the Supreme
Court of New York and by way of relief prays:
(1) Judgment against the plaintiff Eugene Arthur Perkins in the sum of one
hundred eighty-five thousand and four hundred dollars ($185,400), representing
cash dividends paid to him by defendant Benguet Consolidated Mining Co. from
February, 1930, up to and including the dividend of March 30, 1937.
(2) That plaintiff Eugene Arthur Perkins be required to deliver to this defendant
the certificates representing the 48,000 shares of capital stock of Benguet
Consolidated Mining Co. issued as a stock dividend on the 24,000 shares owned
by this defendant as described in the judgment Exhibit 1-A.
(3) That this defendant recover under that judgment Exhibit 1-A interest upon
the amount of each cash dividend referred to in that judgment received by
plaintiff Eugene Arthur Perkins from February, 1930, to and including the
dividend of March 30, 1937, from the date of payment of each of such dividends
at the rate of 7 per cent per annum until paid.
(4) That this defendant recover of plaintiff her costs and disbursements in that
New York action amounting to the sum of one thousand five hundred eighty-
four and 20/00 dollars ($1,584.20), and the further sum of two thousand dollars
($2,000) granted her in that judgment Exhibit 1-A as an extra allowance,
together with interest.
(5) For an order directing an execution to be issued in favor of this defendant
and against the plaintiff for amounts sufficient to satisfy the New York judgment
Exhibit 1-A in its entirety, and against the plaintiff and the defendant Benguet
Consolidated Mining Co. for such other amounts prayed for herein as this court
may find to be due and payable by each of them; and ordering them to comply
with all other orders which this court may issue in favor of the defendant in this
case.
(6) For the costs of this action, and
(7) For such other relief as may be appropriate and proper in the premises.
In other words, Idonah Slade Perkins in her cross-complaint brought suit against Eugene
Arthur Perkins and the Benguet Consolidated Mining Company upon the alleged judgment of
the Supreme Court of the State of New York and asked the court below to render judgment
enforcing that New York judgment, and to issue execution thereon. This is a form of action
recognized by section 309 of the Code of Civil Procedure (now section 47, Rule 39, Rules of
Court) and which falls within the general jurisdiction of the Court of First Instance of Manila,
to adjudicate, settled and determine.
The petitioner expresses the fear that the respondent judge may render judgment "annulling
the final, subsisting, valid judgment rendered and entered in this petitioner's favor by the
courts of the State of New York, ... which decision is res judicata on all the questions
constituting the subject matter of civil case No. 53317," and argues on the assumption that
the respondent judge is without jurisdiction to take cognizance of the cause. Whether or not
the respondent judge in the course of the proceedings will give validity and efficacy to the
New York judgment set up by the petitioner in her cross-complaint is a question that goes to
the merits of the controversy and relates to the rights of the parties as between each other,
and not to the jurisdiction or power of the court. The test of jurisdiction is whether or not
the tribunal has power to enter upon the inquiry, not whether its conclusion in the course of
it is right or wrong. If its decision is erroneous, its judgment case be reversed on appeal; but
its determination of the question, which the petitioner here anticipates and seeks to
prevent, is the exercise by that court — and the rightful exercise — of its jurisdiction.
The petition is, therefore, hereby denied, with costs against the petitioner. So ordered.
Avanceña, C.J., Diaz, Moran and Horrilleno, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171092 March 15, 2010
EDNA DIAGO LHUILLIER, Petitioner,
vs.
BRITISH AIRWAYS, Respondent.
DECISION
DEL CASTILLO, J.:
Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a
power introduced for the public good, on account of the necessity of dispensing justice.1
Factual Antecedents
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged
that on February 28, 2005, she took respondent’s flight 548 from London, United Kingdom to
Rome, Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the
respondent’s flight attendants, to assist her in placing her hand-carried luggage in the
overhead bin. However, Halliday allegedly refused to help and assist her, and even
sarcastically remarked that "If I were to help all 300 passengers in this flight, I would have a
broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another
flight attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers
in the business class section to lecture on plane safety. Allegedly, Kerrigan made her appear
to the other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the
safety rules and regulations of the plane. Affronted, petitioner assured Kerrigan that she
knew the plane’s safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly
thrust his face a mere few centimeters away from that of the petitioner and menacingly told
her that "We don’t like your attitude."
Upon arrival in Rome, petitioner complained to respondent’s ground manager and
demanded an apology. However, the latter declared that the flight stewards were "only
doing their job."
Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay
₱5 million as moral damages, ₱2 million as nominal damages, ₱1 million as exemplary
damages, ₱300,000.00 as attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the
suit.
On May 16, 2005, summons, together with a copy of the complaint, was served on the
respondent through Violeta Echevarria, General Manager of Euro-Philippine Airline Services,
Inc.3
On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion
to Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of London, United Kingdom or Rome,
Italy, have jurisdiction over the complaint for damages pursuant to the Warsaw
Convention,5 Article 28(1) of which provides:
An action for damages must be brought at the option of the plaintiff, either before the court
of domicile of the carrier or his principal place of business, or where he has a place of
business through which the contract has been made, or before the court of the place of
destination.
Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business
is in London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in
Rome);6 and d) Rome, Italy is petitioner’s place of destination, then it follows that the
complaint should only be filed in the proper courts of London, United Kingdom or Rome,
Italy.
Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the
person of the respondent because the summons was erroneously served on Euro-Philippine
Airline Services, Inc. which is not its resident agent in the Philippines.
On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for
respondent to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed
on June 27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint
and Issuance of Alias Summons.8 Petitioner alleged that upon verification with the Securities
and Exchange Commission, she found out that the resident agent of respondent in the
Philippines is Alonzo Q. Ancheta. Subsequently, on September 9, 2005, petitioner filed a
Motion to Resolve Pending Incident and Opposition to Motion to Dismiss. 9
Ruling of the Regional Trial Court
On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order 10 granting
respondent’s Motion to Dismiss. It ruled that:
The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our
Courts have to apply the principles of international law, and are bound by treaty stipulations
entered into by the Philippines which form part of the law of the land. One of this is the
Warsaw Convention. Being a signatory thereto, the Philippines adheres to its stipulations and
is bound by its provisions including the place where actions involving damages to plaintiff is
to be instituted, as provided for under Article 28(1) thereof. The Court finds no justifiable
reason to deviate from the indicated limitations as it will only run counter to the provisions
of the Warsaw Convention. Said adherence is in consonance with the comity of nations and
deviation from it can only be effected through proper denunciation as enunciated in the
Santos case (ibid). Since the Philippines is not the place of domicile of the defendant nor is it
the principal place of business, our courts are thus divested of jurisdiction over cases for
damages. Neither was plaintiff’s ticket issued in this country nor was her destination Manila
but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction
does not constitute constructive denial of plaintiff’s right to have access to our courts since
the Warsaw Convention itself provided for jurisdiction over cases arising from international
transportation. Said treaty stipulations must be complied with in good faith following the
time honored principle of pacta sunt servanda.
The resolution of the propriety of service of summons is rendered moot by the Court’s want
of jurisdiction over the instant case.
WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and
this case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an Order 11 dated
January 4, 2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari on pure
questions of law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT
COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A
FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN COUNTRY;
AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.
II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO
DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE AND
OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF TO
THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY LAWYER
ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.
Petitioner’s Arguments
Petitioner argues that her cause of action arose not from the contract of carriage, but from
the tortious conduct committed by airline personnel of respondent in violation of the
provisions of the Civil Code on Human Relations. Since her cause of action was not
predicated on the contract of carriage, petitioner asserts that she has the option to pursue
this case in this jurisdiction pursuant to Philippine laws.
Respondent’s Arguments
In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of
Article 28(1) of the Warsaw Convention. As such, the same can only be filed before the
courts of London, United Kingdom or Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this country.
In Santos III v. Northwest Orient Airlines,12 we held that:
The Republic of the Philippines is a party to the Convention for the Unification of Certain
Rules Relating to International Transportation by Air, otherwise known as the Warsaw
Convention. It took effect on February 13, 1933. The Convention was concurred in by the
Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of
accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited
with the Polish government on November 9, 1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued
Proclamation No. 201, declaring our formal adherence thereto, "to the end that the same
and every article and clause thereof may be observed and fulfilled in good faith by the
Republic of the Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.13
The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the
Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or
goods performed by aircraft for reward. It applies equally to gratuitous carriage
by aircraft performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage"
means any carriage in which, according to the contract made by the parties, the
place of departure and the place of destination, whether or not there be a break
in the carriage or a transhipment, are situated either within the territories of
two High Contracting Parties, or within the territory of a single High Contracting
Party, if there is an agreed stopping place within a territory subject to the
sovereignty, suzerainty, mandate or authority of another Power, even though
that Power is not a party to this Convention. A carriage without such an agreed
stopping place between territories subject to the sovereignty, suzerainty,
mandate or authority of the same High Contracting Party is not deemed to be
international for the purposes of this Convention. (Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are
situated within the territories of two High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred to herein were the signatories
to the Warsaw Convention and those which subsequently adhered to it. 14
In the case at bench, petitioner’s place of departure was London, United Kingdom while her
place of destination was Rome, Italy. 15 Both the United Kingdom16 and Italy17 signed and
ratified the Warsaw Convention. As such, the transport of the petitioner is deemed to be an
"international carriage" within the contemplation of the Warsaw Convention.
Since the Warsaw Convention applies in the instant case, then the jurisdiction over the
subject matter of the action is governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for
damages before –
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has
been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in London,
United Kingdom with London as its principal place of business. Hence, under the first and
second jurisdictional rules, the petitioner may bring her case before the courts of London in
the United Kingdom. In the passenger ticket and baggage check presented by both the
petitioner and respondent, it appears that the ticket was issued in Rome, Italy. Consequently,
under the third jurisdictional rule, the petitioner has the option to bring her case before the
courts of Rome in Italy. Finally, both the petitioner and respondent aver that the place of
destination is Rome, Italy, which is properly designated given the routing presented in the
said passenger ticket and baggage check. Accordingly, petitioner may bring her action before
the courts of Rome, Italy. We thus find that the RTC of Makati correctly ruled that it does not
have jurisdiction over the case filed by the petitioner.
Santos III v. Northwest Orient Airlines18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines 19 cited by the trial court is
inapplicable to the present controversy since the facts thereof are not similar with the
instant case.
We are not persuaded.
In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines,
purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between
San Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the
Tokyo to Manila segment of his ticket, despite his prior reservation. Contending that
Northwest Orient Airlines acted in bad faith and discriminated against him when it canceled
his confirmed reservation and gave his seat to someone who had no better right to it,
Augusto Santos III sued the carrier for damages before the RTC. Northwest Orient Airlines
moved to dismiss the complaint on ground of lack of jurisdiction citing Article 28(1) of the
Warsaw Convention. The trial court granted the motion which ruling was affirmed by the
Court of Appeals. When the case was brought before us, we denied the petition holding that
under Article 28(1) of the Warsaw Convention, Augusto Santos III must prosecute his claim in
the United States, that place being the (1) domicile of the Northwest Orient Airlines; (2)
principal office of the carrier; (3) place where contract had been made (San Francisco); and
(4) place of destination (San Francisco). 21
We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character.
Thus:
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction
and not a venue provision. First, the wording of Article 32, which indicates the places where
the action for damages "must" be brought, underscores the mandatory nature of Article
28(1). Second, this characterization is consistent with one of the objectives of the
Convention, which is to "regulate in a uniform manner the conditions of international
transportation by air." Third, the Convention does not contain any provision prescribing rules
of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction"
used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32
specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as
such, cannot be left to the will of the parties regardless of the time when the damage
occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes
on a dual concept. Jurisdiction in the international sense must be established in accordance
with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular
court must be established pursuant to the applicable domestic law. Only after the question
of which court has jurisdiction is determined will the issue of venue be taken up. This second
question shall be governed by the law of the court to which the case is submitted. 22
Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines23 is analogous
to the instant case because (1) the domicile of respondent is London, United Kingdom; 24 (2)
the principal office of respondent airline is likewise in London, United Kingdom; 25 (3) the
ticket was purchased in Rome, Italy;26 and (4) the place of destination is Rome, Italy. 27 In
addition, petitioner based her complaint on Article 2176 28 of the Civil Code on quasi-
delict and Articles 1929 and 2130 of the Civil Code on Human Relations. In Santos III v.
Northwest Orient Airlines,31 Augusto Santos III similarly posited that Article 28 (1) of the
Warsaw Convention did not apply if the action is based on tort. Hence, contrary to the
contention of the petitioner, the factual setting of Santos III v. Northwest Orient
Airlines32 and the instant case are parallel on the material points.
Tortious conduct as ground for the petitioner’s complaint is within the purview of the
Warsaw Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines, 33 the cause of action was
based on a breach of contract while her cause of action arose from the tortious conduct of
the airline personnel and violation of the Civil Code provisions on Human Relations. 34 In
addition, she claims that our pronouncement in Santos III v. Northwest Orient Airlines 35 that
"the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from
the comprehension of the Warsaw Convention," is more of an obiter dictum rather than the
ratio decidendi.36 She maintains that the fact that said acts occurred aboard a plane is merely
incidental, if not irrelevant.37
We disagree with the position taken by the petitioner. Black defines obiter dictum as "an
opinion entirely unnecessary for the decision of the case" and thus "are not binding as
precedent."38 In Santos III v. Northwest Orient Airlines,39 Augusto Santos III categorically put
in issue the applicability of Article 28(1) of the Warsaw Convention if the action is based on
tort.
In the said case, we held that the allegation of willful misconduct resulting in a tort is
insufficient to exclude the case from the realm of the Warsaw Convention. In fact, our ruling
that a cause of action based on tort did not bring the case outside the sphere of the Warsaw
Convention was our ratio decidendi in disposing of the specific issue presented by Augusto
Santos III. Clearly, the contention of the herein petitioner that the said ruling is an obiter
dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines, 40 where the passenger
filed an action against the airline arising from an incident involving the former and the
airline’s flight attendant during an international flight resulting to a heated exchange which
included insults and profanity. The United States Court of Appeals (9th Circuit) held that the
"passenger's action against the airline carrier arising from alleged confrontational incident
between passenger and flight attendant on international flight was governed exclusively by
the Warsaw Convention, even though the incident allegedly involved intentional misconduct
by the flight attendant."41
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline
in the state court, arising from a confrontation with the flight attendant during an
international flight to Mexico. The United States Court of Appeals (9th Circuit) held that the
"Warsaw Convention governs actions arising from international air travel and provides the
exclusive remedy for conduct which falls within its provisions." It further held that the said
Convention "created no exception for an injury suffered as a result of intentional
conduct" 43 which in that case involved a claim for intentional infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline passenger
during the course of the international carriage do not bring the case outside the ambit of the
Warsaw Convention.
Respondent, in seeking remedies from the trial court through special appearance of counsel,
is not deemed to have voluntarily submitted itself to the jurisdiction of the trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the
trial court when the latter stated in its Comment/Opposition to the Motion for
Reconsideration that "Defendant [is at a loss] x x x how the plaintiff arrived at her erroneous
impression that it is/was Euro-Philippines Airlines Services, Inc. that has been making a
special appearance since x x x British Airways x x x has been clearly specifying in all the
pleadings that it has filed with this Honorable Court that it is the one making a special
appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court
of Appeals45 where we held that even if a party "challenges the jurisdiction of the court over
his person, as by reason of absence or defective service of summons, and he also invokes
other grounds for the dismissal of the action under Rule 16, he is not deemed to be in
estoppel or to have waived his objection to the jurisdiction over his person."46
This issue has been squarely passed upon in the recent case of Garcia v.
Sandiganbayan,47 where we reiterated our ruling in La Naval Drug Corporation v. Court of
Appeals48 and elucidated thus:
Special Appearance to Question a Court’s Jurisdiction Is Not
Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly
provides:
Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance.
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over
his person, together with other grounds raised therein, is not deemed to have appeared
voluntarily before the court. What the rule on voluntary appearance – the first sentence of
the above-quoted rule – means is that the voluntary appearance of the defendant in court is
without qualification, in which case he is deemed to have waived his defense of lack of
jurisdiction over his person due to improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that
she voluntarily appeared without qualification. Petitioner filed the following pleadings in
Forfeiture I: (a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c)
second motion for reconsideration; (d) motion to consolidate forfeiture case with plunder
case; and (e) motion to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion
to dismiss and/or to quash Forfeiture II; and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely
for special appearance with the purpose of challenging the jurisdiction of the SB over her
person and that of her three children. Petitioner asserts therein that SB did not acquire
jurisdiction over her person and of her three children for lack of valid service of summons
through improvident substituted service of summons in both Forfeiture I and Forfeiture II.
This stance the petitioner never abandoned when she filed her motions for reconsideration,
even with a prayer to admit their attached Answer Ex Abundante Ad Cautelam dated January
22, 2005 setting forth affirmative defenses with a claim for damages. And the other
subsequent pleadings, likewise, did not abandon her stance and defense of lack of
jurisdiction due to improper substituted services of summons in the forfeiture cases.
Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure,
petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent
to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case.
Said case elucidates the current view in our jurisdiction that a special appearance before the
court––challenging its jurisdiction over the person through a motion to dismiss even if the
movant invokes other grounds––is not tantamount to estoppel or a waiver by the movant of
his objection to jurisdiction over his person; and such is not constitutive of a voluntary
submission to the jurisdiction of the court.1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the
SB to cure the defective substituted services of summons. They are, therefore, not estopped
from questioning the jurisdiction of the SB over their persons nor are they deemed to have
waived such defense of lack of jurisdiction. Consequently, there being no valid substituted
services of summons made, the SB did not acquire jurisdiction over the persons of petitioner
and her children. And perforce, the proceedings in the subject forfeiture cases, insofar as
petitioner and her three children are concerned, are null and void for lack of jurisdiction.
(Emphasis supplied)
In this case, the special appearance of the counsel of respondent in filing the Motion to
Dismiss and other pleadings before the trial court cannot be deemed to be voluntary
submission to the jurisdiction of the said trial court. We hence disagree with the contention
of the petitioner and rule that there was no voluntary appearance before the trial court that
could constitute estoppel or a waiver of respondent’s objection to jurisdiction over its
person.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court
of Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 143581 January 7, 2008
KOREA TECHNOLOGIES CO., LTD., petitioner,
vs.
HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial
Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING
CORPORATION, respondents.
DECISION
VELASCO, JR., J.:
In our jurisdiction, the policy is to favor alternative methods of resolving disputes,
particularly in civil and commercial disputes. Arbitration along with mediation, conciliation,
and negotiation, being inexpensive, speedy and less hostile methods have long been favored
by this Court. The petition before us puts at issue an arbitration clause in a contract mutually
agreed upon by the parties stipulating that they would submit themselves to arbitration in a
foreign country. Regrettably, instead of hastening the resolution of their dispute, the parties
wittingly or unwittingly prolonged the controversy.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in
the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants,
while private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic
corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract 1 whereby KOGIES would set up
an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the
Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for Contract No.
KLP-970301 dated March 5, 19972 amending the terms of payment. The contract and its
amendment stipulated that KOGIES will ship the machinery and facilities necessary for
manufacturing LPG cylinders for which PGSMC would pay USD 1,224,000. KOGIES would
install and initiate the operation of the plant for which PGSMC bound itself to pay USD
306,000 upon the plant’s production of the 11-kg. LPG cylinder samples. Thus, the total
contract price amounted to USD 1,530,000.
On October 14, 1997, PGSMC entered into a Contract of Lease 3 with Worth Properties, Inc.
(Worth) for use of Worth’s 5,079-square meter property with a 4,032-square meter
warehouse building to house the LPG manufacturing plant. The monthly rental was PhP
322,560 commencing on January 1, 1998 with a 10% annual increment clause. Subsequently,
the machineries, equipment, and facilities for the manufacture of LPG cylinders were
shipped, delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate4 executed by the parties on January 22, 1998, after
the installation of the plant, the initial operation could not be conducted as PGSMC
encountered financial difficulties affecting the supply of materials, thus forcing the parties to
agree that KOGIES would be deemed to have completely complied with the terms and
conditions of the March 5, 1997 contract.
For the remaining balance of USD306,000 for the installation and initial operation of the
plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated January 30,
1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000.5
When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT
STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter 6 to PGSMC threatening
criminal action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same
date, the wife of PGSMC’s President faxed a letter dated May 7, 1998 to KOGIES’ President
who was then staying at a Makati City hotel. She complained that not only did KOGIES deliver
a different brand of hydraulic press from that agreed upon but it had not delivered several
equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but
the payments were stopped for reasons previously made known to KOGIES. 7
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated
March 5, 1997 on the ground that KOGIES had altered the quantity and lowered the quality
of the machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle
and transfer the machineries, equipment, and facilities installed in the Carmona plant. Five
days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint
for Estafa docketed as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not
unilaterally rescind their contract nor dismantle and transfer the machineries and equipment
on mere imagined violations by KOGIES. It also insisted that their disputes should be settled
by arbitration as agreed upon in Article 15, the arbitration clause of their contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998
letter threatening that the machineries, equipment, and facilities installed in the plant would
be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an
Application for Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul,
Korea pursuant to Art. 15 of the Contract as amended.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case
No. 98-1178 against PGSMC before the Muntinlupa City Regional Trial Court (RTC). The RTC
granted a temporary restraining order (TRO) on July 4, 1998, which was subsequently
extended until July 22, 1998. In its complaint, KOGIES alleged that PGSMC had initially
admitted that the checks that were stopped were not funded but later on claimed that it
stopped payment of the checks for the reason that "their value was not received" as the
former allegedly breached their contract by "altering the quantity and lowering the quality of
the machinery and equipment" installed in the plant and failed to make the plant operational
although it earlier certified to the contrary as shown in a January 22, 1998 Certificate.
Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as amended, by
unilaterally rescinding the contract without resorting to arbitration. KOGIES also asked that
PGSMC be restrained from dismantling and transferring the machinery and equipment
installed in the plant which the latter threatened to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled
to the TRO since Art. 15, the arbitration clause, was null and void for being against public
policy as it ousts the local courts of jurisdiction over the instant controversy.
On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim 9 asserting that it
had the full right to dismantle and transfer the machineries and equipment because it had
paid for them in full as stipulated in the contract; that KOGIES was not entitled to the PhP
9,000,000 covered by the checks for failing to completely install and make the plant
operational; and that KOGIES was liable for damages amounting to PhP 4,500,000 for altering
the quantity and lowering the quality of the machineries and equipment. Moreover, PGSMC
averred that it has already paid PhP 2,257,920 in rent (covering January to July 1998) to
Worth and it was not willing to further shoulder the cost of renting the premises of the plant
considering that the LPG cylinder manufacturing plant never became operational.
After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order
denying the application for a writ of preliminary injunction, reasoning that PGSMC had paid
KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the contract
such that KOGIES no longer had proprietary rights over them. And finally, the RTC held that
Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or any
other court jurisdiction over any dispute that may arise between the parties. KOGIES’ prayer
for an injunctive writ was denied.10 The dispositive portion of the Order stated:
WHEREFORE, in view of the foregoing consideration, this Court believes and so
holds that no cogent reason exists for this Court to grant the writ of preliminary
injunction to restrain and refrain defendant from dismantling the machineries
and facilities at the lot and building of Worth Properties, Incorporated at
Carmona, Cavite and transfer the same to another site: and therefore denies
plaintiff’s application for a writ of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim. 11 KOGIES
denied it had altered the quantity and lowered the quality of the machinery, equipment, and
facilities it delivered to the plant. It claimed that it had performed all the undertakings under
the contract and had already produced certified samples of LPG cylinders. It averred that
whatever was unfinished was PGSMC’s fault since it failed to procure raw materials due to
lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v. Court of
Appeals,12 insisted that the arbitration clause was without question valid.
After KOGIES filed a Supplemental Memorandum with Motion to Dismiss 13 answering
PGSMC’s memorandum of July 22, 1998 and seeking dismissal of PGSMC’s counterclaims,
KOGIES, on August 4, 1998, filed its Motion for Reconsideration 14 of the July 23, 1998 Order
denying its application for an injunctive writ claiming that the contract was not merely for
machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG manufacturing
plant" consisting of "supply of all the machinery and facilities" and "transfer of technology"
for a total contract price of USD 1,530,000 such that the dismantling and transfer of the
machinery and facilities would result in the dismantling and transfer of the very plant itself to
the great prejudice of KOGIES as the still unpaid owner/seller of the plant. Moreover, KOGIES
points out that the arbitration clause under Art. 15 of the Contract as amended was a valid
arbitration stipulation under Art. 2044 of the Civil Code and as held by this Court in Chung Fu
Industries (Phils.), Inc.15
In the meantime, PGSMC filed a Motion for Inspection of Things 16 to determine whether
there was indeed alteration of the quantity and lowering of quality of the machineries and
equipment, and whether these were properly installed. KOGIES opposed the motion positing
that the queries and issues raised in the motion for inspection fell under the coverage of the
arbitration clause in their contract.
On September 21, 1998, the trial court issued an Order (1) granting PGSMC’s motion for
inspection; (2) denying KOGIES’ motion for reconsideration of the July 23, 1998 RTC Order;
and (3) denying KOGIES’ motion to dismiss PGSMC’s compulsory counterclaims as these
counterclaims fell within the requisites of compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration 17 of the September
21, 1998 RTC Order granting inspection of the plant and denying dismissal of PGSMC’s
compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998
urgent motion for reconsideration, KOGIES filed before the Court of Appeals (CA) a petition
for certiorari18 docketed as CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998
and September 21, 1998 RTC Orders and praying for the issuance of writs of prohibition,
mandamus, and preliminary injunction to enjoin the RTC and PGSMC from inspecting,
dismantling, and transferring the machineries and equipment in the Carmona plant, and to
direct the RTC to enforce the specific agreement on arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES’ urgent motion for
reconsideration and directed the Branch Sheriff to proceed with the inspection of the
machineries and equipment in the plant on October 28, 1998. 19
Thereafter, KOGIES filed a Supplement to the Petition20 in CA-G.R. SP No. 49249 informing
the CA about the October 19, 1998 RTC Order. It also reiterated its prayer for the issuance of
the writs of prohibition, mandamus and preliminary injunction which was not acted upon by
the CA. KOGIES asserted that the Branch Sheriff did not have the technical expertise to
ascertain whether or not the machineries and equipment conformed to the specifications in
the contract and were properly installed.
On November 11, 1998, the Branch Sheriff filed his Sheriff’s Report 21 finding that the
enumerated machineries and equipment were not fully and properly installed.
The Court of Appeals affirmed the trial court and declared
the arbitration clause against public policy
On May 30, 2000, the CA rendered the assailed Decision22 affirming the RTC Orders and
dismissing the petition for certiorari filed by KOGIES. The CA found that the RTC did not
gravely abuse its discretion in issuing the assailed July 23, 1998 and September 21, 1998
Orders. Moreover, the CA reasoned that KOGIES’ contention that the total contract price for
USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the
finding of the RTC that PGSMC fully paid the price of USD 1,224,000, which was for all the
machineries and equipment. According to the CA, this determination by the RTC was a
factual finding beyond the ambit of a petition for certiorari.
On the issue of the validity of the arbitration clause, the CA agreed with the lower court that
an arbitration clause which provided for a final determination of the legal rights of the
parties to the contract by arbitration was against public policy.
On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum
shopping by PGSMC, the CA held that the counterclaims of PGSMC were compulsory ones
and payment of docket fees was not required since the Answer with counterclaim was not an
initiatory pleading. For the same reason, the CA said a certificate of non-forum shopping was
also not required.
Furthermore, the CA held that the petition for certiorari had been filed prematurely since
KOGIES did not wait for the resolution of its urgent motion for reconsideration of the
September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy available.
According to the CA, the RTC must be given the opportunity to correct any alleged error it
has committed, and that since the assailed orders were interlocutory, these cannot be the
subject of a petition for certiorari.
Hence, we have this Petition for Review on Certiorari under Rule 45.
The Issues
Petitioner posits that the appellate court committed the following errors:
a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND
FACILITIES AS "A QUESTION OF FACT" "BEYOND THE AMBIT OF A PETITION FOR
CERTIORARI" INTENDED ONLY FOR CORRECTION OF ERRORS OF JURISDICTION
OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF
JURISDICTION, AND CONCLUDING THAT THE TRIAL COURT’S FINDING ON THE
SAME QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW;
b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF
THE CONTRACT BETWEEN THE PARTIES FOR BEING "CONTRARY TO PUBLIC
POLICY" AND FOR OUSTING THE COURTS OF JURISDICTION;
c. DECREEING PRIVATE RESPONDENT’S COUNTERCLAIMS TO BE ALL
COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;
d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING
FOR THE RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE ORDER
DATED SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN
OPPORTUNITY TO CORRECT ITSELF;
e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998
NOT TO BE PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING
"INTERLOCUTORY IN NATURE;"
f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION
AND, INSTEAD, DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT MERIT."23
The Court’s Ruling
The petition is partly meritorious.
Before we delve into the substantive issues, we shall first tackle the procedural issues.
The rules on the payment of docket fees for counterclaims
and cross claims were amended effective August 16, 2004
KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket
fees and filed a certificate of non-forum shopping, and that its failure to do so was a fatal
defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with
Compulsory Counterclaim dated July 17, 1998 in accordance with Section 8 of Rule 11, 1997
Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with
Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states, "A compulsory
counterclaim or a cross-claim that a defending party has at the time he files his answer shall
be contained therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against
KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature.
We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by
A.M. No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or
cross-claims.
As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an
initiatory pleading which requires a certification against forum shopping under Sec. 524 of
Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a
quo did not commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s
compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz,25 the CA also pronounced that "certiorari and Prohibition are neither
the remedies to question the propriety of an interlocutory order of the trial court." 26 The CA
erred on its reliance on Gamboa. Gamboa involved the denial of a motion to acquit in a
criminal case which was not assailable in an action for certiorari since the denial of a motion
to quash required the accused to plead and to continue with the trial, and whatever
objections the accused had in his motion to quash can then be used as part of his defense
and subsequently can be raised as errors on his appeal if the judgment of the trial court is
adverse to him. The general rule is that interlocutory orders cannot be challenged by an
appeal.27 Thus, in Yamaoka v. Pescarich Manufacturing Corporation, we held:
The proper remedy in such cases is an ordinary appeal from an adverse
judgment on the merits, incorporating in said appeal the grounds for assailing
the interlocutory orders. Allowing appeals from interlocutory orders would
result in the ‘sorry spectacle’ of a case being subject of a
counterproductive ping-pong to and from the appellate court as often as a trial
court is perceived to have made an error in any of its interlocutory rulings.
However, where the assailed interlocutory order was issued with grave abuse of
discretion or patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief, the Court allows certiorari as a mode of
redress.28
Also, appeals from interlocutory orders would open the floodgates to endless occasions for
dilatory motions. Thus, where the interlocutory order was issued without or in excess of
jurisdiction or with grave abuse of discretion, the remedy is certiorari. 29
The alleged grave abuse of discretion of the respondent court equivalent to lack of
jurisdiction in the issuance of the two assailed orders coupled with the fact that there is no
plain, speedy, and adequate remedy in the ordinary course of law amply provides the basis
for allowing the resort to a petition for certiorari under Rule 65.
Prematurity of the petition before the CA
Neither do we think that KOGIES was guilty of forum shopping in filing the petition for
certiorari. Note that KOGIES’ motion for reconsideration of the July 23, 1998 RTC Order
which denied the issuance of the injunctive writ had already been denied. Thus, KOGIES’ only
remedy was to assail the RTC’s interlocutory order via a petition for certiorari under Rule 65.
While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998
RTC Order relating to the inspection of things, and the allowance of the compulsory
counterclaims has not yet been resolved, the circumstances in this case would allow an
exception to the rule that before certiorari may be availed of, the petitioner must have filed
a motion for reconsideration and said motion should have been first resolved by the court a
quo. The reason behind the rule is "to enable the lower court, in the first instance, to pass
upon and correct its mistakes without the intervention of the higher court." 30
The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant,
equipment, and facilities when he is not competent and knowledgeable on said matters is
evidently flawed and devoid of any legal support. Moreover, there is an urgent necessity to
resolve the issue on the dismantling of the facilities and any further delay would prejudice
the interests of KOGIES. Indeed, there is real and imminent threat of irreparable destruction
or substantial damage to KOGIES’ equipment and machineries. We find the resort to
certiorari based on the gravely abusive orders of the trial court sans the ruling on the
October 2, 1998 motion for reconsideration to be proper.
The Core Issue: Article 15 of the Contract
We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause.
It provides:
Article 15. Arbitration.—All disputes, controversies, or differences which may
arise between the parties, out of or in relation to or in connection with this
Contract or for the breach thereof, shall finally be settled by arbitration in Seoul,
Korea in accordance with the Commercial Arbitration Rules of the Korean
Commercial Arbitration Board. The award rendered by the arbitration(s) shall
be final and binding upon both parties concerned. (Emphasis supplied.)
Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and
void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of the place where the contract is made
governs. Lex loci contractus. The contract in this case was perfected here in the Philippines.
Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions the
validity of mutually agreed arbitral clause or the finality and binding effect of an arbitral
award. Art. 2044 provides, "Any stipulation that the arbitrators’ award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)
Arts. 2038,31 2039,32 and 204033 abovecited refer to instances where a compromise or an
arbitral award, as applied to Art. 2044 pursuant to Art. 2043,34 may be voided, rescinded, or
annulled, but these would not denigrate the finality of the arbitral award.
The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not
been shown to be contrary to any law, or against morals, good customs, public order, or
public policy. There has been no showing that the parties have not dealt with each other on
equal footing. We find no reason why the arbitration clause should not be respected and
complied with by both parties. In Gonzales v. Climax Mining Ltd.,35 we held that submission
to arbitration is a contract and that a clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a contract. 36 Again in Del Monte
Corporation-USA v. Court of Appeals, we likewise ruled that "[t]he provision to submit to
arbitration any dispute arising therefrom and the relationship of the parties is part of that
contract and is itself a contract."37
Arbitration clause not contrary to public policy
The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy. This Court has sanctioned the validity of
arbitration clauses in a catena of cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan
Ysmael and Co., Inc.,38 this Court had occasion to rule that an arbitration clause to resolve
differences and breaches of mutually agreed contractual terms is valid. In BF Corporation v.
Court of Appeals, we held that "[i]n this jurisdiction, arbitration has been held valid and
constitutional. Even before the approval on June 19, 1953 of Republic Act No. 876, this Court
has countenanced the settlement of disputes through arbitration. Republic Act No. 876 was
adopted to supplement the New Civil Code’s provisions on arbitration." 39 And in LM Power
Engineering Corporation v. Capitol Industrial Construction Groups, Inc., we declared that:
Being an inexpensive, speedy and amicable method of settling
disputes, arbitration––along with mediation, conciliation and negotiation––is
encouraged by the Supreme Court. Aside from unclogging judicial dockets,
arbitration also hastens the resolution of disputes, especially of the commercial
kind. It is thus regarded as the "wave of the future" in international civil and
commercial disputes. Brushing aside a contractual agreement calling for
arbitration between the parties would be a step backward.
Consistent with the above-mentioned policy of encouraging alternative dispute
resolution methods, courts should liberally construe arbitration clauses.
Provided such clause is susceptible of an interpretation that covers the asserted
dispute, an order to arbitrate should be granted. Any doubt should be resolved
in favor of arbitration.40
Having said that the instant arbitration clause is not against public policy, we come to the
question on what governs an arbitration clause specifying that in case of any dispute arising
from the contract, an arbitral panel will be constituted in a foreign country and the
arbitration rules of the foreign country would govern and its award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model law
to which we are a signatory
For domestic arbitration proceedings, we have particular agencies to arbitrate disputes
arising from contractual relations. In case a foreign arbitral body is chosen by the parties, the
arbitration rules of our domestic arbitration bodies would not be applied. As signatory to the
Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration 41 of
the United Nations Commission on International Trade Law (UNCITRAL) in the New York
Convention on June 21, 1985, the Philippines committed itself to be bound by the Model
Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285, otherwise
known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize
the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the
Office for Alternative Dispute Resolution, and for Other Purposes, promulgated on April 2,
2004. Secs. 19 and 20 of Chapter 4 of the Model Law are the pertinent provisions:
CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION
SEC. 19. Adoption of the Model Law on International Commercial Arbitration.––
International commercial arbitration shall be governed by the Model Law on
International Commercial Arbitration (the "Model Law") adopted by the United
Nations Commission on International Trade Law on June 21, 1985 (United
Nations Document A/40/17) and recommended for enactment by the General
Assembly in Resolution No. 40/72 approved on December 11, 1985, copy of
which is hereto attached as Appendix "A".
SEC. 20. Interpretation of Model Law.––In interpreting the Model Law, regard
shall be had to its international origin and to the need for uniformity in its
interpretation and resort may be made to the travaux preparatories and the
report of the Secretary General of the United Nations Commission on
International Trade Law dated March 25, 1985 entitled, "International
Commercial Arbitration: Analytical Commentary on Draft Trade identified by
reference number A/CN. 9/264."
While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a
procedural law which has a retroactive effect. Likewise, KOGIES filed its application for
arbitration before the KCAB on July 1, 1998 and it is still pending because no arbitral award
has yet been rendered. Thus, RA 9285 is applicable to the instant case. Well-settled is the
rule that procedural laws are construed to be applicable to actions pending and
undetermined at the time of their passage, and are deemed retroactive in that sense and to
that extent. As a general rule, the retroactive application of procedural laws does not violate
any personal rights because no vested right has yet attached nor arisen from them. 42
Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model
Law are the following:
(1) The RTC must refer to arbitration in proper cases
Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject
of arbitration pursuant to an arbitration clause, and mandates the referral to arbitration in
such cases, thus:
SEC. 24. Referral to Arbitration.––A court before which an action is brought in a
matter which is the subject matter of an arbitration agreement shall, if at least
one party so requests not later than the pre-trial conference, or upon the
request of both parties thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void, inoperative or incapable of being
performed.
(2) Foreign arbitral awards must be confirmed by the RTC
Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to
be final and binding are not immediately enforceable or cannot be implemented
immediately. Sec. 3543 of the UNCITRAL Model Law stipulates the requirement for the
arbitral award to be recognized by a competent court for enforcement, which court under
Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds
provided for. RA 9285 incorporated these provisos to Secs. 42, 43, and 44 relative to Secs. 47
and 48, thus:
SEC. 42. Application of the New York Convention.––The New York Convention
shall govern the recognition and enforcement of arbitral awards covered by said
Convention.
The recognition and enforcement of such arbitral awards shall be filed with
the Regional Trial Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement shall file with the
court the original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation thereof into any of
such languages.
The applicant shall establish that the country in which foreign arbitration award
was made in party to the New York Convention.
xxxx
SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by
the New York Convention.––The recognition and enforcement of foreign arbitral
awards not covered by the New York Convention shall be done in accordance
with procedural rules to be promulgated by the Supreme Court. The Court may,
on grounds of comity and reciprocity, recognize and enforce a non-convention
award as a convention award.
SEC. 44. Foreign Arbitral Award Not Foreign Judgment.––A foreign arbitral
award when confirmed by a court of a foreign country, shall be recognized and
enforced as a foreign arbitral award and not as a judgment of a foreign court.
A foreign arbitral award, when confirmed by the Regional Trial Court, shall be
enforced in the same manner as final and executory decisions of courts of law of
the Philippines
xxxx
SEC. 47. Venue and Jurisdiction.––Proceedings for recognition and enforcement
of an arbitration agreement or for vacations, setting aside, correction or
modification of an arbitral award, and any application with a court for
arbitration assistance and supervision shall be deemed as special proceedings
and shall be filed with the Regional Trial Court (i) where arbitration proceedings
are conducted; (ii) where the asset to be attached or levied upon, or the act to
be enjoined is located; (iii) where any of the parties to the dispute resides or has
his place of business; or (iv) in the National Judicial Capital Region, at the option
of the applicant.
SEC. 48. Notice of Proceeding to Parties.––In a special proceeding for recognition
and enforcement of an arbitral award, the Court shall send notice to the parties
at their address of record in the arbitration, or if any part cannot be served
notice at such address, at such party’s last known address. The notice shall be
sent al least fifteen (15) days before the date set for the initial hearing of the
application.
It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a
judgment of a foreign court but as a foreign arbitral award, and when confirmed, are
enforced as final and executory decisions of our courts of law.
Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to
judgments or awards given by some of our quasi-judicial bodies, like the National Labor
Relations Commission and Mines Adjudication Board, whose final judgments are stipulated
to be final and binding, but not immediately executory in the sense that they may still be
judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral
awards are similarly situated in that they need first to be confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign arbitral awards
Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with specific
authority and jurisdiction to set aside, reject, or vacate a foreign arbitral award on grounds
provided under Art. 34(2) of the UNCITRAL Model Law. Secs. 42 and 45 provide:
SEC. 42. Application of the New York Convention.––The New York Convention
shall govern the recognition and enforcement of arbitral awards covered by said
Convention.
The recognition and enforcement of such arbitral awards shall be filed with
the Regional Trial Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement shall file with the
court the original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation thereof into any of
such languages.
The applicant shall establish that the country in which foreign arbitration award
was made is party to the New York Convention.
If the application for rejection or suspension of enforcement of an award has
been made, the Regional Trial Court may, if it considers it proper, vacate its
 decision and may also, on the application of the party claiming recognition or
enforcement of the award, order the party to provide appropriate security.
xxxx
SEC. 45. Rejection of a Foreign Arbitral Award.––A party to a foreign arbitration
proceeding may oppose an application for recognition and enforcement of the
arbitral award in accordance with the procedures and rules to be promulgated
by the Supreme Court only on those grounds enumerated under Article V of the
New York Convention. Any other ground raised shall be disregarded by the
Regional Trial Court.
Thus, while the RTC does not have jurisdiction over disputes governed by arbitration
mutually agreed upon by the parties, still the foreign arbitral award is subject to judicial
review by the RTC which can set aside, reject, or vacate it. In this sense, what this Court held
in Chung Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable insofar as the foreign
arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral
awards are not absolute and without exceptions as they are still judicially reviewable.
Chapter 7 of RA 9285 has made it clear that all arbitral awards, whether domestic or foreign,
are subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign arbitral awards
The differences between a final arbitral award from an international or foreign arbitral
tribunal and an award given by a local arbitral tribunal are the specific grounds or conditions
that vest jurisdiction over our courts to review the awards.
For foreign or international arbitral awards which must first be confirmed by the RTC, the
grounds for setting aside, rejecting or vacating the award by the RTC are provided under Art.
34(2) of the UNCITRAL Model Law.
For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec.
23 of RA 87644 and shall be recognized as final and executory decisions of the RTC, 45 they
may only be assailed before the RTC and vacated on the grounds provided under Sec. 25 of
RA 876.46
(5) RTC decision of assailed foreign arbitral award appealable
Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party
in cases where the RTC sets aside, rejects, vacates, modifies, or corrects an arbitral award,
thus:
SEC. 46. Appeal from Court Decision or Arbitral Awards.—A decision of the
Regional Trial Court confirming, vacating, setting aside, modifying or correcting
an arbitral award may be appealed to the Court of Appeals in accordance with
the rules and procedure to be promulgated by the Supreme Court.
The losing party who appeals from the judgment of the court confirming an
arbitral award shall be required by the appellate court to post a counterbond
executed in favor of the prevailing party equal to the amount of the award in
accordance with the rules to be promulgated by the Supreme Court.
Thereafter, the CA decision may further be appealed or reviewed before this Court through a
petition for review under Rule 45 of the Rules of Court.
PGSMC has remedies to protect its interests
Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign
arbitration as it bound itself through the subject contract. While it may have misgivings on
the foreign arbitration done in Korea by the KCAB, it has available remedies under RA 9285.
Its interests are duly protected by the law which requires that the arbitral award that may be
rendered by KCAB must be confirmed here by the RTC before it can be enforced.
With our disquisition above, petitioner is correct in its contention that an arbitration clause,
stipulating that the arbitral award is final and binding, does not oust our courts of jurisdiction
as the international arbitral award, the award of which is not absolute and without
exceptions, is still judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.
Finally, it must be noted that there is nothing in the subject Contract which provides that the
parties may dispense with the arbitration clause.
Unilateral rescission improper and illegal
Having ruled that the arbitration clause of the subject contract is valid and binding on the
parties, and not contrary to public policy; consequently, being bound to the contract of
arbitration, a party may not unilaterally rescind or terminate the contract for whatever cause
without first resorting to arbitration.
What this Court held in University of the Philippines v. De Los Angeles 47 and reiterated in
succeeding cases,48 that the act of treating a contract as rescinded on account of infractions
by the other contracting party is valid albeit provisional as it can be judicially assailed, is not
applicable to the instant case on account of a valid stipulation on arbitration. Where an
arbitration clause in a contract is availing, neither of the parties can unilaterally treat the
contract as rescinded since whatever infractions or breaches by a party or differences arising
from the contract must be brought first and resolved by arbitration, and not through an
extrajudicial rescission or judicial action.
The issues arising from the contract between PGSMC and KOGIES on whether the equipment
and machineries delivered and installed were properly installed and operational in the plant
in Carmona, Cavite; the ownership of equipment and payment of the contract price; and
whether there was substantial compliance by KOGIES in the production of the samples, given
the alleged fact that PGSMC could not supply the raw materials required to produce the
sample LPG cylinders, are matters proper for arbitration. Indeed, we note that on July 1,
1998, KOGIES instituted an Application for Arbitration before the KCAB in Seoul, Korea
pursuant to Art. 15 of the Contract as amended. Thus, it is incumbent upon PGSMC to abide
by its commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion in granting PGSMC’s Motion for
Inspection of Things on September 21, 1998, as the subject matter of the motion is under the
primary jurisdiction of the mutually agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the
inspection made on October 28, 1998, as ordered by the trial court on October 19, 1998, is of
no worth as said Sheriff is not technically competent to ascertain the actual status of the
equipment and machineries as installed in the plant.
For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to
the grant of the inspection of the equipment and machineries have to be recalled and
nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract
price of USD 1,530,000 was for the whole plant and its installation is beyond the ambit of a
Petition for Certiorari.
Petitioner’s position is untenable.
It is settled that questions of fact cannot be raised in an original action for
certiorari.49 Whether or not there was full payment for the machineries and equipment and
installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the order of the RTC in
resolving the issue on the ownership of the plant when it is the arbitral body (KCAB) and not
the RTC which has jurisdiction and authority over the said issue. The RTC’s determination of
such factual issue constitutes grave abuse of discretion and must be reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for
PGSMC to dismantle and transfer the equipment and machineries, we find it to be in order
considering the factual milieu of the instant case.
Firstly, while the issue of the proper installation of the equipment and machineries might
well be under the primary jurisdiction of the arbitral body to decide, yet the RTC under Sec.
28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested rights of
the parties. Sec. 28 pertinently provides:
SEC. 28. Grant of interim Measure of Protection.—(a) It is not incompatible with
an arbitration agreement for a party to request, before constitution of the
tribunal, from a Court to grant such measure. After constitution of the arbitral
tribunal and during arbitral proceedings, a request for an interim measure of
protection, or modification thereof, may be made with the arbitral or to the
extent that the arbitral tribunal has no power to act or is unable to act
effectivity, the request may be made with the Court. The arbitral tribunal is
deemed constituted when the sole arbitrator or the third arbitrator, who has
been nominated, has accepted the nomination and written communication of
 said nomination and acceptance has been received by the party making the
request.
(b) The following rules on interim or provisional relief shall be observed:
Any party may request that provisional relief be granted against the adverse
party.
Such relief may be granted:
(i) to prevent irreparable loss or injury;
(ii) to provide security for the performance of any obligation;
(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(c) The order granting provisional relief may be conditioned upon the provision
of security or any act or omission specified in the order.
(d) Interim or provisional relief is requested by written application transmitted
by reasonable means to the Court or arbitral tribunal as the case may be and the
party against whom the relief is sought, describing in appropriate detail the
precise relief, the party against whom the relief is requested, the grounds for
the relief, and the evidence supporting the request.
(e) The order shall be binding upon the parties.
(f) Either party may apply with the Court for assistance in implementing or
enforcing an interim measure ordered by an arbitral tribunal.
(g) A party who does not comply with the order shall be liable for all damages
resulting from noncompliance, including all expenses, and reasonable attorney's
fees, paid in obtaining the order’s judicial enforcement. (Emphasis ours.)
Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx
(2) An interim measure is any temporary measure, whether in the form of an
award or in another form, by which, at any time prior to the issuance of the
award by which the dispute is finally decided, the arbitral tribunal orders a party
to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to
cause, current or imminent harm or prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may
be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the
dispute.
Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue
interim measures:
Article 17 J. Court-ordered interim measures
A court shall have the same power of issuing an interim measure in relation to
arbitration proceedings, irrespective of whether their place is in the territory of
this State, as it has in relation to proceedings in courts. The court shall exercise
such power in accordance with its own procedures in consideration of the
specific features of international arbitration.
In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation, we were
explicit that even "the pendency of an arbitral proceeding does not foreclose resort to the
courts for provisional reliefs." We explicated this way:
As a fundamental point, the pendency of arbitral proceedings does not foreclose
resort to the courts for provisional reliefs. The Rules of the ICC, which governs
the parties’ arbitral dispute, allows the application of a party to a judicial
authority for interim or conservatory measures. Likewise, Section 14 of Republic
Act (R.A.) No. 876 (The Arbitration Law) recognizes the rights of any party to
petition the court to take measures to safeguard and/or conserve any matter
which is the subject of the dispute in arbitration. In addition, R.A. 9285,
otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the
filing of provisional or interim measures with the regular courts whenever the
arbitral tribunal has no power to act or to act effectively. 50
It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures
of protection.
Secondly, considering that the equipment and machineries are in the possession of PGSMC,
it has the right to protect and preserve the equipment and machineries in the best way it
can. Considering that the LPG plant was non-operational, PGSMC has the right to dismantle
and transfer the equipment and machineries either for their protection and preservation or
for the better way to make good use of them which is ineluctably within the management
discretion of PGSMC.
Thirdly, and of greater import is the reason that maintaining the equipment and machineries
in Worth’s property is not to the best interest of PGSMC due to the prohibitive rent while the
LPG plant as set-up is not operational. PGSMC was losing PhP322,560 as monthly rentals or
PhP3.87M for 1998 alone without considering the 10% annual rent increment in maintaining
the plant.
Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the
preservation or transfer of the equipment and machineries as an interim measure, yet on
hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the equipment and
machineries given the non-recognition by the lower courts of the arbitral clause, has
accorded an interim measure of protection to PGSMC which would otherwise been
irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount
based on the contract. Moreover, KOGIES is amply protected by the arbitral action it has
instituted before the KCAB, the award of which can be enforced in our jurisdiction through
the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration pursuant to
the valid arbitration clause of its contract with KOGIES.
PGSMC to preserve the subject equipment and machineries
Finally, while PGSMC may have been granted the right to dismantle and transfer the subject
equipment and machineries, it does not have the right to convey or dispose of the same
considering the pending arbitral proceedings to settle the differences of the parties. PGSMC
therefore must preserve and maintain the subject equipment and machineries with the
diligence of a good father of a family51 until final resolution of the arbitral proceedings and
enforcement of the award, if any.
WHEREFORE, this petition is PARTLY GRANTED, in that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117
are REVERSED and SET ASIDE;
(3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute
and differences arising from the subject Contract before the KCAB; and
(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if
it had not done so, and ORDERED to preserve and maintain them until the finality of
whatever arbitral award is given in the arbitration proceedings.
No pronouncement as to costs.
SO ORDERED.
Quisumbing,Chairperson Carpio, Carpio-Morales, Tinga, JJ., concur.
THIRD DIVISION
G.R. No. 157010 June 21, 2005
PHILIPPINE NATIONAL BANK, petitioner,
vs.
FLORENCE O. CABANSAG, respondent.
DECISION
PANGANIBAN, J.:
The Court reiterates the basic policy that all Filipino workers, whether employed locally or
overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor
statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations
agreed upon, in a foreign country.
The Case
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, seeking
to reverse and set aside the July 16, 2002 Decision2 and the January 29, 2003 Resolution3 of
the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA
Petition (filed by herein petitioner), which had sought to reverse the National Labor Relations
Commission (NLRC)’s June 29, 2001 Resolution,4 affirming Labor Arbiter Joel S. Lustria’s
January 18, 2000 Decision.5
The assailed CA Resolution denied herein petitioner’s Motion for Reconsideration.
The Facts
The facts are narrated by the Court of Appeals as follows:
"In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She
applied for employment, with the Singapore Branch of the Philippine National Bank, a private
banking corporation organized and existing under the laws of the Philippines, with principal
offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB
Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank
of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of
employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad
including Singapore, and (b) locally (direct) hired. She applied for employment as Branch
Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of
duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October
26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of
Florence O. Cabansag, for the position.
xxxxxxxxx
"The President of the Bank was impressed with the credentials of Florence O. Cabansag that
he approved the recommendation of Ruben C. Tobias. She then filed an ‘Application,’ with
the Ministry of Manpower of the Government of Singapore, for the issuance of an
‘Employment Pass’ as an employee of the Singapore PNB Branch. Her application was
approved for a period of two (2) years.
"On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a
temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a
month and, upon her successful completion of her probation to be determined solely, by the
Bank, she may be extended at the discretion of the Bank, a permanent appointment and that
her temporary appointment was subject to the following terms and conditions:
‘1. You will be on probation for a period of three (3) consecutive months from
the date of your assumption of duty.
‘2. You will observe the Bank’s rules and regulations and those that may be
adopted from time to time.
‘3. You will keep in strictest confidence all matters related to transactions
between the Bank and its clients.
‘4. You will devote your full time during business hours in promoting the
business and interest of the Bank.
‘5. You will not, without prior written consent of the Bank, be employed in
anyway for any purpose whatsoever outside business hours by any person, firm
or company.
‘6. Termination of your employment with the Bank may be made by either party
after notice of one (1) day in writing during probation, one month notice upon
confirmation or the equivalent of one (1) day’s or month’s salary in lieu of
notice.’
"Florence O. Cabansag accepted the position and assumed office. In the meantime, the
Philippine Embassy in Singapore processed the employment contract of Florence O.
Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment
Administration, an ‘Overseas Employment Certificate,’ certifying that she was a bona fide
contract worker for Singapore.
xxxxxxxxx
"Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on
March 9, 1999, her initial ‘Performance Report.’ Ruben C. Tobias was so impressed with the
‘Report’ that he made a notation and, on said ‘Report’: ‘GOOD WORK.’ However, in the
evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia
Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and
Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2)
that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job.
Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way
Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag
talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had
told her was true. Ruben C. Tobias confirmed the veracity of the information, with the
explanation that her resignation was imperative as a ‘cost-cutting measure’ of the Bank.
Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore Branch will be
sold or transformed into a remittance office and that, in either way, Florence O. Cabansag
had to resign from her employment. The more Florence O. Cabansag was perplexed. She
then asked Ruben C. Tobias that she be furnished with a ‘Formal Advice’ from the PNB Head
Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not
submit any letter of resignation.
"On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and
demanded that she submit her letter of resignation, with the pretext that he needed a
Chinese-speaking Credit Officer to penetrate the local market, with the information that a
Chinese-speaking Credit Officer had already been hired and will be reporting for work soon.
She was warned that, unless she submitted her letter of resignation, her employment record
will be blemished with the notation ‘DISMISSED’ spread thereon. Without giving any
definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient
time to look for another job. Ruben C. Tobias told her that she should be ‘out’ of her
employment by May 15, 1999.
"However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and
adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999,
she received a letter from Ruben C. Tobias terminating her employment with the Bank.
xxxxxxxxx
"On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and
against the Respondents, the decretal portion of which reads as follows:
‘WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding
respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered:
1. To reinstate complainant to her former or substantially equivalent position
without loss of seniority rights, benefits and privileges;
2. Solidarily liable to pay complainant as follows:
a) To pay complainant her backwages from 16 April 1999 up to her
actual reinstatement. Her backwages as of the date of the
promulgation of this decision amounted to SGD 40,500.00 or its
equivalent in Philippine Currency at the time of payment;
b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent
in Philippine Currency at the time of payment;
c) Allowance for Sunday banking in the amount of SGD 120.00 or its
equivalent in Philippine Currency at the time of payment;
 d) Monetary equivalent of leave credits earned on Sunday banking
in the amount of SGD 1,557.67 or its equivalent in Philippine
Currency at the time of payment;
e) Monetary equivalent of unused sick leave benefits in the amount
of SGD 1,150.60 or its equivalent in Philippine Currency at the time
of payment.
f) Monetary equivalent of unused vacation leave benefits in the
amount of SGD 319.85 or its equivalent in Philippine Currency at
the time of payment.
g) 13th month pay in the amount of SGD 4,500.00 or its equivalent
in Philippine Currency at the time of payment;
3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00
or its equivalent in Philippine Currency at the time of payment, and moral
damages in the amount of PhP 200,000.00, exemplary damages in the amount
of PhP 100,000.00;
4. To pay complainant the amount of SGD 5,039.81 or its equivalent in
Philippine Currency at the time of payment, representing attorney’s fees.
SO ORDERED." 6 [Emphasis in the original.]
PNB appealed the labor arbiter’s Decision to the NLRC. In a Resolution dated June 29, 2001,
the Commission affirmed that Decision, but reduced the moral damages to ₱100,000 and the
exemplary damages to ₱50,000. In a subsequent Resolution, the NLRC denied PNB’s Motion
for Reconsideration.
Ruling of the Court of Appeals
In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to
adduce in evidence the Singaporean law supposedly governing the latter’s employment
Contract with respondent. The appellate court found that the Contract had actually been
processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas
Employment Administration (POEA), which then used that Contract as a basis for issuing an
Overseas Employment Certificate in favor of respondent.
According to the CA, even though respondent secured an employment pass from the
Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the
jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so
doing, neither did she submit herself solely to the Ministry of Manpower of Singapore’s
jurisdiction over disputes arising from her employment. The appellate court further noted
that a cursory reading of the Ministry’s letter will readily show that no such waiver or
submission is stated or implied.
Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of
respondent. The bank had also failed to give her sufficient notice and an opportunity to be
heard and to defend herself. The CA ruled that she was consequently entitled to
reinstatement and back wages, computed from the time of her dismissal up to the time of
her reinstatement.
Hence, this Petition.7
Issues
Petitioner submits the following issues for our consideration:
"1. Whether or not the arbitration branch of the NLRC in the National Capital
Region has jurisdiction over the instant controversy;
"2. Whether or not the arbitration of the NLRC in the National Capital Region is
the most convenient venue or forum to hear and decide the instant controversy;
and
"3. Whether or not the respondent was illegally dismissed, and therefore,
entitled to recover moral and exemplary damages and attorney’s fees." 8
In addition, respondent assails, in her Comment,9 the propriety of Rule 45 as the procedural
mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue
deserves scant consideration. Respondent miscomprehends the Court’s discourse in St.
Martin Funeral Home v. NLRC,10 which has indeed affirmed that the proper mode of review
of NLRC decisions, resolutions or orders is by a special civil action for certiorari under Rule 65
of the Rules of Court. The Supreme Court and the Court of Appeals
have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of
the doctrine on the hierarchy of courts, these petitions should be initially filed with the CA. 11
Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition
for Certiorari. In seeking a review by this Court of the CA Decision -- on questions of
jurisdiction, venue and validity of employment termination -- petitioner is likewise correct in
invoking Rule 45.12
It is true, however, that in a petition for review on certiorari, the scope of the Supreme
Court’s judicial review of decisions of the Court of Appeals is generally confined only to
errors of law. It does not extend to questions of fact. This doctrine applies with greater force
in labor cases. Factual questions are for the labor tribunals to resolve. 13 In the present case,
the labor arbiter and the NLRC have already determined the factual issues. Their findings,
which are supported by substantial evidence, were affirmed by the CA. Thus, they are
entitled to great respect and are rendered conclusive upon this Court, absent a clear showing
of palpable error or arbitrary disregard of evidence. 14
The Court’s Ruling
The Petition has no merit.
First Issue:
Jurisdiction
The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as
follows:
"ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may
file involving wage, rates of pay, hours of work and other terms and conditions
of employment
4. Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount of exceeding five thousand pesos (₱5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
x x x x x x x x x."
More specifically, Section 10 of RA 8042 reads in part:
"SECTION 10. Money Claims. — Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.
x x x x x x x x x"
Based on the foregoing provisions, labor arbiters clearly have original and
exclusive jurisdiction over claims arising from employer-employee relations,
including termination disputes involving all workers, among whom are overseas Filipino
workers (OFW).15
We are not unmindful of the fact that respondent was directly hired, while on a tourist status
in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner
had to obtain an employment pass for her from the Singapore Ministry of Manpower.
Securing the pass was a regulatory requirement pursuant to the immigration regulations of
that country.16
Similarly, the Philippine government requires non-Filipinos working in the country to first
obtain a local work permit in order to be legally employed here. That permit, however, does
not automatically mean that the non-citizen is thereby bound by local laws only, as averred
by petitioner. It does not at all imply a waiver of one’s national laws on labor. Absent any
clear and convincing evidence to the contrary, such permit simply means that its holder has a
legal status as a worker in the issuing country.1avvphil.zw+
Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in Singapore. The
Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore.
Under Philippine law, this document authorized her working status in a foreign country and
entitled her to all benefits and processes under our statutes. Thus, even
assuming arguendo that she was considered at the start of her employment as a "direct hire"
governed by and subject to the laws, common practices and customs prevailing in
Singapore17 she subsequently became a contract worker or an OFW who was covered by
Philippine labor laws and policies upon certification by the POEA. At the time her
employment was illegally terminated, she already possessed the POEA employment
Certificate.
Moreover, petitioner admits that it is a Philippine corporation doing business through a
branch office in Singapore.18 Significantly, respondent’s employment by the Singapore
branch office had to be approved by Benjamin P. Palma Gil, 19 the president of the bank
whose principal offices were in Manila. This circumstance militates against petitioner’s
contention that respondent was "locally hired"; and totally "governed by and subject to the
laws, common practices and customs" of Singapore, not of the Philippines. Instead, with
more reason does this fact reinforce the presumption that respondent falls under the legal
definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner
cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor
arbiter.
In any event, we recall the following policy pronouncement of the Court in Royal Crown
Internationale v. NLRC:20
"x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle
of Philippine labor and social legislation, contract stipulations to the contrary
notwithstanding. This pronouncement is in keeping with the basic public policy of the State
to afford protection to labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations between workers and
employers.1awphi1.net For the State assures the basic rights of all workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of
work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section
3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of
the Civil Code which states that laws ‘which have for their object public order, public policy
and good customs shall not be rendered ineffective by laws or judgments promulgated, or by
determination or conventions agreed upon in a foreign country.’"
Second Issue:
Proper Venue
Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1. Venue – (a) All cases which Labor Arbiters have authority to hear and decide may
be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW)
shall be filed before the Regional Arbitration Branch where the complainant resides or where
the principal office of the respondent/employer is situated, at the option of the complainant.
"For purposes of venue, workplace shall be understood as the place or locality where the
employee is regularly assigned when the cause of action arose. It shall include the place
where the employee is supposed to report back after a temporary detail, assignment or
travel. In the case of field employees, as well as ambulant or itinerant workers, their
workplace is where they are regularly assigned, or where they are supposed to regularly
receive their salaries/wages or work instructions from, and report the results of their
assignment to their employers."
Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA 8042), a migrant
worker "refers to a person who is to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a legal resident; to be used
interchangeably with overseas Filipino worker."21 Undeniably, respondent was employed by
petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal
resident of that state. She thus falls within the category of "migrant worker" or "overseas
Filipino worker."
As such, it is her option to choose the venue of her Complaint against petitioner for illegal
dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where
she resides or (2) at the RAB where the principal office of her employer is situated. Since her
dismissal by petitioner, respondent has returned to the Philippines -- specifically to her
residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in
Quezon City, she has made a valid choice of proper venue.
Third Issue:
Illegal Dismissal
The appellate court was correct in holding that respondent was already a regular employee
at the time of her dismissal, because her three-month probationary period of employment
had already ended. This ruling is in accordance with Article 281 of the Labor Code: "An
employee who is allowed to work after a probationary period shall be considered a regular
employee." Indeed, petitioner recognized respondent as such at the time it dismissed her, by
giving her one month’s salary in lieu of a one-month notice, consistent with provision No. 6
of her employment Contract.
Notice and Hearing Not Complied With
As a regular employee, respondent was entitled to all rights, benefits and privileges provided
under our labor laws. One of her fundamental rights is that she may not be dismissed
without due process of law. The twin requirements of notice and hearing constitute the
essential elements of procedural due process, and neither of these elements can be
eliminated without running afoul of the constitutional guarantee.22
In dismissing employees, the employer must furnish them two written notices: 1) one to
apprise them of the particular acts or omissions for which their dismissal is sought; and 2)
the other to inform them of the decision to dismiss them. As to the requirement of a hearing,
its essence lies simply in the opportunity to be heard. 23
The evidence in this case is crystal-clear. Respondent was not notified of the specific act or
omission for which her dismissal was being sought. Neither was she given any chance to be
heard, as required by law. At any rate, even if she were given the opportunity to be heard,
she could not have defended herself effectively, for she knew no cause to answer to.
All that petitioner tendered to respondent was a notice of her employment termination
effective the very same day, together with the equivalent of a one-month pay. This Court has
already held that nothing in the law gives an employer the option to substitute the required
prior notice and opportunity to be heard with the mere payment of 30 days’ salary. 24
Well-settled is the rule that the employer shall be sanctioned for noncompliance with the
requirements of, or for failure to observe, due process that must be observed in dismissing
an employee.25
No Valid Cause for Dismissal
Moreover, Articles 282,26 28327 and 28428 of the Labor Code provide the valid grounds or
causes for an employee’s dismissal. The employer has the burden of proving that it was done
for any of those just or authorized causes. The failure to discharge this burden means that
the dismissal was not justified, and that the employee is entitled to reinstatement and back
wages.29
Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for
terminating the employment of respondent. It merely insists that her dismissal was validly
effected pursuant to the provisions of her employment Contract, which she had voluntarily
agreed to be bound to.
Truly, the contracting parties may establish such stipulations, clauses, terms and conditions
as they want, and their agreement would have the force of law between them. However,
petitioner overlooks the qualification that those terms and conditions agreed upon must not
be contrary to law, morals, customs, public policy or public order.30 As explained earlier, the
employment Contract between petitioner and respondent is governed by Philippine labor
laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not
contravene our labor law provisions.
Moreover, a contract of employment is imbued with public interest. The Court has time and LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,
time again reminded parties that they "are not at liberty to insulate themselves and their vs.
relationships from the impact of labor laws and regulations by simply contracting with each THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA
other."31 Also, while a contract is the law between the parties, the provisions of positive law DIMALANTA, respondents.
that regulate such contracts are deemed included and shall limit and govern the relations
between the parties.32
DECISION

Basic in our jurisprudence is the principle that when there is no showing of any clear, valid,
and legal cause for the termination of employment, the law considers the matter a case of
illegal dismissal.33
Awards for Damages Justified
Finally, moral damages are recoverable when the dismissal of an employee is attended by
bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals,
good customs or public policy.34 Awards for moral and exemplary damages would be proper
if the employee was harassed and arbitrarily dismissed by the employer. 35
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for
partition filed against her and her husband, who is also her attorney, summons intended for
her may be served on her husband, who has a law office in the Philippines. The Regional Trial
Court of Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in default,
but the Court of Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:

In affirming the awards of moral and exemplary damages, we quote with approval the
following ratiocination of the labor arbiter:
"The records also show that [respondent’s] dismissal was effected by [petitioners’] capricious
and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and
contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts
committed by [petitioners] before, during and after [respondent’s] dismissal in addition to
the manner by which she was dismissed. First, [respondent] was pressured to resign for two
different and contradictory reasons, namely, cost-cutting and the need for a Chinese[-
]speaking credit officer, for which no written advice was given despite complainant’s
request. Such wavering stance or vacillating position indicates bad faith and a dishonest
purpose. Second, she was employed on account of her qualifications, experience and
readiness for the position of credit officer and pressured to resign a month after she was
commended for her good work. Third, the demand for [respondent’s] instant resignation on
19 April 1999 to give way to her replacement who was allegedly reporting soonest, is
whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of
[sic] until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign
were highly oppressive, anti-social and caused her absolute torture, as [petitioners]
disregarded her situation as an overseas worker away from home and family, with no
prospect for another job. She was not even provided with a return trip fare. Fifth, the notice
of termination is an utter manifestation of bad faith and whim as it totally disregards
[respondent’s] right to security of tenure and due process. Such notice together with the
demands for [respondent’s] resignation contravenes the fundamental guarantee and public
policy of the Philippine government on security of tenure.
"[Respondent] likewise established that as a proximate result of her dismissal and prior
demands for resignation, she suffered and continues to suffer mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her
standing in the social and business community as well as prospects for employment with
other entities have been adversely affected by her dismissal. [Petitioners] are thus liable for
moral damages under Article 2217 of the Civil Code.
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are
both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo
D. Valmonte, who is a member of the Philippine bar, however, practices his profession in the
Philippines, commuting for this purpose between his residence in the state of Washington
and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner
Lourdes A. Valmonte, filed a complaint for partition of real property and accounting of
rentals against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional
Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located
in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823
Conway Road, Chesterfield, Missouri, U.S.A., while the defendants are spouses,
of legal age and at present residents of 90222 Carkeek Drive, South Seattle,
Washington, U.S.A., but, for purposes of this complaint may be served with
summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita, Manila where
defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte's
spouse holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter previously sent by
petitioner Lourdes A. Valmonte to private respondent's counsel in which, in regard to the
partition of the property in question, she referred private respondent's counsel to her
husband as the party to whom all communications intended for her should be sent. The
letter reads:
July 4, 1991

Dear Atty. Balgos:

xxxxxxxxx

This is in response to your letter, dated 20 June 1991, which I received on 3 July
"[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating
1991. Please address all communications to my lawyer, Atty. Alfredo D.
[respondent’s] employment and are therefore liable for exemplary damages. This should
Valmonte, whose address, telephone and fax numbers appear below.
served [sic] as protection to other employees of [petitioner] company, and by way of
example or correction for the public good so that persons similarly minded as [petitioners]
would be deterred from committing the same acts."36 c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
The Court also affirms the award of attorney’s fees. It is settled that when an action is
Metro Manila
instituted for the recovery of wages, or when employees are forced to litigate and
Telephone: 521-1736
consequently incur expenses to protect their rights and interests, the grant of attorney’s fees
Fax: 521-2095
is legally justifiable.37

Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time,
WHEREFORE, the Petition is DENIED and the assailed Decision and
was at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as
Resolution AFFIRMED. Costs against petitioner.
he was concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on
the ground that he was not authorized to accept the process on her behalf. Accordingly the
SO ORDERED. process server left without leaving a copy of the summons and complaint for petitioner
Lourdes A. Valmonte.

Republic of the Philippines

SUPREME COURT Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner
Manila Lourdes A. Valmonte, however, did not file her Answer. For this reason private respondent
moved to declare her in default. Petitioner Alfredo D. Valmonte entered a special
appearance in behalf of his wife and opposed the private respondent's motion.
SECOND DIVISION

In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare
G.R. No. 108538 January 22, 1996 petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly denied
on September 23, 1992. Whereupon, private respondent filed a petition for certiorari,
prohibition and mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and
declaring Lourdes A. Valmonte in default. A copy of the appellate court's decision was
received by petitioner Alfredo D. Valmonte on January 15, 1993 at his Manila office and on
January 21, 1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A.
Valmonte was validly served with summons. In holding that she had been, the Court of
Appeals stated:1
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the
aforementioned counsel of Dimalanta to address all communications (evidently referring to
her controversy with her sister Mrs. Dimalanta over the Paco property, now the subject of
the instant case) to her lawyer who happens also to be her husband. Such directive was
made without any qualification just as was her choice/designation of her husband Atty.
Valmonte as her lawyer likewise made without any qualification or reservation. Any
disclaimer therefore on the part of Atty. Valmonte as to his being his wife's attorney (at least
with regard to the dispute vis-a-vis (sic) the Paco property) would appear to be feeble or
trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on
behalf of his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve
as her lawyer relative to her dispute with her sister over the Paco property and to receive all
communications regarding the same and subsequently to appear on her behalf by way of a
so-called special appearance, she would nonetheless now insist that the same husband
would nonetheless had absolutely no authority to receive summons on her behalf. In effect,
she is asserting that representation by her lawyer (who is also her husband) as far as the
Paco property controversy is concerned, should only be made by him when such
representation would be favorable to her but not otherwise. It would obviously be
inequitable for this Court to allow private respondent Lourdes A. Valmonte to hold that her
husband has the authority to represent her when an advantage is to be obtained by her and
to deny such authority when it would turn out to be her disadvantage. If this be allowed, Our
Rules of Court, instead of being an instrument to promote justice would be made use of to
thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook the fact that the
disputed summons was served not upon just an ordinary lawyer of private
respondent Lourdes A. Valmonte, but upon her lawyer husband. But that is not
all, the same lawyer/husband happens to be also her co-defendant in the
instant case which involves real property which, according to her
lawyer/husband/co-defendant, belongs to the conjugal partnership of the
defendants (the spouses Valmonte). It is highly inconceivable and certainly it
would be contrary to human nature for the lawyer/husband/co-defendant to
keep to himself the fact that they (the spouses Valmonte) had been sued with
regard to a property which, he claims to be conjugal. Parenthetically, there is
nothing in the records of the case before Us regarding any manifestation by
private respondent Lourdes A. Valmonte about her lack of knowledge about the
case instituted against her and her lawyer/husband/co-defendant by her sister
Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari, prohibition
and mandamus is given due course. This Court hereby Resolves to nullify the
orders of the court a quo dated July 3, 1992 and September 23, 1992 and
further declares private respondent Lourdes Arreola Valmonte as having been
properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in
refusing to apply the provisions of Rule 14, §17 of the Revised Rules of Court and applying
instead Rule 14, §8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident
defendant; and (2) because even if Rule 14, §8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement by leaving a copy
of the summons and complaint with petitioner Alfredo D. Valmonte. Private respondent,
upon the other hand, asserts that petitioners are invoking a technicality and that strict
adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed
against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent,
whether it is an action in personam, in rem or quasi in rem. This is because the rules on
service of summons embodied in Rule 14 apply according to whether an action is one or the
other of these actions.
In an action in personam, personal service of summons or, if this is not possible and he
cannot be personally served, substituted service, as provided in Rule 14, §§7-82 is essential
for the acquisition by the court of jurisdiction over the person of a defendant who does not
voluntarily submit himself to the authority of the court. 3 If defendant cannot be served with
summons because he is temporarily abroad, but otherwise he is a Philippine resident, service
of summons may, by leave of court, be made by publication. 4 Otherwise stated, a resident
defendant in an action in personam, who cannot be personally served with summons, may
be summoned either by means of substituted service in accordance with Rule 14, §8 or by
publication as provided in §§ 17 and 18 of the same Rule. 5
In all of these cases, it should be noted, defendant must be a resident of the Philippines,
otherwise an action in personam cannot be brought because jurisdiction over his person is
essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires
jurisdiction over the res. If the defendant is a nonresident and he is not found in the country,
summons may be served exterritorially in accordance with Rule 14, §17, which provides:
§17. Extraterritorial service. - When the defendant does not reside and is not
found in the Philippines and the action affects the personal status of the plaintiff
or relates to, or the subject of which is, property within the Philippines, in which
the defendant has or claims a lien or interest, actual or contingent, or in which
the relief demanded consists, wholly or in part, in excluding the defendant from
any interest therein, or the property of the defendant has been attached within
the Philippines, service may, by leave of court, be effected out of the Philippines
by personal service as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in
which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60) days after
notice, within which the defendant must answer..
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it
has jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached.
Service of summons in the manner provided in §17 is not for the purpose of vesting it with
jurisdiction but for complying with the requirements of fair play or due process, so that he
will be informed of the pendency of the action against him and the possibility that property
in the Philippines belonging to him or in which he has an interest may be subjected to a
judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is
so minded.6
Applying the foregoing rules to the case at bar, private respondent's action, which is for
partition and accounting under Rule 69, is in the nature of an action quasi in rem. Such an
action is essentially for the purpose of affecting the defendant's interest in a specific
property and not to render a judgment against him. As explained in the leading case of Banco
Español Filipino v. Palanca :7
[An action quasi in rem is] an action which while not strictly speaking an action in
rem partakes of that nature and is substantially such. . . . The action quasi in rem differs from
the true action in rem in the circumstance that in the former an individual is named as
defendant and the purpose of the proceeding is to subject his interest therein to the
obligation or lien burdening the property. All proceedings having for their sole object the sale
or other disposition of the property of the defendant, whether by attachment, foreclosure,
or other form of remedy, are in a general way thus designated. The judgment entered in
these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines,
service of summons on her must be in accordance with Rule 14, §17. Such service, to be
effective outside the Philippines, must be made either (1) by personal service; (2) by
publication in a newspaper of general circulation in such places and for such time as the
court may order, in which case a copy of the summons and order of the court should be sent
by registered mail to the last known address of the defendant; or (3) in any other manner
which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was
not done by means of any of the first two modes, the question is whether the service on her
attorney, petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in
any . . . manner the court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be made outside the
Philippines, such as through the Philippine Embassy in the foreign country where the
defendant resides.8 Moreover, there are several reasons why the service of summons on
Atty. Alfredo D. Valmonte cannot be considered a valid service of summons on petitioner
Lourdes A. Valmonte. In the first place, service of summons on petitioner Alfredo D.
Valmonte was not made upon the order of the court as required by Rule 14, §17 and
certainly was not a mode deemed sufficient by the court which in fact refused to consider
the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for
her failure to file an answer.
In the second place, service in the attempted manner on petitioner was not made upon prior
leave of the trial court as required also in Rule 14, §17. As provided in §19, such leave must
be applied for by motion in writing, supported by affidavit of the plaintiff or some person on
his behalf and setting forth the grounds for the application.
Finally, and most importantly, because there was no order granting such leave, petitioner
Lourdes A. Valmonte was not given ample time to file her Answer which, according to the
rules, shall be not less than sixty (60) days after notice. It must be noted that the period to
file an Answer in an action against a resident defendant differs from the period given in an
action filed against a nonresident defendant who is not found in the Philippines. In the
former, the period is fifteen (15) days from service of summons, while in the latter, it is at
least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of due process. That
is why in one case,9 although the Court considered publication in the Philippines of the
summons (against the contention that it should be made in the foreign state where
defendant was residing) sufficient, nonetheless the service was considered insufficient
because no copy of the summons was sent to the last known correct address in the
Philippines..
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in
which it was held that service of summons upon the defendant's husband was binding on
her. But the ruling in that case is justified because summons were served upon defendant's
husband in their conjugal home in Cebu City and the wife was only temporarily absent,
having gone to Dumaguete City for a vacation. The action was for collection of a sum of
money. In accordance with Rule 14, §8, substituted service could be made on any person of
sufficient discretion in the dwelling place of the defendant, and certainly defendant's
husband, who was there, was competent to receive the summons on her behalf. In any
event, it appears that defendant in that case submitted to the jurisdiction of the court by
instructing her husband to move for the dissolution of the writ of attachment issued in that
case.
On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife
of a nonresident defendant was found sufficient because the defendant had appointed his
wife as his attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss
citizen and resident of Switzerland, service of summons upon his wife Helen Schenker who
was in the Philippines was sufficient because she was her husband's representative and
attorney-in-fact in a civil case, which he had earlier filed against William Gemperle. In fact
Gemperle's action was for damages arising from allegedly derogatory statements contained
in the complaint filed in the first case. As this Court said, "[i]n other words, Mrs. Schenker
had authority to sue, and had actually sued, on behalf of her husband, so that she was, also,
empowered to represent him in suits filed against him, particularly in a case, like the one at
bar, which is a consequence of the action brought by her on his behalf" 11 Indeed, if instead
of filing an independent action Gemperle filed a counterclaim in the action brought by Mr.
Schenker against him, there would have been no doubt that the trial court could have
acquired jurisdiction over Mr. Schenker through his agent and attorney-in-fact, Mrs.
Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband
as her attorney-in-fact. Although she wrote private res- pondent's attorney that "all
communications" intended for her should be addressed to her husband who is also her
lawyer at the latter's address in Manila, no power of attorney to receive summons for her
can be inferred therefrom. In fact the letter was written seven months before the filing of
this case below, and it appears that it was written in connection with the negotiations
between her and her sister, respondent Rosita Dimalanta, concerning the partition of the
property in question. As is usual in negotiations of this kind, the exchange of correspondence
was carried on by counsel for the parties. But the authority given to petitioner's husband in
these negotiations certainly cannot be construed as also including an authority to represent
her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A.
Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and
September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.
Regalado, Romero and Puno, JJ., concur.
SECOND DIVISION
[G.R. No. 103493. June 19, 1997]
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and
ATHONA HOLDINGS, N.V., Petitioners, v. THE HONORABLE COURT OF APPEALS, 1488, INC.,
DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H.
CRAIG, Respondents.
DECISION
MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment upon the
rights of the parties under the same cause of action asserted in a case in our local court.
Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view
of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the
ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of
Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from
petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured
by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to
facilitate the payment of the loans, private respondent 1488, Inc., through its president,
private respondent Drago Daic, assumed Ducats obligation under an Agreement, dated
January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by which
it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in
Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan
to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The
balance of US$307,209.02 was to be paid by means of a promissory note executed by
ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from
1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488,
Inc. all the shares of stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount
covered by the note became due and demandable. Accordingly, on October 17, 1985, private
respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for
payment of the balance of US$307,209.02 and for damages for breach of contract and for
fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares
of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United
States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-
57746, the venue of the action was later transferred to the United States District Court for
the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its
allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading
private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly
appraised the property, was later dropped as counterdefendant. ATHONA sought the
recovery of damages and excess payment allegedly made to 1488, Inc. and, in the
alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed a
motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion
was denied, they later filed a joint answer with counterclaim against private respondents and
Edgardo V. Guevarra, PHILSECs own former president, for the rescission of the sale on the
ground that the property had been overvalued. On March 13, 1990, the United States District
Court for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was frivolous and [was] brought against him simply to
humiliate and embarrass him. For this reason, the U.S. court imposed so-called Rule 11
sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary
Attachment against private respondents in the Regional Trial Court of Makati, where it was
docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in
their respective counterclaims in Civil Action No. H-86-440 of the United States District Court
of Southern Texas that private respondents committed fraud by selling the property at a
price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a
result of private respondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA
were induced to enter into the Agreement and to purchase the Houston property.
Petitioners prayed that private respondents be ordered to return to ATHONA the excess
payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a
writ of preliminary attachment against the real and personal properties of private
respondents.2chanroblesvirtuallawlibrary
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S.,
(2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause
of action. Ducat contended that the alleged overpricing of the property prejudiced only
petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale
and whose only participation was to extend financial accommodation to ATHONA under a
separate loan agreement. On the other hand, private respondents 1488, Inc. and its
president Daic filed a joint Special Appearance and Qualified Motion to Dismiss, contending
that the action being in personam, extraterritorial service of summons by publication was
ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-
resident foreign corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that the
evidentiary requirements of the controversy may be more suitably tried before the forum of
the litis pendentia in the U.S., under the principle in private international law of forum non
conveniens, even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss. On March
9, 1988, the trial court3 granted the motion to dismiss filed by 1488, Inc. and Daic on the
ground of litis pendentia considering that
the main factual element of the cause of action in this case which is the validity of the sale of
real property in the United States between defendant 1488 and plaintiff ATHONA is the
subject matter of the pending case in the United States District Court which, under the
doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters
needed to determine the assessment and/or fluctuations of the fair market value of real
estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the
present and verily,... (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were
non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial
service of summons was ineffective. The trial court subsequently lifted the writ of
attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying
the principle of litis pendentia and forum non conveniens and in ruling that it had no
jurisdiction over the defendants, despite the previous attachment of shares of stocks
belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563
against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are
Philsec, the Ayala International Finance Ltd. (BPI-IFLs former name) and the Athona Holdings,
NV. The case at bar involves the same parties. The transaction sued upon by the parties, in
both cases is the Warranty Deed executed by and between Athona Holdings and 1488 Inc. In
the U.S. case, breach of contract and the promissory note are sued upon by 1488 Inc., which
likewise alleges fraud employed by herein appellants, on the marketability of Ducats
securities given in exchange for the Texas property. The recovery of a sum of money and
damages, for fraud purportedly committed by appellees, in overpricing the Texas land,
constitute the action before the Philippine court, which likewise stems from the same
Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the
recovery of a sum of money for alleged tortious acts, so that service of summons by
publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The
dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise
affirmed by the Court of Appeals on the ground that the case can be better tried and decided
by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign
elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the
seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona
Holdings, a foreign corporation which does not claim to be doing business in the Philippines,
is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-
IFL, also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR
THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING
THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF
APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS
LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT
HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL
ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS RIGHTS FOR
TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY
NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was
pending in the Court of Appeals, the United States District Court for the Southern District of
Texas rendered judgment5 in the case before it. The judgment, which was in favor of private
respondents, was affirmed on appeal by the Circuit Court of Appeals. 6 Thus, the principal
issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of
the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a
judgment admitting the foreign decision is not necessary. On the other hand, petitioners
argue that the foreign judgment cannot be given the effect of res judicata without giving
them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules of Court, to
wit: want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law
or fact.
Petitioners contention is meritorious. While this Court has given the effect of res judicata to
foreign judgments in several cases,7 it was after the parties opposed to the judgment had
been given ample opportunity to repel them on grounds allowed under the law. 8 It is not
necessary for this purpose to initiate a separate action or proceeding for enforcement of the
foreign judgment. What is essential is that there is opportunity to challenge the foreign
judgment, in order for the court to properly determine its efficacy. This is because in this
jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a
foreign judgment merely constitutes prima facie evidence of the justness of the claim of a
party and, as such, is subject to proof to the contrary. 9 Rule 39, 50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a foreign
country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to
the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right
as between the parties and their successors in interest by a subsequent title; but the
judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of
Canton, Ltd.,10 which private respondents invoke for claiming conclusive effect for the
foreign judgment in their favor, the foreign judgment was considered res judicata because
this Court found from the evidence as well as from appellants own pleadings 11 that the
foreign court did not make a clear mistake of law or fact or that its judgment was void for
want of jurisdiction or because of fraud or collusion by the defendants. Trial had been
previously held in the lower court and only afterward was a decision rendered, declaring the
judgment of the Supreme Court of the State of Washington to have the effect of res
judicata in the case before the lower court. In the same vein, in Philippine International
Shipping Corp. v. Court of Appeals,12 this Court held that the foreign judgment was valid and
enforceable in the Philippines there being no showing that it was vitiated by want of notice
to the party, collusion, fraud or clear mistake of law or fact. The prima facie presumption
under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge
the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights
of private respondents. The proceedings in the trial court were summary. Neither the trial
court nor the appellate court was even furnished copies of the pleadings in the U.S. court or
apprised of the evidence presented thereat, to assure a proper determination of whether
the issues then being litigated in the U.S. court were exactly the issues raised in this case
such that the judgment that might be rendered would constitute res judicata. As the trial
court stated in its disputed order dated March 9, 1988:
On the plaintiffs claim in its Opposition that the causes of action of this case and
the pending case in the United States are not identical, precisely the Order of
January 26, 1988 never found that the causes of action of this case and the case
pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners action is
barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the
U.S. court over their persons, but their claim was brushed aside by both the trial court and
the Court of Appeals.13chanroblesvirtuallawlibrary
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as
Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were
suspended because of the pendency of this case. To sustain the appellate courts ruling that
the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would
effectively preclude petitioners from repelling the judgment in the case for enforcement. An
absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff
against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be
opposed by the defendant if the foreign judgment is sought to be enforced against him in a
separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where
affirmative relief is being sought. Hence, in the interest of justice, the complaint should be
considered as a petition for the recognition of the Hongkong judgment under Section 50 (b),
Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may
present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and
law, if applicable.14chanroblesvirtuallawlibrary
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-
1070 should be consolidated.15 After all, the two have been filed in the Regional Trial Court
of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V.
Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In
such proceedings, petitioners should have the burden of impeaching the foreign judgment
and only in the event they succeed in doing so may they proceed with their action against
private respondents.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the
principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under
Rule 16, 1, which does not include forum non conveniens.16 The propriety of dismissing a case
based on this principle requires a factual determination, hence, it is more properly
considered a matter of defense. Second, 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 courts
desistance.17chanroblesvirtuallawlibrary
In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed to
consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters
debt which was the object of the transaction under litigation. The trial court arbitrarily
dismissed the case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action
in personam and summons were served by extraterritorial service. Rule 14, 17 on
extraterritorial service provides that service of summons on a non-resident defendant may
be effected out of the Philippines by leave of Court where, among others, the property of the
defendant has been attached within the Philippines. 18 It is not disputed that the properties,
real and personal, of the private respondents had been attached prior to service of summons
under the Order of the trial court dated April 20, 1987. 19chanroblesvirtuallawlibrary
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to
suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce
so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that
the judgment sought to be enforced is severable from the main judgment under
consideration in Civil Case No. 16563. The separability of Guevarras claim is not only
admitted by petitioners,20 it appears from the pleadings that petitioners only belatedly
impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted
and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is
REMANDEDto the Regional Trial Court of Makati for consolidation with Civil Case No. 92-
1070 and for further proceedings in accordance with this decision. The temporary restraining
order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.
THIRD DIVISION
G.R. No. 141536. February 26, 2001
GIL MIGUEL T. PUYAT, Petitioner, v. RON ZABARTE, Respondent.
DECISION
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no genuine issue as to any material
fact, other than the amount of damages. If this verity is evident from the pleadings and the
supporting affidavits, depositions and admissions on file with the court, the moving party is
entitled to such remedy as a matter of course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
challenging the August 31, 1999 Decision 1 of the Court of Appeals (CA), which affirmed the
Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January
20, 2000 CA Resolution 2 which denied reconsideration.
The assailed CA Decision disposed as follows:
WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED." 3
The Facts
The facts of this case, as narrated by the Court of Appeals, are as follows: 4cräläwvirtualibräry
It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to
enforce the money judgment rendered by the Superior Court for the State of California,
County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with the
following special and affirmative defenses:
xxx
8) The Superior Court for the State of California, County of Contra Costa[,] did not properly
acquire jurisdiction over the subject matter of and over the persons involved in [C]ase #C21-
00265.
9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December
12, 1991 was obtained without the assistance of counsel for [petitioner] and without
sufficient notice to him and therefore, was rendered in clear violation of [petitioners]
constitutional rights to substantial and procedural due process.
10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December
12, 1991 was procured by means of fraud or collusion or undue influence and/or based on a
clear mistake of fact and law.
11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December
12, 1991 is contrary to the laws, public policy and canons of morality obtaining in the
Philippines and the enforcement of such judgment in the Philippines would result in the
unjust enrichment of [respondent] at the expense of [petitioner] in this case.
12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December
12, 1991 is null and void and unenforceable in the Philippines.
13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in
any way liable, in fact and in law, to [respondent] in this case, as contained in [petitioners]
Answer to Complaint in Case #C21-00265 dated April 1, 1991, Annex B of [respondents]
Complaint dated December 6, 1993.
14) [Respondent] is guilty of misrepresentation or falsification in the filing of his Complaint in
this case dated December 6, 1993. Worse, [respondent] has no capacity to sue in the
Philippines.
15) Venue has been improperly laid in this case.
(Record, pp. 42-44)
On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under
Rule 34 of the Rules of Court alleging that the [A]nswer filed by [petitioner] failed to
tender any genuine issue as to the material facts. In his [O]pposition to [respondents]
motion, [petitioner] demurred as follows:
2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his
Answer with Special and Affirmative Defenses dated March 16, 1994 [petitioner] has
interposed that the Judgment on Stipulations for Entry in Judgment is null and void,
fraudulent, illegal and unenforceable, the same having been obtained by means of fraud,
collusion, undue influence and/or clear mistake of fact and law. In addition, [he] has
maintained that said Judgment on Stipulations for Entry in Judgment was obtained without
the assistance of counsel for [petitioner] and without sufficient notice to him and therefore,
was rendered in violation of his constitutional rights to substantial and procedural due
process.
The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994
during which [respondent] marked and submitted in evidence the following:
Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court
of the State of California[,] County of Contra Costa[,]
signed by Hon. Ellen James, Judge of the Superior Court.
Exhibit B - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen
James, issued by the Consulate General of the Republic
of the Philippines.
Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the
sheriff/marshall, County of Santa Clara, State of
California.
Exhibit D - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy,
[M]emorandum of [G]arnishee, [E]xemptions from
[E]nforcement of [J]udgment.
Exhibit F - Certification issued by the Secretary of State, State of California that
Stephen Weir is the duly elected, qualified and acting
[c]ounty [c]lerk of the County of Contra Costa of the
State of California.
Exhibit G - Certificate of [A]uthentication of the [W]rit of [E]xecution.
On 6 April 1995, the court a quo issued an [O]rder granting [respondents] [M]otion for
[S]ummary [J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing
affidavits, after which the case would be deemed submitted for resolution (Record, pp. 152-
153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid [O]rder and
[respondent] filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on
the ground of lack of jurisdiction over the subject matter of the case and forum-non-
conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion (Record, pp. 181-182)
[respondent] contended that [petitioner could] no longer question the jurisdiction of the
lower court on the ground that [the latters] Answer had failed to raise the issue of
jurisdiction. [Petitioner] countered by asserting in his Reply that jurisdiction [could] not be
fixed by agreement of the parties. The lower court dismissed [his] [M]otion for
[R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.
The RTC 5 eventually rendered its February 21, 1997 Decision, 6 which disposed as follows:
WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the
following amounts:
1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18,
1991, or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in
[J]udgment dated December 19, 1991;
2. The amount of P30,000.00 as attorneys fees;
3. To pay the costs of suit.
The claim for moral damages, not having been substantiated, it is hereby denied. 7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was estopped from
assailing the judgment that had become final and had, in fact, been partially executed. The
CA also ruled that summary judgment was proper, because petitioner had failed to tender
any genuine issue of fact and was merely maneuvering to delay the full effects of the
judgment.
Citing Ingenohl v. Olsen, 8 the CA also rejected petitioners argument that the RTC should
have dismissed the action for the enforcement of a foreign judgment, on the ground
of forum non conveniens. It reasoned out that the recognition of the foreign judgment was
based on comity, reciprocity and res judicata.
Hence, this Petition. 9
Issue
In his Memorandum, petitioner submits this lone but all-embracing issue:
Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed
the Order of the trial court granting respondents Motion for Summary Judgment and
rendering judgment against the petitioner. 10cräläwvirtualibräry
In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgments conformity to Philippine laws, public policy, canons of
morality, and norms against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.
This Courts Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at
bar, arguing that his Answer allegedly raised genuine and material factual matters which he
should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged genuine issues of fact raised by
petitioner are mere conclusions of law, or propositions arrived at not by any process of
natural reasoning from a fact or a combination of facts stated but by the application of the
artificial rules of law to the facts pleaded. 11cräläwvirtualibräry
The RTC granted respondents Motion for Summary Judgment because petitioner, in his
Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment.
Besides, he had already paid $5,000 to respondent, as provided in the foreign judgment
sought to be enforced. 12 Hence, the trial court ruled that, there being no genuine issue as to
any material fact, the case should properly be resolved through summary judgment. The CA
affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural device for the prompt
disposition of actions in which the pleadings raise only a legal issue, and not a genuine issue
as to any material fact. By genuine issue is meant a question of fact that calls for the
presentation of evidence. It should be distinguished from an issue that is sham, contrived,
set in bad faith and patently unsubstantial. 13cräläwvirtualibräry
Summary judgment is resorted to in order to avoid long drawn out litigations and useless
delays. When affidavits, depositions and admissions on file show that there are no genuine
issues of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings
and to obtain immediate relief by way of summary judgment. In short, since the facts are not
in dispute, the court is allowed to decide the case summarily by applying the law to the
material facts.
Petitioner contends that by allowing summary judgment, the two courts a quo prevented
him from presenting evidence to substantiate his claims. We do not agree. Summary
judgment is based on facts directly proven by affidavits, depositions or admissions. 14 In this
case, the CA and the RTC both merely ruled that trial was not necessary to resolve the case.
Additionally and correctly, the RTC specifically ordered petitioner to submit opposing
affidavits to support his contentions that (1) the Judgment on Stipulation for Entry in
Judgment was procured on the basis of fraud, collusion, undue influence, or a clear mistake
of law or fact; and (2) that it was contrary to public policy or the canons of
morality. 15cräläwvirtualibräry
Again, in its Order 16 dated November 29, 1995, the trial court clarified that the opposing
affidavits were for [petitioner] to spell out the facts or circumstances [that] would constitute
lack of jurisdiction over the subject matter of and over the persons involved in Case No. C21-
00265, and that would render the judgment therein null and void. In this light, petitioners
contention that he was not allowed to present evidence to substantiate his claims is clearly
untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that
there must be no genuine issue as to any material fact, except for the amount of damages;
and (b) that the party presenting the motion for summary judgment must be entitled to a
judgment as a matter of law. 17 As mentioned earlier, petitioner admitted that a foreign
judgment had been rendered against him and in favor of respondent, and that he had paid
$5,000 to the latter in partial compliance therewith. Hence, respondent, as the party
presenting the Motion for Summary Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no
genuine issue, it relied instead on the finality of the foreign judgment which was, in fact,
partially executed. Hence, we shall show in the following discussion how the defenses
presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial
was not necessary for the resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership
interest, was vested in the Securities and Exchange Commission, not in the Superior Court of
California, County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
presumption of identity or similarity, also known as processual presumption. 18 The
Complaint, 19 which respondent filed with the trial court, was for the enforcement of a
foreign judgment. He alleged therein that the action of the foreign court was for the
collection of a sum of money, breach of promissory notes, and
damages. 20cräläwvirtualibräry
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities
and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters
enumerated in Section 5, PD 902-A, 21 prior to its latest amendment. If the foreign court did
not really have jurisdiction over the case, as petitioner claims, it would have been very easy
for him to show this. Since jurisdiction is determined by the allegations in a complaint, he
only had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did
not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form of a Compromise
Agreement, cannot be executed without the parties being assisted by their chosen lawyers.
The reason for this, he points out, is to eliminate collusion, undue influence and/or improper
exertion of ascendancy by one party over the other. He alleges that he discharged his
counsel during the proceedings, because he felt that the latter was not properly attending to
the case. The judge, however, did not allow him to secure the services of another counsel.
Insisting that petitioner settle the case with respondent, the judge practically imposed the
settlement agreement on him. In his Opposing Affidavit, petitioner states:
It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I
discharged him because I then felt that he was not properly attending to my case or was not
competent enough to represent my interest. I asked the Judge for time to secure another
counsel but I was practically discouraged from engaging one as the Judge was insistent that I
settle the case at once with the [respondent]. Being a foreigner and not a lawyer at that I did
not know what to do. I felt helpless and the Judge and [respondents] lawyer were the ones
telling me what to do. Under ordinary circumstances, their directives should have been taken
with a grain of salt especially so [since respondents] counsel, who was telling me what to do,
had an interest adverse to mine. But [because] time constraints and undue influence exerted
by the Judge and [respondents] counsel on me disturbed and seriously affected my freedom
to act according to my best judgment and belief. In point of fact, the terms of the settlement
were practically imposed on me by the Judge seconded all the time by [respondents]
counsel. I was then helpless as I had no counsel to assist me and the collusion between the
Judge and [respondents] counsel was becoming more evident by the way I was treated in the
Superior Court of [t]he State of California. I signed the Judgment on Stipulation for Entry in
Judgment without any lawyer assisting me at the time and without being fully aware of its
terms and stipulations.22cräläwvirtualibräry
The manifestation of petitioner that the judge and the counsel for the opposing party had
pressured him would gain credibility only if he had not been given sufficient time to engage
the services of a new lawyer. Respondents Affidavit 23 dated May 23, 1994, clarified,
however, that petitioner had sufficient time, but he failed to retain a counsel. Having
dismissed his lawyer as early as June 19, 1991, petitioner directly handled his own defense
and negotiated a settlement with respondent and his counsel in December 1991.
Respondent also stated that petitioner, ignoring the judges reminder of the importance of
having a lawyer, argued that he would be the one to settle the case and pay anyway.
Eventually, the Compromise Agreement was presented in court and signed before Judge
Ellen James on January 3, 1992. Hence, petitioners rights to counsel and to due process were
not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the norm against unjust
enrichment because the judge made him shoulder all the liabilities in the case, even if there
were two other defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the foreign judgment, even if
there are other defendants who are not being held liable together with him. First, the foreign
judgment itself does not mention these other defendants, their participation or their liability
to respondent. Second, petitioners undated Opposing Affidavit states: [A]lthough myself and
these entities were initially represented by Atty. Lawrence L. Severson of the Law Firm
Kouns, Quinlivan & Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed the
representation for myself and these firms and this was allowed by the Superior Court of the
State of California without any authorization from G.G.P. & Sons, Inc. and the Genesis
Group. 24 Clearly, it was petitioner who chose to represent the other defendants; hence, he
cannot now be allowed to impugn a decision based on this ground.
In any event, contrary to petitioners contention, unjust enrichment or solutio indebiti does
not apply to this case. This doctrine contemplates payment when there is no duty to pay, and
the person who receives the payment has no right to receive it. 25 In this case, petitioner
merely argues that the other two defendants whom he represented were liable together
with him. This is not a case of unjust enrichment.
We do not see, either, how the foreign judgment could be contrary to law, morals, public
policy or the canons of morality obtaining in the country. Petitioner owed money, and the
judgment required him to pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court reinforce our belief that his
claims are unfounded. Instead of filing opposing affidavits to support his affirmative
defenses, he filed a Motion for Reconsideration of the Order allowing summary judgment, as
well as a Motion to Dismiss the action on the ground of forum non conveniens. His opposing
affidavits were filed only after the Order of November 29, 1995 had denied both
Motions. 26 Such actuation was considered by the trial court as a dilatory ploy which justified
the resolution of the action by summary judgment. According to the CA, petitioners
allegations sought to delay the full effects of the judgment; hence, summary judgment was
proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain the Complaint for
enforcement of the foreign judgment on the principle of forum non conveniens. He claims
that the trial court had no jurisdiction, because the case involved partnership interest, and
there was difficulty in ascertaining the applicable law in California. All the aspects of the
transaction took place in a foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction
is authorized by law, courts may nonetheless refuse to entertain a case for any of the
following practical reasons:
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
The difficulty of ascertaining foreign law.27cräläwvirtualibräry
None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the
present action, there was no more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign
judgment, and no question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed on the
basis of the above-mentioned principle depends largely upon the facts of each case and on
the sound discretion of the trial court. 28 Since the present action lodged in the RTC was for
the enforcement of a foreign judgment, there was no need to ascertain the rights and the
obligations of the parties based on foreign laws or contracts. The parties needed only to
perform their obligations under the Compromise Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in
personam rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of
a right as between the parties and their successors-in-interest by a subsequent
title. 29cräläwvirtualibräry
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere --
enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is
regularly performing its official duty. 30 Its judgment may, however, be assailed if there is
evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake
of law or fact. But precisely, this possibility signals the need for a local trial court to exercise
jurisdiction. Clearly, the application of forum non coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the
RTC take jurisdiction over the enforcement case in order to invalidate the foreign judgment;
yet, he avers that the trial court should not exercise jurisdiction over the same case on the
basis of forum non conveniens. Not only do these defenses weaken each other, but they
bolster the finding of the lower courts that he was merely maneuvering to avoid or delay
payment of his obligation.
WHEREFORE , the Petition is hereby DENIEDand the assailed Decision and
Resolution AFFIRMED. Double costs against petitioner.
SO ORDERED.
SECOND DIVISION
G.R. No. 120135. March 31, 2003
BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD., Petitioners, v. COURT
OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA,
JR., respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
November 29, 1994 decision of the Court of Appeals 1 and the April 28, 1995 resolution
denying petitioners motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed
a Complaint2 before the Regional Trial Court of Pasig against the Bank of America NT&SA and
Bank of America International, Ltd. (defendant banks for brevity) alleging that: they were
engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion,
through their wholly-owned corporations; they deposited their revenues from said business
together with other funds with the branches of said banks in the United Kingdom and
Hongkong up to 1979; with their business doing well, the defendant banks induced them to
increase the number of their ships in operation, offering them easy loans to acquire said
vessels;3 thereafter, the defendant banks acquired, through their (Litonjuas) corporations as
the borrowers: (a) El Carrier4; (b) El General5; (c) El Challenger6; and (d) El Conqueror7; the
vessels were registered in the names of their corporations; the operation and the funds
derived therefrom were placed under the complete and exclusive control and disposition of
the petitioners;8 and the possession the vessels was also placed by defendant banks in the
hands of persons selected and designated by them (defendant banks). 9cräläwvirtualibräry
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all
the income derived from the operation of the vessels as well as of the proceeds of the
subsequent foreclosure sale;10 because of the breach of their fiduciary duties and/or
negligence of the petitioners and/or the persons designated by them in the operation of
private respondents six vessels, the revenues derived from the operation of all the vessels
declined drastically; the loans acquired for the purchase of the four additional vessels then
matured and remained unpaid, prompting defendant banks to have all the six vessels,
including the two vessels originally owned by the private respondents, foreclosed and sold at
public auction to answer for the obligations incurred for and in behalf of the operation of the
vessels; they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten
percent (10%) of the acquisition cost of the four vessels and were left with the unpaid
balance of their loans with defendant banks. 11 The Litonjuas prayed for the accounting of the
revenues derived in the operation of the six vessels and of the proceeds of the sale thereof
at the foreclosure proceedings instituted by petitioners; damages for breach of trust;
exemplary damages and attorneys fees.12cräläwvirtualibräry
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of
cause of action against them.13cräläwvirtualibräry
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:
WHEREFORE, and in view of the foregoing consideration, the Motion to Dismiss is hereby
DENIED. The defendant is therefore, given a period of ten (10) days to file its Answer to the
complaint.
SO ORDERED.14cräläwvirtualibräry
Instead of filing an answer the defendant banks went to the Court of Appeals on a Petition
for Review on Certiorari15 which was aptly treated by the appellate court as a petition for
certiorari. They assailed the above-quoted order as well as the subsequent denial of their
Motion for Reconsideration.16 The appellate court dismissed the petition and denied
petitioners Motion for Reconsideration.17cräläwvirtualibräry
Hence, herein petition anchored on the following grounds:
1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT THE SEPARATE
PERSONALITIES OF THE PRIVATE RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN
CORPORATIONS (THE REAL BORROWERS) CLEARLY SUPPORT, BEYOND ANY DOUBT, THE
PROPOSITION THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE THE PRINCIPLE
OF FORUM NON CONVENIENS IS NOT MANDATORY, THERE ARE, HOWEVER, SOME
GUIDELINES TO FOLLOW IN DETERMINING WHETHER THE CHOICE OF FORUM SHOULD BE
DISTURBED. UNDER THE CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF
THE COMPLAINT ON THE GROUND OF FORUM NON-CONVENIENS IS MORE APPROPRIATE
AND PROPER.
3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT IN THE
PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN ACTION MAY BE THE LEGAL BASIS FOR
THE DISMISSAL OF THE COMPLAINT FILED BY THE PRIVATE RESPONDENT. COROLLARY TO
THIS, THE RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE
RESPONDENTS ARE GUILTY OF FORUM SHOPPING. 18cräläwvirtualibräry
As to the first assigned error: Petitioners argue that the borrowers and the registered owners
of the vessels are the foreign corporations and not private respondents Litonjuas who are
mere stockholders; and that the revenues derived from the operations of all the vessels are
deposited in the accounts of the corporations. Hence, petitioners maintain that these foreign
corporations are the legal entities that have the personalities to sue and not herein private
respondents; that private respondents, being mere shareholders, have no claim on the
vessels as owners since they merely have an inchoate right to whatever may remain upon
the dissolution of the said foreign corporations and after all creditors have been fully paid
and satisfied;19 and that while private respondents may have allegedly spent amounts equal
to 10% of the acquisition costs of the vessels in question, their 10% however represents their
investments as stockholders in the foreign corporations.20cräläwvirtualibräry
Anent the second assigned error, petitioners posit that while the application of the principle
of forum non conveniens is discretionary on the part of the Court, said discretion is limited by
the guidelines pertaining to the private as well as public interest factors in determining
whether plaintiffs choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert21 and Piper Aircraft Co. vs. Reyno,22 to wit:
Private interest factors include: (a) the relative ease of access to sources of proof; (b) the
availability of compulsory process for the attendance of unwilling witnesses; (c) the cost of
obtaining attendance of willing witnesses; or (d) all other practical problems that make trial
of a case easy, expeditious and inexpensive. Public interest factors include: (a) the
administrative difficulties flowing from court congestion; (b) the local interest in having
localized controversies decided at home; (c) the avoidance of unnecessary problems in
conflict of laws or in the application of foreign law; or (d) the unfairness of burdening citizens
in an unrelated forum with jury duty.23cräläwvirtualibräry
In support of their claim that the local court is not the proper forum, petitioners allege the
following:
i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are based
in Hongkong and England. As such, the evidence and the witnesses are not readily available
in the Philippines;
ii) The loan transactions were obtained, perfected, performed, consummated and partially
paid outside the Philippines;
iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels
were part of an offshore fleet, not based in the Philippines;
iv) All the loans involved were granted to the Private Respondents foreign CORPORATIONS;
v) The Restructuring Agreements were ALL governed by the laws of England;
vi) The subsequent sales of the mortgaged vessels and the application of the sales
proceeds occurred and transpired outside the Philippines, and the deliveries of the sold
mortgaged vessels were likewise made outside the Philippines;
vii) The revenues of the vessels and the proceeds of the sales of these vessels
were ALL deposited to the Accounts of the foreign CORPORATIONS abroad; and
viii) Bank of America International Ltd. is not licensed nor engaged in trade or business in the
Philippines.24cräläwvirtualibräry
Petitioners argue further that the loan agreements, security documentation and all
subsequent restructuring agreements uniformly, unconditionally and expressly provided that
they will be governed by the laws of England; 25 that Philippine Courts would then have to
apply English law in resolving whatever issues may be presented to it in the event it
recognizes and accepts herein case; that it would then be imposing a significant and
unnecessary expense and burden not only upon the parties to the transaction but also to the
local court. Petitioners insist that the inconvenience and difficulty of applying English law
with respect to a wholly foreign transaction in a case pending in the Philippines may be
avoided by its dismissal on the ground of forum non conveniens. 26cräläwvirtualibräry
Finally, petitioners claim that private respondents have already waived their alleged causes
of action in the case at bar for their refusal to contest the foreign civil cases earlier filed by
the petitioners against them in Hongkong and England, to wit:
1.) Civil action in England in its High Court of Justice, Queens Bench Division Commercial
Court (1992-Folio No. 2098) against (a) LIBERIAN TRANSPORT NAVIGATION. SA.; (b) ESHLEY
COMPANIA NAVIERA SA., (c) EL CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h)
AURELIO K. LITONJUA.
2.) Civil action in England in its High Court of Justice, Queens Bench Division, Commercial
Court (1992-Folio No. 2245) against (a) EL CHALLENGER S.A., (b) ESPRIONA SHIPPING
COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN LITONJUA.
3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992),
against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER S.A., (c) ESPRIONA
SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, JR., and (h) EDUARDO KATIPUNAN LITONJUA.
4.) A civil action in the Supreme Court of Hong Kong High Court (Action No. 4040 of 1992),
against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL CHALLENGER S.A., (c) ESPRIONA
SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN
LITONJUA, RJ., and (h) EDUARDO KATIPUNAN LITONJUA.
and that private respondents alleged cause of action is already barred by the pendency of
another action or by litis pendentia as shown above.27
On the other hand, private respondents contend that certain material facts and pleadings are
omitted and/or misrepresented in the present petition for certiorari; that the prefatory
statement failed to state that part of the security of the foreign loans were mortgages on a
39-hectare piece of real estate located in the Philippines; 28 that while the complaint was filed
only by the stockholders of the corporate borrowers, the latter are wholly-owned by the
private respondents who are Filipinos and therefore under Philippine laws, aside from the
said corporate borrowers being but their alter-egos, they have interests of their own in the
vessels.29 Private respondents also argue that the dismissal by the Court of Appeals of the
petition for certiorari was justified because there was neither allegation nor any showing
whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law from the Order of the trial judge denying their Motion
to Dismiss; that the remedy available to the petitioners after their Motion to Dismiss was
denied was to file an Answer to the complaint; 30 that as upheld by the Court of Appeals, the
decision of the trial court in not applying the principle of forum non conveniens is in the
lawful exercise of its discretion.31 Finally, private respondents aver that the statement of
petitioners that the doctrine of res judicata also applies to foreign judgment is merely an
opinion advanced by them and not based on a categorical ruling of this Court; 32 and that
herein private respondents did not actually participate in the proceedings in the foreign
courts.33cräläwvirtualibräry
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot be the subject of
petition for certiorari. Petitioners should have filed an answer to the complaint, proceed to
trial and await judgment before making an appeal. As repeatedly held by this Court:
An order denying a motion to dismiss is interlocutory and cannot be the subject of the
extraordinary petition for certiorari or mandamus. The remedy of the aggrieved party is to
file an answer and to interpose as defenses the objections raised in his motion to dismiss,
proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in
due course. xxx Under certain situations, recourse to certiorari or mandamus is considered
appropriate, i.e., (a) when the trial court issued the order without or in excess of jurisdiction;
(b) where there is patent grave abuse of discretion by the trial court; or (c) appeal would not
prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a
defendant from the injurious effects of the patently mistaken order maintaining the plaintiffs
baseless action and compelling the defendant needlessly to go through a protracted trial and
clogging the court dockets by another futile case. 34cräläwvirtualibräry
Records show that the trial court acted within its jurisdiction when it issued the assailed
Order denying petitioners motion to dismiss. Does the denial of the motion to dismiss
constitute a patent grave abuse of discretion? Would appeal, under the circumstances, not
prove to be a speedy and adequate remedy? We will resolve said questions in conjunction
with the issues raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the
complaint on the ground that plaintiffs have no cause of action against defendants since
plaintiffs are merely stockholders of the corporations which are the registered owners of the
vessels and the borrowers of petitioners?
No. Petitioners argument that private respondents, being mere stockholders of the foreign
corporations, have no personalities to sue, and therefore, the complaint should be
dismissed, is untenable. A case is dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a
ground for a Motion to Dismiss based on the fact that the complaint, on the face thereof,
evidently states no cause of action.35 In San Lorenzo Village Association, Inc. vs. Court of
Appeals,36 this Court clarified that a complaint states a cause of action where it contains
three essential elements of a cause of action, namely: (1) the legal right of the plaintiff, (2)
the correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint becomes vulnerable
to a motion to dismiss on the ground of failure to state a cause of action. 37 To emphasize, it is
not the lack or absence of cause of action that is a ground for dismissal of the complaint but
rather the fact that the complaint states no cause of action. 38 Failure to state a cause of
action refers to the insufficiency of allegation in the pleading, unlike lack of cause of
action which refers to the insufficiency of factual basis for the action. Failure to state a cause
of action may be raised at the earliest stages of an action through a motion to dismiss the
complaint, while lack of cause of action may be raised any time after the questions of fact
have been resolved on the basis of stipulations, admissions or evidence presented. 39
In the case at bar, the complaint contains the three elements of a cause of action. It alleges
that: (1) plaintiffs, herein private respondents, have the right to demand for an accounting
from defendants (herein petitioners), as trustees by reason of the fiduciary relationship that
was created between the parties involving the vessels in question; (2) petitioners have the
obligation, as trustees, to render such an accounting; and (3) petitioners failed to do the
same.
Petitioners insist that they do not have any obligation to the private respondents as they are
mere stockholders of the corporation; that the corporate entities have juridical personalities
separate and distinct from those of the private respondents. Private respondents maintain
that the corporations are wholly owned by them and prior to the incorporation of such
entities, they were clients of petitioners which induced them to acquire loans from said
petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case,40cräläwvirtualibräry
xxx assuming that the allegation of facts constituting plaintiffs cause of action is not as clear
and categorical as would otherwise be desired, any uncertainty thereby arising should be so
resolved as to enable a full inquiry into the merits of the action.
As this Court has explained in the San Lorenzo case, such a course, would preclude SO ORDERED.
multiplicity of suits which the law abhors, and conduce to the definitive determination and
termination of the dispute. To do otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be indecisive and would not end the Bellosillo, (Chairman), Mendoza, Quisumbing and Callejo, Sr., JJ., concur.
controversy, since the institution of another action upon a revised complaint would not be
foreclosed.41cräläwvirtualibräry THIRD DIVISION

Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens? [G.R. NO. 154830 : June 8, 2007]

No. The doctrine of forum non-conveniens, literally meaning the forum is inconvenient, PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J.
emerged in private international law to deter the practice of global forum shopping,42 that is KLEPZIG, Petitioners, v. ANTONIO D. TODARO, Respondent.
to prevent non-resident litigants from choosing the forum or place wherein to bring their suit
for malicious reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under this DECISION
doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most convenient or available forum and the parties are not precluded from seeking
AUSTRIA-MARTINEZ, J.:
remedies elsewhere.43cräläwvirtualibräry

Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the
trial court.44 In the case of Communication Materials and Design, Inc. vs. Court of
Appeals,45 this Court held that xxx [a] Philippine Court may assume jurisdiction over the case
if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine
Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is
in a position to make an intelligent decision as to the law and the facts; and, (3) that the
Philippine Court has or is likely to have power to enforce its decision. 46 Evidently, all these
requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of
Appeals,47 that the doctrine of forum non conveniens should not be used as a ground for a
motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of the trial
court to abstain from assuming jurisdiction on this ground, it should do so only after vital
facts are established, to determine whether special circumstances require the courts
desistance; and that the propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly considered a matter
of defense.48cräläwvirtualibräry
Third issue. Are private respondents guilty of forum shopping because of the pendency of
foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a
final judgment in one case will amount to res judicata in the other.49 Parenthetically, for litis
pendentia to be a ground for the dismissal of an action there must be: (a) identity of the
parties or at least such as to represent the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity
in the two cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the
other.50cräläwvirtualibräry
In case at bar, not all the requirements for litis pendentia are present. While there may be
identity of parties, notwithstanding the presence of other respondents, 51 as well as the
reversal in positions of plaintiffs and defendants 52, still the other requirements necessary
for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were
filed in Hongkong and England without however showing the identity of rights asserted and
the reliefs sought for as well as the presence of the elements of res judicata should one of
the cases be adjudged.
As the Court of Appeals aptly observed:
xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad involving the
parties herein xxx, failed to provide this Court with relevant and clear specifications that
would show the presence of the above-quoted elements or requisites for res judicata. While
it is true that the petitioners in their motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad, did aver that Copies of the foreign
judgments are hereto attached and made integral parts hereof as Annexes B, C, D and E, they
failed, wittingly or inadvertently, to include a single foreign judgment in their pleadings
submitted to this Court as annexes to their petition. How then could We have been expected
to rule on this issue even if We were to hold that foreign judgments could be the basis for
the application of the aforementioned principle of res judicata?53cräläwvirtualibräry
Consequently, both courts correctly denied the dismissal of herein subject complaint.
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the
Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and
its Resolution2 of August 21, 2002 denying petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional
Trial Court (RTC) of Makati City, a complaint for Sum of Money and Damages with
Preliminary Attachment against Pioneer International Limited (PIL), Pioneer Concrete
Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald
(McDonald) and Philip J. Klepzig (Klepzig). 3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under
the laws of Australia and is principally engaged in the ready-mix concrete and concrete
aggregates business; PPHI is the company established by PIL to own and hold the stocks of its
operating company in the Philippines; PCPI is the company established by PIL to undertake
its business of ready-mix concrete, concrete aggregates and quarrying operations in the
Philippines; McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the
President and Managing Director of PPHI and PCPI; Todaro has been the managing director
of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and
concrete aggregate production; he resigned from Betonval in February 1996; in May 1996,
PIL contacted Todaro and asked him if he was available to join them in connection with their
intention to establish a ready-mix concrete plant and other related operations in the
Philippines; Todaro informed PIL of his availability and interest to join them; subsequently,
PIL and Todaro came to an agreement wherein the former consented to engage the services
of the latter as a consultant for two to three months, after which, he would be employed as
the manager of PIL's ready-mix concrete operations should the company decide to invest in
the Philippines; subsequently, PIL started its operations in the Philippines; however, it
refused to comply with its undertaking to employ Todaro on a permanent basis.4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the
complaint on the grounds that the complaint states no cause of action, that the RTC has no
jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of
the NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum
non conveniens.5
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners'
respective motions to dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus
Motion7 for the reconsideration of the trial court's Order of January 4, 1999 but the trial
court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October
31, 2000, the CA rendered its presently assailed Decision denying herein petitioners' Petition
for Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its
Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION
AGAINST PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT
CLEARLY BELIE THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN
PRIVATE RESPONDENT AND PETITIONERS.

WHEREFORE, the petition is DENIED for lack of merit.

B.

Costs against petitioners.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD
WITH LAW AND WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD
THE JURISDICTION OF THE TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT
INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT
CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL
LABOR RELATIONS COMMISSION.
C the employer-employee relationship of petitioners and respondent.
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF
"FORUM NON CONVENIENS" AS A VALID GROUND FOR DISMISSING A COMPLAINT.10
In their first assigned error, petitioners contend that there was no perfected employment
contract between PIL and herein respondent. Petitioners assert that the annexes to
respondent's complaint show that PIL's offer was for respondent to be employed as the
manager only of its pre-mixed concrete operations and not as the company's managing
director or CEO. Petitioners argue that when respondent reiterated his intention to become
the manager of PIL's overall business venture in the Philippines, he, in effect did not accept
PIL's offer of employment and instead made a counter-offer, which, however, was not
accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code, one of the
requisites for a contract to be perfected is the consent of the contracting parties; that under
Article 1319 of the same Code, consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract; that the offer
must be certain and the acceptance absolute; that a qualified acceptance constitutes a
counter-offer. Petitioners assert that since PIL did not accept respondent's counter-offer,
there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of
Articles 19 and 21 of the Civil Code is baseless because it was shown that there was no
perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment
contract, petitioners contend that PCPI and PPHI, may not also be held liable because they
are juridical entities with personalities which are separate and distinct from PIL, even if they
are subsidiary corporations of the latter. Petitioners also aver that the annexes to
respondent's complaint show that the negotiations on the alleged employment contract took
place between respondent and PIL through its office in Hongkong. In other words, PCPI and
PPHI were not privy to the negotiations between PIL and respondent for the possible
employment of the latter; and under Article 1311 of the Civil Code, a contract is not binding
upon and cannot be enforced against one who was not a party to it even if he be aware of
such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply
acting in his capacity as president of PCPI and PPHI and settled is the rule that an officer of a
corporation is not personally liable for acts done in the performance of his duties and within
the bounds of the authority conferred on him. Furthermore, petitioners argue that even if
PCPI and PPHI are held liable, respondent still has no cause of action against Klepzig because
PCPI and PPHI have personalities which are separate and distinct from those acting in their
behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims
for actual, moral and exemplary damages are solely premised on the alleged breach of
employment contract, the present case should be considered as falling within the exclusive
jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisidiction is authorized by law, courts may
refuse to entertain a case involving a foreign element where the matter can be better tried
and decided elsewhere, either because the main aspects of the case transpired in a foreign
jurisdiction or the material witnesses have their residence there and the plaintiff sought the
forum merely to secure procedural advantage or to annoy or harass the defendant.
Petitioners also argue that one of the factors in determining the most convenient forum for
conflicts problem is the power of the court to enforce its decision. Petitioners contend that
since the majority of the defendants in the present case are not residents of the Philippines,
they are not subject to compulsory processes of the Philippine court handling the case for
purposes of requiring their attendance during trial. Even assuming that they can be
summoned, their appearance would entail excessive costs. Petitioners further assert that
there is no allegation in the complaint from which one can conclude that the evidence to be
presented during the trial can be better obtained in the Philippines. Moreover, the events
which led to the present controversy occurred outside the Philippines. Petitioners conclude
that based on the foregoing factual circumstances, the case should be dismissed under the
principle of forum non conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that
the factual allegations in the complaint determine whether or not the complaint states a
cause of action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not
based on a contract of employment. Rather, it was based on petitioners' unwarranted breach
of their contractual obligation to employ respondent. This breach, respondent argues, gave
rise to an action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the NLRC
to acquire jurisdiction, the claim for damages must have a reasonable causal connection with
Respondent further argues that there is a perfected contract between him and petitioners as
they both agreed that the latter shall employ him to manage and operate their ready-mix
concrete operations in the Philippines. Even assuming that there was no perfected contract,
respondent contends that his complaint alleges an alternative cause of action which is based
on the provisions of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the
question of whether a suit should be entertained or dismissed on the basis of the principle
of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial judge, who is in the best position to determine
whether special circumstances require that the court desist from assuming jurisdiction over
the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or
omission by which a party violates a right of another. A cause of action exists if the following
elements are present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and, (3) an act or omission on the part of such defendant
violative of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of
damages.11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
The elementary test for failure to state a cause of action is whether the complaint alleges
facts which if true would justify the relief demanded. Stated otherwise, may the court render
a valid judgment upon the facts alleged therein? The inquiry is into the sufficiency, not the
veracity of the material allegations. If the allegations in the complaint furnish sufficient basis
on which it can be maintained, it should not be dismissed regardless of the defense that may
be presented by the defendants.13
Moreover, the complaint does not have to establish or allege facts proving the existence of a
cause of action at the outset; this will have to be done at the trial on the merits of the
case.14 To sustain a motion to dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist, rather than that a claim has been defectively stated,
or is ambiguous, indefinite or uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of
action, the trial court correctly limited itself to examining the sufficiency of the allegations in
the Complaint as well as the annexes thereto. It is proscribed from inquiring into the truth of
the allegations in the Complaint or the authenticity of any of the documents referred or
attached to the Complaint, since these are deemed hypothetically admitted by the
respondent.
This Court has reviewed respondent's allegations in its Complaint. In a nutshell, respondent
alleged that herein petitioners reneged on their contractual obligation to employ him on a
permanent basis. This allegation is sufficient to constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between petitioners and
respondent is a matter which is not ripe for determination in the present case; rather, this
issue must be taken up during trial, considering that its resolution would necessarily entail an
examination of the veracity of the allegations not only of herein respondent as plaintiff but
also of petitioners as defendants.
The Court does not agree with petitioners' contention that they were not privy to the
negotiations for respondent's possible employment. It is evident from paragraphs 24 to 28 of
the Complaint16 that, on various occasions, Klepzig conducted negotiations with respondent
regarding the latter's possible employment. In fact, Annex "H" 17 of the complaint shows that
it was Klepzig who informed respondent that his company was no longer interested in
employing respondent. Hence, based on the allegations in the Complaint and the annexes
attached thereto, respondent has a cause of action against herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-
employee relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction. 18 In the present case, no
employer-employee relationship exists between petitioners and respondent. In fact, in his
complaint, private respondent is not seeking any relief under the Labor Code, but seeks
payment of damages on account of petitioners' alleged breach of their obligation under their
agreement to employ him. It is settled that an action for breach of contractualobligation is
intrinsically a civil dispute.19 In the alternative, respondent seeks redress on the basis of the
provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is
within the realm of civil law, and jurisdiction over it belongs to the regular courts. 20
With respect to the applicability of the principle of forum non conveniens in the present case,
this Court's ruling in Bank of America NT & SA v. Court of Appeals 21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning 'the forum is inconvenient', emerged
in private international law to deter the practice of global forum shopping, that is to prevent
non-resident litigants from choosing the forum or place wherein to bring their suit for
malicious reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under this
doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most "convenient" or available forum and the parties are not precluded from
seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the
trial court. In the case of Communication Materials and Design, Inc. v. Court of Appeals, this
Court held that "xxx [a] Philippine Court may assume jurisdiction over the case if it chooses
to do so; provided, that the following requisites are met: (1) that the Philippine Court is one
to which the parties may conveniently resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court
has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation v. Court of Appeals,
that the doctrine of forum non conveniens should not be used as a ground for a motion to
dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a
ground. This Court further ruled that while it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court's desistance;
and that the propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly considered a matter
of defense.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly
justify the application of the doctrine of forum non conveniens are matters of defense, the
merits of which should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the
Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
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 Decision1 and Resolution2 of the Court of Appeals
in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent against
petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and
existing under the laws of the State of Connecticut, United States of America, and
respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby
BMSI hired respondent as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service contract with the Republic of the
Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo
eruption and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor
Relations Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney
C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal
termination and breach of employment contract. 4 On 28 September 1995, Labor Arbiter
Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay respondent’s money
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and
dismissed respondent’s complaint on the ground of lack of jurisdiction.6 Respondent
elevated the case to this Court but was dismissed in a Resolution dated 26 November 1997.
The Resolution became final and executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages
before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint, 7 docketed as Civil
Case No. 1192-BG, named as defendants herein petitioner Raytheon International, Inc. as
well as BMSI and RUST, the two corporations impleaded in the earlier labor case. The
complaint essentially reiterated the allegations in the labor case that BMSI verbally
employed respondent to negotiate the sale of services in government projects and that
respondent was not paid the commissions due him from the Pinatubo dredging project
which he secured on behalf of BMSI. The complaint also averred that BMSI and RUST as well
as petitioner itself had combined and functioned as one company.
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 Judgment12 seeking the dismissal of the complaint on
grounds of forum non conveniens and failure to state a cause of action. Respondent opposed
the same. Pending the resolution of the omnibus motion, the deposition of Walter Browning
was taken before the Philippine Consulate General in Chicago. 13
In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The
trial court held that the factual allegations in the complaint, assuming the same to be
admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled
that the principle of forum non conveniens was inapplicable because the trial court could
enforce judgment on petitioner, it being a foreign corporation licensed to do business in the
Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion.
Thus, it filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ
of certiorari and a writ of injunction to set aside the twin orders of the trial court dated 13
September 2000 and 31 July 2001 and to enjoin the trial court from conducting further
proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the
petition for certiorari for lack of merit. It also denied petitioner’s motion for reconsideration
in the assailed Resolution issued on 10 March 2004. 22
The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner’s omnibus motion, it found the evidence presented by petitioner, that is, the
deposition of Walter Browning, insufficient for purposes of determining whether the
complaint failed to state a cause of action. The appellate court also stated that it could not
rule one way or the other on the issue of whether the corporations, including petitioner,
named as defendants in the case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be threshed out during
trial.23 Moreover, the appellate court deferred to the discretion of the trial court when the
latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of
the principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS
THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST
RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS
THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino
Padua Law Office, counsel on record for respondent, manifested that the lawyer handling
the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before the
filing of the instant petition and that it could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a 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 law30 and by the material allegations in the complaint, irrespective of whether or not
the plaintiff is entitled to recover all or some of the claims or reliefs sought therein. 31 Civil
Case No. 1192-BG is an action for damages arising from an alleged breach of contract.
Undoubtedly, the nature of the action and the amount of damages prayed are within the
jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein
respondent (as party plaintiff) upon the filing of the complaint. On the other hand,
jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary
appearance in court.32
That the subject contract included a stipulation that the same shall be governed by the laws
of the State of Connecticut does not suggest that the Philippine courts, or any other foreign
tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and choice
of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a defendant
to travel to this state; choice of law asks the further question whether the application of a
substantive law which will determine the merits of the case is fair to both parties. 33 The
choice of law stipulation will become relevant only when the substantive issues of the instant
case develop, that is, after hearing on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse
impositions on its jurisdiction where it is not the most "convenient" or available forum and
the parties are not precluded from seeking remedies elsewhere. 34 Petitioner’s averments of
the foreign elements in the instant case are not sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a
matter of defense. While it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the court’s desistance.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound discretion of the lower courts
because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause
of action against petitioner. Failure to state a cause of action refers to the insufficiency of
allegation in the pleading.36 As a general rule, the elementary test for failure to state a cause
of action is whether the complaint alleges facts which if true would justify the relief
demanded.37
The complaint alleged that petitioner had combined with BMSI and RUST to function as one
company. Petitioner contends that the deposition of Walter Browning rebutted this
allegation. On this score, the resolution of the Court of Appeals is instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well as other
documents produced in the hearing shows that these evidence aliunde are not
quite sufficient for us to mete a ruling that the complaint fails to state a cause of
action.
Annexes "A" to "E" by themselves are not substantial, convincing and conclusive
proofs that Raytheon Engineers and Constructors, Inc. (REC) assumed the
warranty obligations of defendant Rust International in the Makar Port Project
in General Santos City, after Rust International ceased to exist after being
absorbed by REC. Other documents already submitted in evidence are likewise
meager to preponderantly conclude that Raytheon International, Inc., Rust
International[,] Inc. and Brand Marine Service, Inc. have combined into one
company, so much so that Raytheon International, Inc., the surviving company
(if at all) may be held liable for the obligation of BMSI to respondent Rouzie for
unpaid commissions. Neither these documents clearly speak otherwise. 38
As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI
and RUST merged together requires the presentation of further evidence, which only a full-
blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.
DANTE O. TINGA
FIRST DIVISION
[G.R. No. 120077. October 13, 2000.]
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., Petitioners, v. NATIONAL
LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G.
SANTOS, Respondents.
DECISION
PARDO, J.:
The case before the Court is a petition for certiorari 1 to annul the following orders of the
National Labor Relations Commission (hereinafter referred to as "NLRC") for having been
issued without or with excess jurisdiction and with grave abuse of discretion: 2
(1) Order of May 31, 1993. 3 Reversing and setting aside its earlier resolution of August 28,
1992. 4 The questioned order declared that the NLRC, not the Philippine Overseas
Employment Administration (hereinafter referred to as "POEA"), had jurisdiction over private
respondent’s complaint;
(2) Decision of December 15, 1994. 5 Directing petitioners to jointly and severally pay private
respondent twelve thousand and six hundred dollars (US$ 12,600.00) representing salaries
for the unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00)
as extra four months salary for the two (2) year period of his contract, three thousand six
hundred dollars (US$3,600.00) as "14th month pay" or a total of nineteen thousand and
eight hundred dollars (US$19,800.00) or its peso equivalent and attorney’s fees amounting
to ten percent (10%) of the total award; and
(3) Order of March 30, 1995. 6 Denying the motion for reconsideration of the
petitioners.chanrob1es virtua1 1aw 1ibrary
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was
an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman. and paid all benefits due him, including his plane fare back to the Philippines.
Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People’s
Republic of China and later terminated due to retrenchment. On October 3, 1989, respondent Santos was repatriated to the Philippines.

Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr.
Manila Hotel International Company, Limited (hereinafter referred to as "MHICL"). Shmidt, demanding full compensation pursuant to the employment agreement.

When the case was filed in 1990, MHC was still a government-owned and controlled On November 11, 1989, Mr. Shmidt replied, to wit: 17
corporation duly organized and existing under the laws of the Philippines.
His service with the Palace Hotel, Beijing was not abruptly terminated but we followed the
MHICL is a corporation duly organized and existing under the laws of Hong Kong. 7 MHC is an one-month notice clause and Mr. Santos received all benefits due him.
"incorporator" of MHICL, owning 50% of its capital stock. 8
"For your information the Print Shop at the Palace Hotel is still not operational and with a
By virtue of a "management agreement" 9 with the Palace Hotel (Wang Fu Company low business outlook, retrenchment in various departments of the hotel is going on which is
Limited), MHICL 10 trained the personnel and staff of the Palace Hotel at Beijing, China. a normal management practice to control costs.

Now the facts. "When going through the latest performance ratings, please also be advised that his
performance was below average and a Chinese National who is doing his job now shows a
During his employment with the Mazoon Printing Press in the Sultanate of Oman, better approach.
respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General
Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was "In closing, when Mr. Santos received the letter of notice, he hardly showed up for work but
recommended by one Nestor Buenio, a friend of his. still enjoyed free accommodation/laundry/meals up to the day of his departure."cralaw
virtua1aw library
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. The position was slated to open on October 1, 1988. On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
11 Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC). He
prayed for an award of nineteen thousand nine hundred and twenty three dollars
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as exemplary damages
offer. and attorney’s fees equivalent to 20% of the damages prayed for. The complaint named
MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.chanrob1es virtua1 1aw
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign 1ibrary
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in Manila, together with his The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in
passport and two additional pictures for his visa to China.chanrob1es virtua1 1aw 1ibrary the proceedings before the Labor Arbiter. 18

On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners,
June 30, 1988, under the pretext that he was needed at home to help with the family’s thus: 19
piggery and poultry business.
"WHEREFORE, judgment is hereby rendered:jgc:chanrobles.com.ph
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk’s
letter. Respondent Santos enclosed four (4) signed copies of the employment contract "1. directing all the respondents to pay complainant jointly and severally;
(dated June 4, 1988) and notified them that he was going to arrive in Manila during the first
week of July 1988. "a) $20,820 US dollars or its equivalent in Philippine currency as unearned salaries;

The employment contract of June 4, 1988 stated that his employment would commence "b) P50,000.00 as moral damages;
September 1, 1988 for a period of two years. 12 It provided for a monthly salary of nine
hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year. 13 "c) P40,000.00 as exemplary damages; and

On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press. "d) Ten (10) percent of the total award as attorney’s fees.

On July 1, 1988, respondent Santos arrived in Manila. "SO ORDERED."cralaw virtua1aw library

On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had
Palace Hotel. 14 jurisdiction over the case.

Subsequently, respondent Santos signed an amended "employment agreement" with the On August 28, 1992, the NLRC promulgated a resolution, stating: 20
Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the
Palace Hotel. The Vice President (Operations and Development) of petitioner MHICL Miguel "WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for want of
D. Cergueda signed the employment agreement under the word "noted" . jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA.

From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He "SO ORDERED."cralaw virtua1aw library
returned to China and reassumed his post on July 17, 1989.chanrob1es virtua1 1aw 1ibrary
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
On July 22, 1989, Mr. Shmidt’s Executive Secretary, a certain Joanna suggested in a resolution. He argued that the case was not cognizable by the POEA as he was not an
handwritten note that respondent Santos be given one (1) month notice of his release from "overseas contract worker." 21
employment.
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Arbiter Emerson Tumanon to hear the case on the question of whether private respondent
Shmidt that his employment at the Palace Hotel print shop would be terminated due to was retrenched or dismissed. 22
business reverses brought about by the political upheaval in China. 15 We quote the letter:
16 On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him. 23
"After the unfortunate happenings in China and especially Beijing (referring to Tiannamen
Square incidents), our business has been severely affected. To reduce expenses, we will not Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital
open/operate printshop for the time being. Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera. 24

"We sincerely regret that a decision like this has to be made, but rest assured this does in no On November 25, 1994, Labor Arbiter de Vera submitted his report. 25 He found that
way reflect your past performance which we found up to our expectations."cralaw virtua1aw respondent Santos was illegally dismissed from employment and recommended that he be
library paid actual damages equivalent to his salaries for the unexpired portion of his contract. 26

"Should a turnaround in the business happen, we will contact you directly and give you On December 15, 1994, the NLRC ruled in favor of private respondent, to wit: 27
priority on future assignment."cralaw virtua1aw library
"WHEREFORE, finding that the report and recommendations of Arbiter de Vera are
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos supported by substantial evidence, judgment is hereby rendered, directing the respondents
to jointly and severally pay complainant the following computed contractual benefits: (1) China and was not even served with summons. Jurisdiction over its person was not acquired.
US$12,600.00 as salaries for the unexpired portion of the parties’ contract; (2) US$3,600.00
as extra four (4) months salary for the two (2) years period (sic) of the parties’ contract; (3) This is not to say that Philippine courts and agencies have no power to solve controversies
US$3,600.00 as "14th month pay" for the aforesaid two (2) years contract stipulated by the involving foreign employers. Neither are we saying that we do not have power over an
parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorney’s fees of 10% of employment contract executed in a foreign country. If Santos were an "overseas contract
complainant’s total award. worker", a Philippine forum, specifically the POEA, not the NLRC, would protect him. 39 He is
not an "overseas contract worker" a fact which he admits with conviction. 40
"SO ORDERED."cralaw virtua1aw library
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC’s decision
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter cannot be sustained.
de Vera’s recommendation had no basis in law and in fact. 28
II. MHC Not Liable
On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that
Hence, this petition. 30 MHICL was liable for Santos’ retrenchment, still MHC, as a separate and distinct juridical
entity cannot be held liable.
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock.
annulment of the entry of judgment of the NLRC dated July 31, 1995. 31 However, this is not enough to pierce the veil of corporate fiction between MHICL and MHC.

On November 20, 1995, the Court denied petitioner’s urgent motion. The Court required Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
respondents to file their respective comments, without giving due course to the petition. 32 corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend
a crime. 41 It is done only when a corporation is a mere alter ego or business conduit of a
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the person or another corporation.
petition and its annexes, they can not defend and sustain the position taken by the NLRC in
its assailed decision and orders. The Solicitor General prayed that he be excused from filing a In Traders Royal Bank v. Court of Appeals, 42 we held that "the mere ownership by a single
comment on behalf of the NLRC 33 stockholder or by another corporation of all or nearly all of the capital stock of a corporation
is not of itself a sufficient reason for disregarding the fiction of separate corporate
On April 30,1996, private respondent Santos filed his comment. 34 personalities."cralaw virtua1aw library

On June 26, 1996, the Court granted the manifestation of the Solicitor General and required The tests in determining whether the corporate veil may be pierced are: First, the defendant
the NLRC to file its own comment to the petition. 35 must have control or complete domination of the other corporation’s finances, policy and
business practices with regard to the transaction attacked. There must be proof that the
On January 7, 1997, the NLRC filed its comment. other corporation had no separate mind, will or existence with respect the act complained
of. Second, control must be used by the defendant to commit fraud or wrong. Third, the
The petition is meritorious. aforesaid control or breach of duty must be the proximate cause of the injury or loss
complained of. The absence of any of the elements prevents the piercing of the corporate
I. Forum Non-Conveniens veil. 43

The NLRC was a seriously inconvenient forum. It is basic that a corporation has a personality separate and distinct from those composing it
as well as from that of any other legal entity to which it may be related. 44 Clear and
We note that the main aspects of the case transpired in two foreign jurisdictions and the convincing evidence is needed to pierce the veil of corporate fiction. 45 In this case, we find
case involves purely foreign elements. The only link that the Philippines has with the case is no evidence to show that MHICL and MHC are one and the same entity.chanrob1es virtua1
that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign 1aw 1ibrary
corporations. Not all cases involving our citizens can be tried here.chanrob1es virtua1 1aw
1ibrary III. MHICL not Liable

The employment contract. — Respondent Santos was hired directly by the Palace Hotel, a Respondent Santos predicates MHICL’s liability on the fact that MHICL "signed" his
foreign employer, through correspondence sent to the Sultanate of Oman, where employment contract with the Palace Hotel. This fact fails to persuade us.
respondent Santos was then employed. He was hired without the intervention of the POEA
or any authorized recruitment agency of the government. 36 First, we note that the Vice President (Operations and Development) of MHICL, Miguel D.
Cergueda signed the employment contract as a mere witness. He merely signed under the
Under the rule of forum non conveniens, a Philippine court or agency may assume word "noted" .
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one
to which the parties may conveniently resort to; (2) that the Philippine court is in a position When one "notes" a contract, one is not expressing his agreement or approval, as a party
to make an intelligent decision as to the law and the facts; and (3) that the Philippine court would. 46 In Sichangco v. Board of Commissioners of Immigration, 47 the Court recognized
has or is likely to have power to enforce its decision. 37 The conditions are unavailing in the that the term "noted" means that the person so noting has merely taken cognizance of the
case at bar. existence of an act or declaration, without exercising a judicious deliberation or rendering a
decision on the matter.
Not Convenient. — We fail to see how the NLRC is a convenient forum given that all the
incidents of the case — from the time of recruitment, to employment to dismissal occurred Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of
outside the Philippines. The inconvenience is compounded by the fact that the proper the document is that which, "in a deed or other formal instrument is that part which comes
defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither .are after the recitals, or where there are no recitals, after the parties (Emphasis ours)." 48 As
they "doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. opposed to a party to a contract, a witness is simply one who, "being present, personally
Henk are non-residents of the Philippines. sees or perceives a thing; a beholder, a spectator, or eyewitness." 49 One who "notes"
something just makes a "brief written statement" 50 a memorandum or observation.
No power to determine applicable law. — Neither can an intelligent decision be made as to
the law governing the employment contract as such was perfected in foreign soil. This calls Second, and more importantly, there was no existing employer-employee relationship
to fore the application of the principle of lex loci contractus (the law of the place where the between Santos and MHICL. In determining the existence of an employer-employee
contract was made). 38 relationship, the following elements are considered: 51

The employment contract was not perfected in the Philippines. Respondent Santos signified "(1) the selection and engagement of the employee;
his acceptance by writing a letter while he was in the Republic of Oman. This letter was sent
to the Palace Hotel in the People’s Republic of China. "(2) the payment of wages;

No power to determine the facts. — Neither can the NLRC determine the facts surrounding "(3) the power to dismiss; and
the alleged illegal dismissal as all acts complained of took place in Beijing, People’s Republic
of China. The NLRC was not in a position to determine whether the Tiannamen Square "(4) the power to control employee’s conduct."cralaw virtua1aw library
incident truly adversely affected operations of the Palace Hotel as to justify respondent
Santos’ retrenchment. MHICL did not have and did not exercise any of the aforementioned powers. It did not select
respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel
Principle of effectiveness, no power to execute decision. — Even assuming that a proper by his friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of
decision could be reached by the NLRC, such would not have any binding effect against the employment were negotiated and finalized through correspondence between respondent
employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of Santos, Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace
Hotel and not MHICL. Neither did respondent Santos adduce any proof that MHICL had the vs.
power to control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not ANNIE COUSHING HIX, oppositor-appellee.
MHICL that terminated respondent Santos’ services.

Neither is there evidence to suggest that MHICL was a "labor-only contractor." 52 There is no C.A. Sobral for appellant.
proof that MHICL "supplied" respondent Santos or even referred him for employment to the Harvey & O' Brien and Gibbs & McDonough for appellee.
Palace Hotel.
MALCOLM, J.:
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the
same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not
enough to pierce the corporate veil between MHICL and the Palace Hotel. The special administrator of the estate of Edward Randolph Hix appeals from a decision of
Judge of First Instance Tuason denying the probate of the document alleged to by the last
IV. Grave Abuse of Discretion will and testament of the deceased. Appellee is not authorized to carry on this appeal. We
think, however, that the appellant, who appears to have been the moving party in these
Considering that the NLRC was forum non-conveniens and considering further that no proceedings, was a "person interested in the allowance or disallowance of a will by a Court of
employer-employee relationship existed between MHICL, MHC and respondent Santos, First Instance," and so should be permitted to appeal to the Supreme Court from the
Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent’s claim in NLRC disallowance of the will (Code of Civil Procedure, sec. 781, as amended; Villanueva vs. De
NCR Case No. 00-02-01058-90.chanrob1es virtua1 1aw 1ibrary Leon [1925], 42 Phil., 780).

Labor Arbiters have exclusive and original jurisdiction only over the following: 53
It is theory of the petitioner that the alleged will was executed in Elkins, West Virginia, on
November 3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of
"1. Unfair labor practice cases;
West Verginia Code, Annotated, by Hogg, Charles E., vol. 2, 1914, p. 1690, and as certified to
by the Director of the National Library. But this was far from a compliance with the law. The
"2. Termination disputes;
laws of a foreign jurisdiction do not prove themselves in our courts. the courts of the
Philippine Islands are not authorized to take American Union. Such laws must be proved as
"3. If accompanied with a claim for reinstatement, those cases that workers may file
facts. (In re Estate of Johnson [1918], 39 Phil., 156.) Here the requirements of the law were
involving wages, rates of pay, hours of work and other terms and conditions of employment;
not met. There was no was printed or published under the authority of the State of West
Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from
"4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
the law attested by the certificate of the officer having charge of the original, under the sale
employee relations;
of the State of West Virginia, as provided in section 301 of the Code of Civil Procedure. No
evidence was introduced to show that the extract from the laws of West Virginia was in force
"5 Cases arising from any violation of Article 264 of this Code, including questions involving
at the time the alleged will was executed.
legality of strikes and lockouts; and

"6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement."cralaw
virtua1aw library
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
In addition, the due execution of the will was not established. The only evidence on this
point is to be found in the testimony of the petitioner. Aside from this, there was nothing to
indicate that the will was acknowledged by the testator in the presence of two competent
witnesses, of that these witnesses subscribed the will in the presence of the testator and of
each other as the law of West Virginia seems to require. On the supposition that the
witnesses to the will reside without the Philippine Islands, it would then the duty of the
petitioner to prove execution by some other means (Code of Civil Procedure, sec. 633.)

The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited It was also necessary for the petitioner to prove that the testator had his domicile in West
to disputes arising from an employer-employee relationship which can be resolved by Virginia and not establish this fact consisted of the recitals in the CATHY will and the
reference to the Labor Code, or other labor statutes, or their collective bargaining testimony of the petitioner. Also in beginning administration proceedings orginally in the
agreements. 54 Philippine Islands, the petitioner violated his own theory by attempting to have the principal
administration in the Philippine Islands.
"To determine which body has jurisdiction over the present controversy, we rely on the
sound judicial principle that jurisdiction over the subject matter is conferred by law and is
While the appeal pending submission in this court, the attorney for the appellant presented
determined by the allegations of the complaint irrespective of whether the plaintiff is
an unverified petition asking the court to accept as part of the evidence the documents
entitled to all or some of the claims asserted therein." 55
attached to the petition. One of these documents discloses that a paper writing purporting
to be the was presented for probate on June 8, 1929, to the clerk of Randolph Country, State
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
of West Virginia, in vacation, and was duly proven by the oaths of Dana Wamsley and Joseph
complaint. His failure to dismiss the case amounts to grave abuse of discretion. 56
L. MAdden, the subscribing witnesses thereto , and ordered to be recorded and filed. It was
shown by another document that, in vacation, on June 8, 1929, the clerk of court of
V. The Fallo
Randolph Country, West Virginia, appointed Claude W. Maxwell as administrator, cum
testamento annexo, of the estate of Edward Randolph Hix, deceased. In this connection, it is
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders
to be noted that the application for the probate of the will in the Philippines was filed on
and resolutions of the National Labor Relations Commission dated May 31, 1993, December
February 20, 1929, while the proceedings in West Virginia appear to have been initiated on
15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-
June 8, 1929. These facts are strongly indicative of an intention to make the Philippines the
01058-90).
principal administration and West Virginia the ancillary administration. However this may be,
no attempt has been made to comply with Civil Procedure, for no hearing on the question of
No costs.
the allowance of a will said to have been proved and allowed in West Virginia has been
requested. There is no showing that the deceased left any property at any place other than
SO ORDERED.
the Philippine Islands and no contention that he left any in West Virginia.
Davide, Jr., C.J., Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.
Reference has been made by the parties to a divorce purported to have been awarded
Edward Randolph Hix from Annie Cousins Hix on October 8, 1925, in the State of West
specific pronouncements on the validity or validity of this alleged divorce.
Republic of the Philippines
SUPREME COURT
Manila For all of the foregoing, the judgment appealed from will be affirmed, with the costs of this
instance against the appellant.

EN BANC
Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-32636 March 17, 1930

Republic of the Philippines
SUPREME COURT
In the matter Estate of Edward Randolph Hix, deceased. Manila
A.W. FLUEMER, petitioner-appellant,
EN BANC
G.R. No. L-12105 January 30, 1960
TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee,
vs.
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA
BOHANAN, oppositors-appellants.
Jose D. Cortes for appellants.
Ohnick, Velilla and Balonkita for appellee.
LABRADOR, J.:
Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose,
presiding, dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and
Edward Bohanan to the project of partition submitted by the executor and approving the
said project.
On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding,
admitted to probate a last will and testament of C. O. Bohanan, executed by him on April 23,
1944 in Manila. In the said order, the court made the following findings:
According to the evidence of the opponents the testator was born in Nebraska
and therefore a citizen of that state, or at least a citizen of California where
some of his properties are located. This contention in untenable.
Notwithstanding the long residence of the decedent in the Philippines, his stay
here was merely temporary, and he continued and remained to be a citizen of
the United States and of the state of his pertinent residence to spend the rest of
his days in that state. His permanent residence or domicile in the United States
depended upon his personal intent or desire, and he selected Nevada as his
homicide and therefore at the time of his death, he was a citizen of that state.
Nobody can choose his domicile or permanent residence for him. That is his
exclusive personal right.
Wherefore, the court finds that the testator C. O. Bohanan was at the time of his
death a citizen of the United States and of the State of Nevada and declares that
his will and testament, Exhibit A, is fully in accordance with the laws of the state
of Nevada and admits the same to probate. Accordingly, the Philippine Trust
Company, named as the executor of the will, is hereby appointed to such
executor and upon the filing of a bond in the sum of P10,000.00, let letters
testamentary be issued and after taking the prescribed oath, it may enter upon
the execution and performance of its trust. (pp. 26-27, R.O.A.).
It does not appear that the order granting probate was ever questions on appeal. The
executor filed a project of partition dated January 24, 1956, making, in accordance with the
provisions of the will, the following adjudications: (1) one-half of the residuary estate, to the
Farmers and Merchants National Bank of Los Angeles, California, U.S.A. in trust only for the
benefit of testator's grandson Edward George Bohanan, which consists of several mining
companies; (2) the other half of the residuary estate to the testator's brother, F.L. Bohanan,
and his sister, Mrs. M. B. Galbraith, share and share alike. This consist in the same amount of
cash and of shares of mining stock similar to those given to testator's grandson; (3) legacies
of P6,000 each to his (testator) son, Edward Gilbert Bohana, and his daughter, Mary Lydia
Bohanan, to be paid in three yearly installments; (4) legacies to Clara Daen, in the amount of
P10,000.00; Katherine Woodward, P2,000; Beulah Fox, P4,000; and Elizabeth Hastings,
P2,000;
It will be seen from the above that out of the total estate (after deducting administration
expenses) of P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of
all shares of stock of several mining companies and to his brother and sister the same
amount. To his children he gave a legacy of only P6,000 each, or a total of P12,000.
The wife Magadalena C. Bohanan and her two children question the validity of the
testamentary provisions disposing of the estate in the manner above indicated, claiming that
they have been deprived of the legitimate that the laws of the form concede to them.
The first question refers to the share that the wife of the testator, Magdalena C. Bohanan,
should be entitled to received. The will has not given her any share in the estate left by the
testator. It is argued that it was error for the trial court to have recognized the Reno divorce
secured by the testator from his Filipino wife Magdalena C. Bohanan, and that said divorce
should be declared a nullity in this jurisdiction, citing the case of Querubin vs. Querubin, 87
Phil., 124, 47 Off. Gaz., (Sup, 12) 315, Cousins Hiz vs. Fluemer, 55 Phil., 852,
Ramirez vs. Gmur, 42 Phil., 855 and Gorayeb vs. Hashim, 50 Phil., 22. The court below
refused to recognize the claim of the widow on the ground that the laws of Nevada, of which
the deceased was a citizen, allow him to dispose of all of his properties without requiring him
to leave any portion of his estate to his wife. Section 9905 of Nevada Compiled Laws of 1925
provides:
Every person over the age of eighteen years, of sound mind, may, by last will,
dispose of all his or her estate, real and personal, the same being chargeable
with the payment of the testator's debts.
Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the
testator's estafa had already been passed upon adversely against her in an order dated June
19, 1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become final, as
Magdalena C. Bohanan does not appear to have appealed therefrom to question its validity.
On December 16, 1953, the said former wife filed a motion to withdraw the sum of P20,000
from the funds of the estate, chargeable against her share in the conjugal property, (See pp.
294-297, Vol. I, Record, Court of First Instance), and the court in its said error found that
there exists no community property owned by the decedent and his former wife at the time
the decree of divorce was issued. As already and Magdalena C. Bohanan may no longer
question the fact contained therein, i.e. that there was no community property acquired by
the testator and Magdalena C. Bohanan during their converture.
Moreover, the court below had found that the testator and Magdalena C. Bohanan were
married on January 30, 1909, and that divorce was granted to him on May 20, 1922; that
sometime in 1925, Magdalena C. Bohanan married Carl Aaron and this marriage was
subsisting at the time of the death of the testator. Since no right to share in the inheritance
in favor of a divorced wife exists in the State of Nevada and since the court below had
already found that there was no conjugal property between the testator and Magdalena C.
Bohanan, the latter can now have no longer claim to pay portion of the estate left by the
testator.
The most important issue is the claim of the testator's children, Edward and Mary Lydia, who
had received legacies in the amount of P6,000 each only, and, therefore, have not been given
their shares in the estate which, in accordance with the laws of the forum, should be two-
thirds of the estate left by the testator. Is the failure old the testator to give his children two-
thirds of the estate left by him at the time of his death, in accordance with the laws of the
forum valid?
The old Civil Code, which is applicable to this case because the testator died in 1944,
expressly provides that successional rights to personal property are to be earned by the
national law of the person whose succession is in question. Says the law on this point:
Nevertheless, legal and testamentary successions, in respect to the order of
succession as well as to the extent of the successional rights and the intrinsic
validity of their provisions, shall be regulated by the national law of the person
whose succession is in question, whatever may be the nature of the property
and the country in which it is found. (par. 2, Art. 10, old Civil Code, which is the
same as par. 2 Art. 16, new Civil Code.)
In the proceedings for the probate of the will, it was found out and it was decided that the
testator was a citizen of the State of Nevada because he had selected this as his domicile and
his permanent residence. (See Decision dated April 24, 1950, supra). So the question at issue
is whether the estementary dispositions, especially hose for the children which are short of
the legitime given them by the Civil Code of the Philippines, are valid. It is not disputed that
the laws of Nevada allow a testator to dispose of all his properties by will (Sec. 9905,
Complied Nevada Laws of 1925, supra). It does not appear that at time of the hearing of the
project of partition, the above-quoted provision was introduced in evidence, as it was the
executor's duly to do. The law of Nevada, being a foreign law can only be proved in our
courts in the form and manner provided for by our Rules, which are as follows:
SEC. 41. Proof of public or official record. — An official record or an entry
therein, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy tested by the officer having the legal custody of
he record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. . . . (Rule 123).
We have, however, consulted the records of the case in the court below and we have found
that during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for
withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled
Nevada Laws. was introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See
pp. 77-79, VOL. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws
presented by the counsel for the executor and admitted by the Court as Exhibit "B" during
the hearing of the case on January 23, 1950 before Judge Rafael Amparo (se Records, Court
of First Instance, Vol. 1).
In addition, the other appellants, children of the testator, do not dispute the above-quoted
provision of the laws of the State of Nevada. Under all the above circumstances, we are
constrained to hold that the pertinent law of Nevada, especially Section 9905 of the
Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of such
law having been offered at the hearing of the project of partition.
As in accordance with Article 10 of the old Civil Code, the validity of testamentary
dispositions are to be governed by the national law of the testator, and as it has been
decided and it is not disputed that the national law of the testator is that of the State of
Nevada, already indicated above, which allows a testator to dispose of all his property
according to his will, as in the case at bar, the order of the court approving the project of
partition made in accordance with the testamentary provisions, must be, as it is hereby
affirmed, with costs against appellants.
Paras, Bengzon, C.J., Padilla, Bautista Angelo and Endencia, JJ., concur.
Barrera, J., concurs in the result.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-104776 December 5, 1994
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of
1,767 NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR, NATIONAL
LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERS CORPORATION, respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO M. CADALIN, ET AL., petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC.
and/or ASIA INTERNATIONAL BUILDERS CORPORATION, respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT INTERNATIONAL,
INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M.
AMUL, DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA,
SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN, ROMEO
ACUPAN, BENJAMIN ALEJANDRE, WILFREDO D. ALIGADO, MARTIN AMISTAD, JR.,
ROLANDO B. AMUL, AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE ARLITA,
HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO, FALCONERO BANAAG, RAMON
BARBOSA, FELIX BARCENA, FERNANDO BAS, MARIO BATACLAN, ROBERTO S. BATICA,
ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M. BOBIER,
DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO, GUILLERMO CABEZAS,
BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE CAILAO, IRENEO CANDOR, JOSE
CASTILLO, MANUEL CASTILLO, REMAR CASTROJERES, REYNALDO CAYAS, ROMEO CECILIO,
TEODULO CREUS, BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO
DE GUZMAN, ONOFRE DE RAMA, IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON,
ANTONIO S. DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR.,
EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN ESGUERRA, EDUARDO ESPIRITU, ERNESTO
ESPIRITU, RODOLFO ESPIRITU, NESTOR M. ESTEVA, BENJAMIN ESTRADA, VALERIO
EVANGELISTA, OLIGARIO FRANCISCO, JESUS GABAWAN, ROLANDO GARCIA, ANGEL GUDA,
PACITO HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO JARDINIANO,
ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U. LIRIO LORETO LONTOC, ISRAEL
LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN, LEOVIGILDO
MARCIAL, NOEL MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO,
FRANCIS MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO MIRANDA,
ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR RESURRECCION D. NAZARENO, JUAN
OLINDO, FRANCISCO R. OLIVARES, PEDRO ORBISTA, JR., RICARDO ORDONEZ, ERNIE
PANCHO, JOSE PANCHO, GORGONIO P. PARALA, MODESTO PINPIN, JUANITO PAREA,
ROMEO I. PATAG, FRANCISCO PINPIN, LEONARDO POBLETE, JAIME POLLOS, DOMINGO
PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL, GAUDENCIO RETANAN, JR., TOMAS B.
RETENER, ALVIN C. REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G. RICAZA,
RODELIO RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES, JOSE
ROBLEZA, QUIRINO RONQUILLO, AVELINO M. ROQUE, MENANDRO L. SABINO, PEDRO
SALGATAR, EDGARDO SALONGA, NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS,
JR., GABRIEL SANTOS, JUANITO SANTOS, PAQUITO SOLANTE, CONRADO A. SOLIS, JR.,
RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC, MENANDRO TEMPROSA,
BIENVENIDO S. TOLENTINO, BENEDICTO TORRES, MAXIMIANO TORRES, FRANCISCO G.
TRIAS, SERGIO A. URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN VICTORIA,
GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES, DOMINGO
VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO VILLANUEVA,
ROGELIO VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO
AALAGOS, NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES, EDUARDO ABANTE,
JOSE ABARRO, JOSEFINO ABARRO, CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL
ABESTANO, RODRIGO G. ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S.
ACOJIDO, LEOWILIN ACTA, EUGENIO C. ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN,
SOLANO ACUPAN, MANUEL P. ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO,
MANUEL P. AGUINALDO, DANTE AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO, JR.,
CONRADO ALCANTARA, LAMBERTO Q. ALCANTARA, MARIANITO J. ALCANTARA, BENCIO
ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L. ALEJANDRO,
MAXIMINO ALEJANDRO, ALBERTO ALMENAR, ARNALDO ALONZO, AMADO ALORIA,
CAMILO ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS AMORES,
BERNARD P. ANCHETA, TIMOTEO O. ANCHETA, JEOFREY ANI, ELINO P. ANTILLON,
ARMANDRO B. ANTIPONO, LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO,
FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR AQUINO,
ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O. ARATEA, ARTURO V.
ARAULLO, PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO ARCIAGA, JOSE
AREVALO, JUANTO AREVALO, RAMON AREVALO, RODOLFO AREVALO, EULALIO
ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO ASUNCION, ARTEMIO M.
ASUNCION, EDGARDO ASUNCION, REXY M. ASUNCION, VICENTE AURELIO, ANGEL
AUSTRIA, RICARDO P. AVERILLA, JR., VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO
BABILONIA, FELIMON BACAL, JOSE L. BACANI, ROMULO R. BALBIERAN, VICENTE
BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O. BARBA, BERNARDO
BARRO, JUAN A. BASILAN, CEFERINO BATITIS, VIVENCIO C. BAUAN, GAUDENCIO S.
BAUTISTA, LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO BAUTISTA, RUPERTO B.
BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA, WINIEFREDO
BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN, EMELIANO BENALES, JR.,
RAUL BENITEZ, PERFECTO BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO I.
BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN, ANGELITO BICOL, ANSELMO BICOL,
CELESTINO BICOL, JR., FRANCISCO BICOL, ROGELIO BICOL, ROMULO L. BICOL, ROGELIO
BILLIONES, TEOFILO N. BITO, FERNANDO BLANCO, AUGUSTO BONDOC, DOMINGO
BONDOC, PEPE S. BOOC, JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C. BRECINO,
EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO, ARCHIMEDES
BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO BUENCONSEJO, ALEXANDER
BUSTAMANTE, VIRGILIO BUTIONG, JR., HONESTO P. CABALLA, DELFIN CABALLERO,
BENEDICTO CABANIGAN, MOISES CABATAY, HERMANELI CABRERA, PEDRO CAGATAN,
JOVEN C. CAGAYAT, ROGELIO L. CALAGOS, REYNALDO V. CALDEJON, OSCAR C. CALDERON,
NESTOR D. CALLEJA, RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO,
ROBERTO CAMANA, FLORANTE C. CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS,
EPIFANIO A. CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON, MENANDRO M.
CASTAÑEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO, JOSEPH B. CASTILLO,
ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P. CASTILLO,
SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR.,
ROMEO A. DE CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS,
HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA,
VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION,
TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR
CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M.
CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR.,
CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ,
AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ,
TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON,
FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO
DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID,
VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE
GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON, JOSELITO L. DE
LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO
DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A.
DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE
DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO, ALBERTO
STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D.
DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO,
JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS EQUIPANO,
FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS,
ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU,
JULIAN ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO,
ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO
FALQUEZA, WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M.
FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES,
BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO, VALERIANO
FRANCISCO, RODOLFO GABAWAN, ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO
N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES GARCIA,
JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA, PATRICIO L. GARCIA,
JR., PONCIANO G. GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S.
GARCIA, OSIAS G. GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO
GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D.
GUANIO, MARTIN V. GUERRERO, JR., ALEXIS GUNO, RICARDO L. GUNO, FRANCISCO GUPIT,
DENNIS J. GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H.
HABANA, RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO D. HILADO, JUSTO
HILAPO, ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO,
MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL
L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES, GENEROSO
IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER,
ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ, DANILO E.
JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL
VALENTINO S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO YABUT, VICENTE YNGENTE,
JOSE, GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. AND ORO C. ZUNIGA, respondents.
LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC,
RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN,
EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO LAXAMANA, DANIEL R. LAZARO, Gerardo A. Del Mundo and Associates for petitioners.
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 Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for BRII/AIBC.
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, Florante M. De Castro for private respondents in 105029-32.
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. QUIASON, J.:
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. The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine
MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V. MAGTIBAY, Overseas Employment Administration's Administrator, et. al.," was filed under Rule 65 of the
GERONIMO MAHILUM, MANUEL MALONZO, RICARDO MAMADIS, RODOLFO MANA, Revised Rules of Court:
BERNARDO A. MANALILI, MANUEL MANALILI, ANGELO MANALO, AGUILES L. MANALO,
LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL
(1) to modify the Resolution dated September 2, 1991 of the
MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON
National Labor Relations Commission (NLRC) in POEA Cases Nos.
MAPILE, ROBERTO C. MARANA, NEMESIO MARASIGAN, WENCESLAO MARASIGAN,
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to
LEONARDO MARCELO, HENRY F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO,
render a new decision: (i) declaring private respondents as in
NARCISO A. MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE,
default; (ii) declaring the said labor cases as a class suit; (iii)
RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO
ordering Asia International Builders Corporation (AIBC) and Brown
MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO MENDOZA,
and Root International Inc. (BRII) to pay the claims of the 1,767
JR., CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED,
claimants in said labor cases; (iv) declaring Atty. Florante M. de
RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR MINIMO, BENJAMIN
Castro guilty of forum-shopping; and (v) dismissing POEA Case No.
MIRANDA, FELIXBERTO D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO,
L-86-05-460; and
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, (3) to reverse the Resolution dated March 24, 1992 of NLRC,
MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO D. denying the motion for reconsideration of its Resolution dated
NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO September 2, 1991 (Rollo, pp. 8-288).
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, The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National
FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, Labor Relations Commission, et. al.," was filed under Rule 65 of the Revised Rules of Court:
DANILO R. ORTANEZ, WILFREDO OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N.
PACHECO, ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO (1) to reverse the Resolution dated September 2, 1991 of NLRC in
T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA, QUINCIANO PALO, JOSE PAMATIAN, POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
GONZALO PAN, PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V. L-86-05-460 insofar as it: (i) applied the three-year prescriptive
PASIA, EDILBERTO PASIMIO, JR., JOSE V. PASION, ANGELITO M. PENA, DIONISIO PENDRAS, period under the Labor Code of the Philippines instead of the ten-
HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, year prescriptive period under the Civil Code of the Philippines; and
JUAN PEREZ, LEON PEREZ, ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO (ii) denied the
G. PERINO, FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE "three-hour daily average" formula in the computation of
PINPIN, WILFREDO PINPIN, ARTURO POBLETE, DOMINADOR R. PRIELA, BUENAVENTURA petitioners' overtime pay; and
PRUDENTE, CARMELITO PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O.
PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L. QUINTO, ROMEO QUINTOS,
EDUARDO W. RACABO, RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, (2) to reverse the Resolution dated March 24, 1992 of NLRC,
FERNANDO A. RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V. RAMIREZ, denying the motion for reconsideration of its Resolution dated
ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO, September 2, 1991 (Rollo, pp. 8-25; 26-220).
REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E.
RECOLASO, ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME RELLOSA,
EUGENIO A. REMOQUILLO, GERARDO RENTOZA, REDENTOR C. REY, ALFREDO S. REYES, The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al.,
AMABLE S. REYES, BENEDICTO R. REYES, GREGORIO B. REYES, JOSE A. REYES, JOSE C. v. National Labor Relations Commission, et. al." was filed under Rule 65 of the Revised Rules
REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M. RICO, of Court:
EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO ROBLEZA,
RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO (1) to reverse the Resolution dated September 2, 1991 of NLRC in
RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS RONQUILLO, ELISE RONQUILLO, POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO, RODOLFO RONQUILLO, ANGEL L-86-05-460, insofar as it granted the claims of 149 claimants; and
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. (2) to reverse the Resolution dated March 21, 1992 of NLRC insofar
SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S. SANTIAGO, SERGIO as it denied the motions for reconsideration of AIBC and BRII (Rollo,
SANTIAGO, EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL pp. 2-59; 61-230).
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,
The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA in
ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO, JOSELITO C. SOLANTE,
four labor cases: (1) awarded monetary benefits only to 149 claimants and (2) directed Labor
CARLITO SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS,
Arbiter Fatima J. Franco to conduct hearings and to receive evidence on the claims dismissed
EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA, FELIMON SUPANG,
by the POEA for lack of substantial evidence or proof of employment.
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. Consolidation of Cases
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 G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R. Nos.
VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO, ALFREDO 104911-14 were raffled to the Second Division. In the Resolution dated July 26, 1993, the
VICTORIANO, TEOFILO P. VIDALLO, SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos. 104911-
VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA, ALEX VILLAHERMOZA, 14, Rollo, p. 895).
DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M. VILLANUEVA, MANUEL R.
In the Resolution dated September 29, 1993, the Third Division granted the motion filed in
G.R. Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and 105029-
32, which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R.
Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the
First Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776
(G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p. 1562).
I benefits and their share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985,
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
the POEA Administrator directed AIBC to file its answer to the amended complaint (G.R. No.
104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the same
day, the POEA issued an order directing AIBC and BRII to file their answers to the "Amended
Complaint," otherwise, they would be deemed to have waived their right to present
evidence and the case would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and
Motion for Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants
opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to
file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for
the issuance of a writ of injunction. On September 19, 1985, NLRC enjoined the POEA
Administrator from hearing the labor cases and suspended the period for the filing of the
answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional
claimants in the case and to investigate alleged wrongdoings of BRII, AIBC and their
respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-
85-10-777) against AIBC and BRII with the POEA, demanding monetary claims similar to
those subject of POEA Case No. L-84-06-555. In the same month, Solomon Reyes also filed
his own complaint (POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the
substitution of the original counsel of record and the cancellation of the special powers of
attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce
attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-
460) in behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case No. 84-
06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and
September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA Administrator, it is not amiss
to mention that two cases were filed in the Supreme Court by the claimants, namely — G.R.
No. 72132 on September 26, 1985 and Administrative Case No. 2858 on March 18, 1986. On
May 13, 1987, the Supreme Court issued a resolution in Administrative Case No. 2858
directing the POEA Administrator to resolve the issues raised in the motions and oppositions
filed in POEA Cases Nos. L-84-06-555 and L-86-05-460 and to decide the labor cases with
deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order dated
September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC to answer
the amended complaint in POEA Case No. L-84-06-555. In a resolution dated November 9,
1987, we dismissed the petition by informing AIBC that all its technical objections may
properly be resolved in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on September 22,
1988 by claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator and
several NLRC Commissioners. The Ombudsman merely referred the complaint to the
Secretary of Labor and Employment with a request for the early disposition of POEA Case No.
L-84-06-555. The second was filed on April 28, 1989 by claimants Emigdio P. Bautista and
Rolando R. Lobeta charging AIBC and BRII for violation of labor and social legislations. The
third was filed by Jose R. Santos, Maximino N. Talibsao and Amado B. Bruce denouncing AIBC
and BRII of violations of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution dated 3. The awards given by the POEA to the 19
December 12, 1986. complainants classified and listed in Annex
"C" hereof, who appear to have worked
elsewhere than in Bahrain are hereby set
On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for aside.
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. 4. All claims other than those indicated in
Annex "B", including those for overtime
work and favorably granted by the POEA,
At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the same are hereby dismissed for lack of
hearing, the parties were given a period of 15 days from said date within which to submit substantial evidence in support thereof or
their respective position papers. On June 24, 1987 claimants filed their "Urgent Motion to are beyond the competence of this
Strike Out Answer," alleging that the answer was filed out of time. On June 29, 1987, Commission to pass upon.
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 In addition, this Commission, in the exercise of its powers and
Records" the position paper of AIBC and BRII, claiming that it was filed out of time. 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
On September 1, 1988, the claimants represented by Atty. De Castro filed their evidence, as expeditiously as possible, and thereafter submit a
memorandum in POEA Case No. L-86-05-460. On September 6, 1988, AIBC and BRII written report to this Commission (First Division) of the proceedings
submitted their Supplemental Memorandum. On September 12, 1988, BRII filed its "Reply to taken, regarding the claims of the following:
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 (a) complainants identified and listed in
filed a "Consolidated Reply." Annex "D" attached and made an integral
part of this Resolution, whose claims were
dismissed by the POEA for lack of proof of
On January 30, 1989, the POEA Administrator rendered his decision in POEA Case No. L-84- employment in Bahrain (these
06-555 and the other consolidated cases, which awarded the amount of $824,652.44 in favor complainants numbering 683, are listed in
of only 324 complainants. pages 13 to 23 of the decision of POEA,
subject of the appeals) and,
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 (b) complainants identified and listed in
reconsideration and/or appeal in addition to the "Notice of Appeal" filed earlier on February Annex "E" attached and made an integral
6, 1989 by another counsel for AIBC. part of this Resolution, whose awards
decreed by the POEA, to Our mind, are
On February 17, 1989, claimants filed their "Answer to Appeal," praying for the dismissal of not supported by substantial evidence"
the appeal of AIBC and BRII. (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 March 15, 1989, claimants filed their "Supplement to Complainants' Appeal
Memorandum," together with their "newly discovered evidence" consisting of payroll
records. 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
On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating among January 27, 1992.
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.
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
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision dated claimants represented by Atty. De Castro; and the third, by AIBC and BRII.
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.
In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.

On December 23, 1989, claimants filed another motion to resolve the labor cases.
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
On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the 1,767 and BRII (G.R. Nos. 105029-32).
claimants be awarded their monetary claims for failure of private respondents to file their
answers within the reglamentary period required by law.
II

On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:

Compromise Agreements

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;
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);
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.

5) Joint Manifestation and Motion involving claimant Dionisio PART B —

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); (1) Employment Position Classification :—————————
(Code) :—————————

6) Joint Manifestation and Motion involving claimant Valerio A.

Evangelista and 4 co-claimants dated March 10, 1993 (G.R. Nos. (2) Company Employment Status :—————————
104911-14, Rollo, pp. 731-746; G.R. No. 104776, Rollo, pp. 1815- (3) Date of Employment to Commence on :—————————
1829); (4) Basic Working Hours Per Week :—————————
(5) Basic Working Hours Per Month :—————————
(6) Basic Hourly Rate :—————————
7) Joint Manifestation and Motion involving claimants Palconeri (7) Overtime Rate Per Hour :—————————
Banaag and 5 co-claimants dated March 17, 1993 (G.R. No. (8) Projected Period of Service
104776, Rollo, pp. 1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655- (Subject to C(1) of this [sic]) :—————————
675); Months and/or
Job Completion
8) Joint Manifestation and Motion involving claimant Benjamin
Ambrosio and 15 other co-claimants dated May 4, 1993 (G.R. Nos. xxx xxx xxx
105029-32, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-
729; G.R. No. 104776, Rollo, pp. 1773-1814);
3. HOURS OF WORK AND COMPENSATION

9) Joint Manifestation and Motion involving Valerio Evangelista and

3 co-claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. a) The Employee is employed at the hourly rate and overtime rate
1815-1829); as set out in Part B of this Document.

10) Joint Manifestation and Motion involving petitioner Quiterio R. b) The hours of work shall be those set forth by the Employer, and
Agudo and 36 co-claimants dated June 14, 1993 (G.R. Nos. 105029- Employer may, at his sole option, change or adjust such hours as
32, Rollo, pp. 974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864; maybe deemed necessary from time to time.
G.R. No. 104776, Rollo, pp. 1066-1183);

11) Joint Manifestation and Motion involving claimant Arnaldo J.
Alonzo and 19 co-claimants dated July 22, 1993 (G.R. No.
104776, Rollo, pp. 1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-
1256; G.R. Nos. 104911-14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C.
Dayrit and 2 co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-
1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C.
Aceres and 37 co-claimants dated September 8, 1993 (G.R. No.
104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-
1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
4. TERMINATION
a) Notwithstanding any other terms and conditions of this
agreement, the Employer may, at his sole discretion, terminate
employee's service with cause, under this agreement at any time. If
the Employer terminates the services of the Employee under this
Agreement because of the completion or termination, or
suspension of the work on which the Employee's services were
being utilized, or because of a reduction in force due to a decrease
in scope of such work, or by change in the type of construction of
such work. The Employer will be responsible for his return
transportation to his country of origin. Normally on the most
expeditious air route, economy class accommodation.
xxx xxx xxx

14) Joint Manifestation and Motion involving Vivencio V. Abella and
27 co-claimants dated January 10, 1994 (G.R. Nos. 105029-
32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano
and six co-claimants dated August 25, 1994 (G.R. Nos. 105029-32;
G.R. No. 104776; G.R. Nos. 104911-14).
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.

III 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
The facts as found by the NLRC are as follows: forfeited at the end of the year in which said sick leave is granted.

We have taken painstaking efforts to sift over the more than fifty 11. BONUS
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
A bonus of 20% (for offshore work) of gross income will be accrued
and payable only upon satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of rest with
8 hours regular pay. If work is performed on this day, all hours work
shall be paid at the premium rate. However, this offday pay
provision is applicable only when the laws of the Host Country
require payments for rest day.
In the State of Bahrain, where some of the individual complainants
were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of
Bahrain, issued his Amiri Decree No. 23 on June 16, 1976, otherwise
known as the Labour Law for the Private Sector (Records, Vol. 18).
This decree took effect on August 16, 1976. Some of the provisions
of Amiri Decree No. 23 that are relevant to the claims of the
complainants-appellants are as follows (italics supplied only for
emphasis):
Art. 79: . . . A worker shall receive payment
for each extra hour equivalent to his wage
entitlement increased by a minimum of
twenty-five per centum thereof for hours
worked during the day; and by a minimum
of fifty per centum thereof for hours
worked during the night which shall be
deemed to being from seven o'clock in the
evening until seven o'clock in the
morning. . . .
Art. 80: Friday shall be deemed to be a
weekly day of rest on full pay.
. . . an employer may require a applicable in these cases, whether or not complainants' claim for
worker, with his consent, to work on his
weekly day of rest if circumstances so
require and in respect of which an
additional sum equivalent to 150% of his
normal wage shall be paid to him. . . .
Art. 81: . . . When conditions of work
require the worker to work on any official
holiday, he shall be paid an additional sum
equivalent to 150% of his normal wage.
Art. 84: Every worker who has completed
one year's continuous service with his
employer shall be entitled to leave on full
pay for a period of not less than 21 days
for each year increased to a period not less
than 28 days after five continuous years of
service.
A worker shall be entitled to such leave
upon a quantum meruit in respect of the
proportion of his service in that year.
Art. 107: A contract of employment made
for a period of indefinite duration may be
terminated by either party thereto after
giving the other party thirty days' prior
notice before such termination, in writing,
in respect of monthly paid workers and
fifteen days' notice in respect of other
workers. The party terminating a contract
without giving the required notice shall
pay to the other party compensation
equivalent to the amount of wages
payable to the worker for the period of
such notice or the unexpired portion
thereof.
Art. 111: . . . the employer concerned shall
pay to such worker, upon termination of
employment, a leaving indemnity for the
period of his employment calculated on
the basis of fifteen days' wages for each
year of the first three years of service and
of one month's wages for each year of
service thereafter. Such worker shall be
entitled to payment of leaving indemnity
upon a quantum meruit in proportion to
the period of his service completed within
a year.
All the individual complainants-appellants
have already been repatriated to the
Philippines at the time of the filing of
these cases (R.R. No. 104776, Rollo, pp.
59-65).
IV
The issues raised before and resolved by the NLRC were:
First: — Whether or not complainants are entitled to the benefits
provided by Amiri Decree No. 23 of Bahrain;
(a) Whether or not the complainants who
have worked in Bahrain are entitled to the
above-mentioned benefits.
(b) Whether or not Art. 44 of the same
Decree (allegedly prescribing a more
favorable treatment of alien employees)
bars complainants from enjoying its
benefits.
Second: — Assuming that Amiri Decree No. 23 of Bahrain is
the benefits provided therein have prescribed.
Third: — Whether or not the instant cases qualify as a class suit.
Fourth: — Whether or not the proceedings conducted by the POEA,
as well as the decision that is the subject of these appeals,
conformed with the requirements of due process;
(a) Whether or not the respondent-
appellant was denied its right to due
process;
(b) Whether or not the admission of
evidence by the POEA after these cases
were submitted for decision was valid;
(c) Whether or not the POEA acquired
jurisdiction over Brown & Root
International, Inc.;
(d) Whether or not the judgment awards
are supported by substantial evidence;
(e) Whether or not the awards based on
the averages and formula presented by
the complainants-appellants are
supported by substantial evidence;
(f) Whether or not the POEA awarded
sums beyond what the complainants-
appellants prayed for; and, if so, whether
or not these awards are valid.
Fifth: — Whether or not the POEA erred in holding respondents
AIBC and Brown & Root jointly are severally liable for the judgment
awards despite the alleged finding that the former was the
employer of the complainants;
 (a) Whether or not the POEA has acquired
jurisdiction over Brown & Root;
(b) Whether or not the undisputed fact
that AIBC was a licensed construction
contractor precludes a finding that Brown
& Root is liable for complainants claims.
Sixth: — Whether or not the POEA Administrator's failure to hold
respondents in default constitutes a reversible error.
Seventh: — Whether or not the POEA Administrator erred in
dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve
Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of at
least 100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid
benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to
SSS;
j. Refund of withholding tax not remitted
to BIR;
k. Fringe benefits under B & R's "A
Summary of Employee Benefits" (Annex
"Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent
of the judgment award;
n. Other reliefs, like suspending and/or
cancelling the license to recruit of AIBC
and the accreditation of B & R issued by
POEA;
o. Penalty for violations of Article 34
(prohibited practices), not excluding
reportorial requirements thereof.
Eighth: — Whether or not the POEA Administrator erred in not
dismissing POEA Case No. (L) 86-65-460 on the ground of
multiplicity of suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on
Evidence governing the pleading and proof of a foreign law and admitted in evidence a
simple copy of the Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector).
NLRC invoked Article 221 of the Labor Code of the Philippines, vesting on the Commission
ample discretion to use every and all reasonable means to ascertain the facts in each case
without regard to the technicalities of law or procedure. NLRC agreed with the POEA
Administrator that the Amiri Decree No. 23, being more favorable and beneficial to the
workers, should form part of the overseas employment contract of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who worked
in Bahrain, and set aside awards of the POEA Administrator in favor of the claimants, who
worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing of the claims of the
complainants was three years, as provided in Article 291 of the Labor Code of the Philippines,
and not ten years as provided in Article 1144 of the Civil Code of the Philippines nor one year
as provided in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the labor cases cannot be
treated as a class suit for the simple reason that not all the complainants worked in Bahrain
and therefore, the subject matter of the action, the claims arising from the Bahrain law, is
not of common or general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal rules of
administrative due process: namely, (1) the failure of the POEA Administrator to consider the
evidence presented by AIBC and BRII; (2) some findings of fact were not supported by
substantial evidence; and (3) some of the evidence upon which the decision was based were
not disclosed to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and AIBC
are solidarily liable for the claims of the complainants and held that BRII was the actual
employer of the complainants, or at the very least, the indirect employer, with AIBC as the
labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator through
the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in denying the Motion
to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the Amiri Decree No.
23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims
for refund of the SSS premiums and refund of withholding taxes
and the claimants should file their claims for said refund with the
appropriate government agencies;
(2) the claimants failed to establish that they are entitled to the
claims which are not based on the overseas employment contracts
nor the Amiri Decree No. 23 of 1976;
(3) that the POEA Administrator has no jurisdiction over claims for
moral and exemplary damages and nonetheless, the basis for
granting said damages was not established;
(4) that the claims for salaries corresponding to the unexpired
portion of their contract may be allowed if filed within the three-
year prescriptive period;
(5) that the allegation that complainants were prematurely
repatriated prior to the expiration of their overseas contract was
not established; and
(6) that the POEA Administrator has no jurisdiction over the
complaint for the suspension or cancellation of the AIBC's
recruitment license and the cancellation of the accreditation of
BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460 should
have been dismissed on the ground that the claimants in said case were also claimants in
POEA Case No. (L) 84-06-555. Instead of dismissing POEA Case No. (L) 86-65-460, the POEA
just resolved the corresponding claims in POEA Case No. (L) 84-06-555. In other words, the
POEA did not pass upon the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
 (1) that they were deprived by NLRC and the POEA of their right to
a speedy disposition of their cases as guaranteed by Section 16,
Article III of the 1987 Constitution. The POEA Administrator allowed
private respondents to file their answers in two years (on June 19,
1987) after the filing of the original complaint (on April 2, 1985) and
NLRC, in total disregard of its own rules, affirmed the action of the
POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared
AIBC and BRII in default and should have rendered summary
judgment on the basis of the pleadings and evidence submitted by
claimants;
(3) the NLRC and POEA Administrator erred in not holding that the
labor cases filed by AIBC and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims is ten
years; and
(5) that NLRC and the POEA Administrator should have dismissed
POEA Case No. L-86-05-460, the case filed by Atty. Florante de
Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of
the labor cases, considering the great difficulty of getting all the
records of the more than 1,500 claimants, the piece-meal filing of
the complaints and the addition of hundreds of new claimants by
petitioners;
(2) that considering the number of complaints and claimants, it was
impossible to prepare the answers within the ten-day period
provided in the NLRC Rules, that when the motion to declare AIBC
in default was filed on July 19, 1987, said party had already filed its
answer, and that considering the staggering amount of the claims
(more than US$50,000,000.00) and the complicated issues raised by
the parties, the ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject matter of
the controversy — which was the applicability of the Amiri Decree
No. 23. Likewise, the nature of the claims varied, some being based
on salaries pertaining to the unexpired portion of the contracts
while others being for pure money claims. Each claimant demanded
separate claims peculiar only to himself and depending upon the
particular circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that
prescribed by Article 291 of the Labor Code of the Philippines (three
years) and not the one prescribed by Article 1144 of the Civil Code
of the Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA
Case No. L-86-05-460 should be dismissed, this being a private
quarrel between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint
manifestations and motions of AIBC and BRII dated September 2 and 11, 1992, claiming that
all the claimants who entered into the compromise agreements subject of said
manifestations and motions were his clients and that Atty. Florante M. de Castro had no
right to represent them in said agreements. He also claimed that the claimants were paid
less than the award given them by NLRC; that Atty. De Castro collected additional attorney's
fees on top of the 25% which he was entitled to receive; and that the consent of the
claimants to the compromise agreements and quitclaims were procured by fraud (G.R. No.
104776, Rollo, pp. 838-810). In the Resolution dated November 23, 1992, the Court denied
the motion to strike out the Joint Manifestations and Motions dated September 2 and 11,
1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's
Lien," alleging that the claimants who entered into compromise agreements with AIBC and
BRII with the assistance of Atty. De Castro, had all signed a retainer agreement with his law
firm (G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De
Castro and Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and 16 of
the Code of Professional Responsibility. The said lawyers allegedly misled this Court, by
making it appear that the claimants who entered into the compromise agreements were
represented by Atty. De Castro, when in fact they were represented by Atty. Del Mundo (G.R.
No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro for
unethical practices and moved for the voiding of the quitclaims submitted by some of the
claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the grounds that
NLRC gravely abused its discretion when it: (1) applied the three-year prescriptive period
under the Labor Code of the Philippines; and (2) it denied the claimant's formula based on an
average overtime pay of three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the negotiation for
an amicable settlement of their money claims in Bahrain as shown in the Memorandum
dated April 16, 1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the
prescriptive period in the Labor Code of the Philippines, a special law, prevails over that
provided in the Civil Code of the Philippines, a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of computing the
overtime pay, BRII and AIBC claimed that they were not bound by what appeared therein,
because such memorandum was proposed by a subordinate Bahrain official and there was
no showing that it was approved by the Bahrain Minister of Labor. Likewise, they claimed
that the averaging method was discussed in the course of the negotiation for the amicable
settlement of the dispute and any offer made by a party therein could not be used as an
admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion when it:
(1) enforced the provisions of the Amiri Decree No. 23 of 1976 and not the terms of the
employment contracts; (2) granted claims for holiday, overtime and leave indemnity pay and
other benefits, on evidence admitted in contravention of petitioner's constitutional right to
due process; and (3) ordered the POEA Administrator to hold new hearings for the 683
claimants whose claims had been dismissed for lack of proof by the POEA Administrator or
NLRC itself. Lastly, they allege that assuming that the Amiri Decree No. 23 of 1976 was
applicable, NLRC erred when it did not apply the one-year prescription provided in said law
(Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed as to the
time that should be embraced within the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article 1144 of
the Civil Code of the Philippines. NLRC believed otherwise, fixing the prescriptive period at
three years as provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds,
insisted that NLRC erred in ruling that the prescriptive period applicable to the claims was
three years, instead of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period was one year
as prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of NLRC that
Article 291 of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to
those arising from the employer's violation of the employee's right
as provided by the Labor Code.
 In the instant case, what the respondents violated are not the rights
of the workers as provided by the Labor Code, but the provisions of
the Amiri Decree No. 23 issued in Bahrain, which ipso
facto amended the worker's contracts of employment.
Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It
was only after June 30, 1983, four months after the brown builders
brought a suit against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments in
Bahrain for the new hires/renewals (Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to
this instant case is Article 1144 of the Civil Code of the Philippines,
which provides:
Art. 1144. The following actions may be
brought within ten years from the time
the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the
respondents shall prescribe in ten years from August 16, 1976.
Inasmuch as all claims were filed within the ten-year prescriptive
period, no claim suffered the infirmity of being prescribed (G.R. No.
104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period is three years
as provided in Article 291 of the Labor Code of the Philippines, the NLRC argued as follows:
The Labor Code provides that "all money claims arising from
employer-employee relations . . . shall be filed within three years
from the time the cause of action accrued; otherwise they shall be
forever barred" (Art. 291, Labor Code, as amended). This three-year
prescriptive period shall be the one applied here and which should
be reckoned from the date of repatriation of each individual
complainant, considering the fact that the case is having (sic) filed
in this country. We do not agree with the POEA Administrator that
this three-year prescriptive period applies only to money claims
specifically recoverable under the Philippine Labor Code. Article
291 gives no such indication. Likewise, We can not consider
complainants' cause/s of action to have accrued from a violation of
their employment contracts. There was no violation; the claims
arise from the benefits of the law of the country where they
worked. (G.R. No. 104776, Rollo, pp.
90-91).
Anent the applicability of the one-year prescriptive period as provided by the Amiri Decree
No. 23 of 1976, NLRC opined that the applicability of said law was one of characterization,
i.e., whether to characterize the foreign law on prescription or statute of limitation as
"substantive" or "procedural." NLRC cited the decision in Bournias v. Atlantic Maritime
Company (220 F. 2d. 152, 2d Cir. [1955], where the issue was the applicability of the Panama
Labor Code in a case filed in the State of New York for claims arising from said Code. In said
case, the claims would have prescribed under the Panamanian Law but not under the Statute
of Limitations of New York. The U.S. Circuit Court of Appeals held that the Panamanian Law
was procedural as it was not "specifically intended to be substantive," hence, the
prescriptive period provided in the law of the forum should apply. The Court observed:
. . . And where, as here, we are dealing with a statute of limitations
of a foreign country, and it is not clear on the face of the statute
that its purpose was to limit the enforceability, outside as well as
within the foreign country concerned, of the substantive rights to
which the statute pertains, we think that as a yardstick for
determining whether that was the purpose this test is the most
satisfactory one. It does not lead American courts into the necessity
of examining into the unfamiliar peculiarities and refinements of
different foreign legal systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the libelant is entitled
to succeed, for the respondents have failed to satisfy us that the
Panamanian period of limitation in question was specifically aimed
against the particular rights which the libelant seeks to enforce. The
Panama Labor Code is a statute having broad objectives, viz: "The
present Code regulates the relations between capital and labor,
placing them on a basis of social justice, so that, without injuring
any of the parties, there may be guaranteed for labor the necessary
conditions for a normal life and to capital an equitable return to its
investment." In pursuance of these objectives the Code gives
laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain
ones which are enumerated in Article 621. And there is nothing in
the record to indicate that the Panamanian legislature gave special
consideration to the impact of Article 623 upon the particular rights
sought to be enforced here, as distinguished from the other rights
to which that Article is also applicable. Were we confronted with
the question of whether the limitation period of Article 621 (which
carves out particular rights to be governed by a shorter limitation
period) is to be regarded as "substantive" or "procedural" under
the rule of "specifity" we might have a different case; but here on
the surface of things we appear to be dealing with a "broad," and
not a "specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the
Philippines, which was applied by NLRC, refers only to claims "arising from the employer's
violation of the employee's right as provided by the Labor Code." They assert that their
claims are based on the violation of their employment contracts, as amended by the Amiri
Decree No. 23 of 1976 and therefore the claims may be brought within ten years as provided
by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA 244
(1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri
Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law,"
which is Section 48 of the Code of Civil Procedure and that where such kind of law exists, it
takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of action based on the
Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing
law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry of
the contract. (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal, and
so forth, are governed by the laws of the forum. This is true even if the action is based upon
a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private
International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be
viewed either as procedural or substantive, depending on the characterization given such a
law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the
statute of limitations of New York, instead of the Panamanian law, after finding that there
was no showing that the Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to give way to the law of
the forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum has a "borrowing statute." Said statute has the
practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws 152-153 [1938]). A "borrowing statute" directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law (Siegel,
Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes," one form
provides that an action barred by the laws of the place where it accrued, will not be enforced
in the forum even though the local statute has not run against it (Goodrich and Scoles,
Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:
If by the laws of the state or country where the cause of action
arose, the action is barred, it is also barred in the Philippines
Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article
2270 of said Code repealed only those provisions of the Code of Civil Procedures as to which
were inconsistent with it. There is no provision in the Civil Code of the Philippines, which is
inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras,
Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri
Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's public
policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713
[1920]). To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as
regards the claims in question would contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:
The state shall promote social justice in all phases of national
development. (Sec. 10).
The state affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
Having determined that the applicable law on prescription is the Philippine law, the next
question is whether the prescriptive period governing the filing of the claims is three years,
as provided by the Labor Code or ten years, as provided by the Civil Code of the Philippines.
The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of
the Philippines, which provides:
The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor
Code of the Philippines, which in pertinent part provides:
Money claims-all money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued,
otherwise they shall be forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70 SCRA
244 (1976) invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the cases at
bench (Rollo, p. 21). The said case involved the correct computation of overtime pay as
provided in the collective bargaining agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any reference as to
the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No.
494) and instead insisted that work computation provided in the collective bargaining
agreements between the parties be observed. Since the claim for pay differentials is
primarily anchored on the written contracts between the litigants, the ten-year prescriptive
period provided by Art. 1144(1) of the New Civil Code should govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933)
provides:
Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued
otherwise such action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor
Law (CA No. 444 as amended) will apply, if the claim for
differentials for overtime work is solely based on said law, and not
on a collective bargaining agreement or any other contract. In the
instant case, the claim for overtime compensation is not so much
because of Commonwealth Act No. 444, as amended but because
the claim is demandable right of the employees, by reason of the
above-mentioned collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing "actions to
enforce any cause of action under said law." On the other hand, Article 291 of the Labor
Code of the Philippines provides the prescriptive period for filing "money claims arising from
employer-employee relations." The claims in the cases at bench all arose from the employer-
employee relations, which is broader in scope than claims arising from a specific law or from
the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period under
Article 291 of the Labor Code of the Philippines applies only to money claims specifically
recoverable under said Code, does not find support in the plain language of the provision.
Neither is the contention of the claimants in G.R. Nos. 104911-14 that said Article refers only
to claims "arising from the employer's violation of the employee's right," as provided by the
Labor Code supported by the facial reading of the provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that
while their complaints were filed on June 6, 1984 with POEA, the case was decided only on
January 30, 1989, a clear denial of their right to a speedy disposition of the case; and (2) that
NLRC and the POEA Administrator should have declared AIBC and BRII in default (Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:
Sec. 16. All persons shall have the right to a speedy disposition of
their cases before all judicial, quasi-judicial, or administrative
bodies.
It is true that the constitutional right to "a speedy disposition of cases" is not limited to the
accused in criminal proceedings but extends to all parties in all cases, including civil and
administrative cases, and in all proceedings, including judicial and quasi-judicial hearings.
Hence, under the Constitution, any party to a case may demand expeditious action on all
officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition of
cases" is a relative term. Just like the constitutional guarantee of "speedy trial" accorded to
the accused in all criminal proceedings, "speedy disposition of cases" is a flexible concept. It
is consistent with delays and depends upon the circumstances of each case. What the
Constitution prohibits are unreasonable, arbitrary and oppressive delays which render rights
nugatory.
Caballero laid down the factors that may be taken into consideration in determining whether
or not the right to a "speedy disposition of cases" has been violated, thus:
In the determination of whether or not the right to a "speedy trial"
has been violated, certain factors may be considered and balanced
against each other. These are length of delay, reason for the delay,
assertion of the right or failure to assert it, and prejudice caused by
the delay. The same factors may also be considered in answering
judicial inquiry whether or not a person officially charged with the
administration of justice has violated the speedy disposition of
cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
It must be here emphasized that the right to a speedy disposition of
a case, like the right to speedy trial, is deemed violated only when
 the proceeding is attended by vexatious, capricious, and oppressive
delays; or when unjustified postponements of the trial are asked for
and secured, or when without cause or justified motive a long
period of time is allowed to elapse without the party having his
case tried.
Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the amended
complaint, claimants had been asking that AIBC and BRII be declared in default for failure to
file their answers within the ten-day period provided in Section 1, Rule III of Book VI of the
Rules and Regulations of the POEA. At that time, there was a pending motion of AIBC and
BRII to strike out of the records the amended complaint and the "Compliance" of claimants
to the order of the POEA, requiring them to submit a bill of particulars.
The cases at bench are not of the run-of-the-mill variety, such that their final disposition in
the administrative level after seven years from their inception, cannot be said to be attended
by unreasonable, arbitrary and oppressive delays as to violate the constitutional rights to a
speedy disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said
complaint had undergone several amendments, the first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They were deployed in
different areas, one group in and the other groups outside of, Bahrain. The monetary claims
totalling more than US$65 million according to Atty. Del Mundo, included:
1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal
Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of
Employees Benefits consisting of 43 pages (Annex "Q" of Amended
Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to
recruit of AIBC and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not
excluding reportorial requirements thereof (NLRC Resolution,
September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some
facts, the claimants were ordered to comply with the motion of AIBC for a bill of particulars.
When claimants filed their "Compliance and Manifestation," AIBC moved to strike out the
complaint from the records for failure of claimants to submit a proper bill of particulars.
While the POEA Administrator denied the motion to strike out the complaint, he ordered the
claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the records of
employment of the more than 1,700 claimants had to be retrieved from various countries in
the Middle East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA Administrator were interrupted
several times by the various appeals, first to NLRC and then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases were filed against AIBC and
BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA Case No.
L-86-05-460). NLRC, in exasperation, noted that the exact number of claimants had never
been completely established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57). All the
three new cases were consolidated with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the proceedings,
thus:
These cases could have been spared the long and arduous route
towards resolution had the parties and their counsel been more
interested in pursuing the truth and the merits of the claims rather
than exhibiting a fanatical reliance on technicalities. Parties and
counsel have made these cases a litigation of emotion. The
intransigence of parties and counsel is remarkable. As late as last
month, this Commission made a last and final attempt to bring the
counsel of all the parties (this Commission issued a special order
directing respondent Brown & Root's resident agent/s to appear) to
come to a more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of the
cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these
consolidated cases appear to be not only the individual
complainants, on the one hand, and AIBC and Brown & Root, on the
other hand. The two lawyers for the complainants, Atty. Gerardo
Del Mundo and Atty. Florante De Castro, have yet to settle the right
of representation, each one persistently claiming to appear in
behalf of most of the complainants. As a result, there are two
appeals by the complainants. Attempts by this Commission to
resolve counsels' conflicting claims of their respective authority to
represent the complainants prove futile. The bickerings by these
two counsels are reflected in their pleadings. In the charges and
countercharges of falsification of documents and signatures, and in
the disbarment proceedings by one against the other. All these
have, to a large extent, abetted in confounding the issues raised in
these cases, jumble the presentation of evidence, and even
derailed the prospects of an amicable settlement. It would not be
far-fetched to imagine that both counsel, unwittingly, perhaps,
painted a rainbow for the complainants, with the proverbial pot of
gold at its end containing more than US$100 million, the aggregate
of the claims in these cases. It is, likewise, not improbable that their
misplaced zeal and exuberance caused them to throw all caution to
the wind in the matter of elementary rules of procedure and
evidence (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties and
the public respondents would not know which claim of which petitioner was dismissed and
which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class suit"
because "all the named complainants have similar money claims and similar rights sought
irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya
or in any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of common or
general interest to many and the parties are so numerous that it is impracticable to bring
them all before the court (Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law, many of the claimants
worked outside Bahrain. Some of the claimants were deployed in Indonesia and Malaysia
under different terms and conditions of employment.
NLRC and the POEA Administrator are correct in their stance that inasmuch as the first
requirement of a class suit is not present (common or general interest based on the Amiri
Decree of the State of Bahrain), it is only logical that only those who worked in Bahrain shall
be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the same
(for employee's benefits), there is no common question of law or fact. While some claims are
based on the Amiri Law of Bahrain, many of the claimants never worked in that country, but
were deployed elsewhere. Thus, each claimant is interested only in his own demand and not
in the claims of the other employees of defendants. The named claimants have a special or
particular interest in specific benefits completely different from the benefits in which the
other named claimants and those included as members of a "class" are claiming (Berses v.
Villanueva, 25 Phil. 473 [1913]). It appears that each claimant is only interested in collecting
his own claims. A claimants has no concern in protecting the interests of the other claimants
as shown by the fact, that hundreds of them have abandoned their co-claimants and have
entered into separate compromise settlements of their respective claims. A principle basic to
the concept of "class suit" is that plaintiffs brought on the record must fairly represent and
protect the interests of the others (Dimayuga v. Court of Industrial Relations, 101 Phil. 590
[1957]). For this matter, the claimants who worked in Bahrain can not be allowed to sue in a
class suit in a judicial proceeding. The most that can be accorded to them under the Rules of
Court is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule 3,
Sec. 6).
The Court is extra-cautious in allowing class suits because they are the exceptions to the
condition sine qua non, requiring the joinder of all indispensable parties.
In an improperly instituted class suit, there would be no problem if the decision secured is
favorable to the plaintiffs. The problem arises when the decision is adverse to them, in which
case the others who were impleaded by their self-appointed representatives, would surely
claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC should
have declared Atty. Florante De Castro guilty of "forum shopping, ambulance chasing
activities, falsification, duplicity and other unprofessional activities" and his appearances as
counsel for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the
practice of some parties of filing multiple petitions and complaints involving the same issues,
with the result that the courts or agencies have to resolve the same issues. Said Rule,
however, applies only to petitions filed with the Supreme Court and the Court of Appeals. It
is entitled "Additional Requirements For Petitions Filed with the Supreme Court and the
Court of Appeals To Prevent Forum Shopping or Multiple Filing of Petitioners and
Complainants." The first sentence of the circular expressly states that said circular applies to
an governs the filing of petitions in the Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum shopping
rule to the lower courts and administrative agencies, said circular took effect only on April 1,
1994.
POEA and NLRC could not have entertained the complaint for unethical conduct against Atty.
De Castro because NLRC and POEA have no jurisdiction to investigate charges of unethical
conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed by
Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services
rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or administrative
agency which renders and executes the money judgment secured by the lawyer for his
clients. The lawyer shall cause written notice thereof to be delivered to his clients and to the
adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the claim for the
charging lien of Atty. Del Mundo should have been filed with the administrative agency that
rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty. Katz
Tierra for violation of the Code of Professional Responsibility should be filed in a separate
and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting their formula of
"Three Hours Average Daily Overtime" in computing the overtime payments. They claim that
it was BRII itself which proposed the formula during the negotiations for the settlement of
their claims in Bahrain and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16,
1983, which in pertinent part states:
After the perusal of the memorandum of the Vice President and the
Area Manager, Middle East, of Brown & Root Co. and the Summary
of the compensation offered by the Company to the employees in
respect of the difference of pay of the wages of the overtime and
the difference of vacation leave and the perusal of the documents
attached thereto i.e., minutes of the meetings between the
Representative of the employees and the management of the
Company, the complaint filed by the employees on 14/2/83 where
they have claimed as hereinabove stated, sample of the Service
Contract executed between one of the employees and the
company through its agent in (sic) Philippines, Asia International
Builders Corporation where it has been provided for 48 hours of
work per week and an annual leave of 12 days and an overtime
wage of 1 & 1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is
35 months for the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is
US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in all public
holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation
for the difference of the wages of the overtime done for each
Philippino (sic) employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a
subordinate official in the Bahrain Department of Labor; (2) that there was no showing that
the Bahrain Minister of Labor had approved said memorandum; and (3) that the offer was
made in the course of the negotiation for an amicable settlement of the claims and therefore
it was not admissible in evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing the rule on presenting
official documents of a foreign government as provided in Section 24, Rule 132 of the 1989
Revised Rules on Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said memorandum, and they
could easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as contained in the memorandum
is another matter. Under Section 27, Rule 130 of the 1989 Revised Rules on Evidence, an
offer to settle a claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. — In civil cases, an offer of
compromise is not an admission of any liability, and is not
admissible in evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record with unwanted
evidence but a statement of public policy. There is great public interest in having the
protagonists settle their differences amicable before these ripen into litigation. Every effort
must be taken to encourage them to arrive at a settlement. The submission of offers and
counter-offers in the negotiation table is a step in the right direction. But to bind a party to
his offers, as what claimants would make this Court do, would defeat the salutary purpose of
the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits than
those stipulated in the overseas-employment contracts of the claimants. It was of the belief
that "where the laws of the host country are more favorable and beneficial to the workers,
then the laws of the host country shall form part of the overseas employment contract." It
quoted with approval the observation of the POEA Administrator that ". . . in labor
proceedings, all doubts in the implementation of the provisions of the Labor Code and its
implementing regulations shall be resolved in favor of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to enforce
the overseas-employment contracts, which became the law of the parties. They contend that
the principle that a law is deemed to be a part of a contract applies only to provisions of
Philippine law in relation to contracts executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC and BRII themselves,
provided that the laws of the host country became applicable to said contracts if they offer
terms and conditions more favorable that those stipulated therein. It was stipulated in said
contracts that:
The Employee agrees that while in the employ of the Employer, he
will not engage in any other business or occupation, nor seek
employment with anyone other than the Employer; that he shall
devote his entire time and attention and his best energies, and
abilities to the performance of such duties as may be assigned to
him by the Employer; that he shall at all times be subject to the
direction and control of the Employer; and that the benefits
provided to Employee hereunder are substituted for and in lieu of
all other benefits provided by any applicable law, provided of
course, that total remuneration and benefits do not fall below that
of the host country regulation or custom, it being understood that
should applicable laws establish that fringe benefits, or other such
benefits additional to the compensation herein agreed cannot be
waived, Employee agrees that such compensation will be adjusted
downward so that the total compensation hereunder, plus the non-
waivable benefits shall be equivalent to the compensation herein
agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more felicitously. While a part
thereof provides that the compensation to the employee may be "adjusted downward so
that the total computation (thereunder) plus the non-waivable benefits shall be equivalent
to the compensation" therein agreed, another part of the same provision categorically states
"that total remuneration and benefits do not fall below that of the host country regulation
and custom."
Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and
BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93
SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion where there is already a
prepared form containing the stipulations of the employment contract and the employees
merely "take it or leave it." The presumption is that there was an imposition by one party
against the other and that the employees signed the contracts out of necessity that reduced
their bargaining power (Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment contracts in question as
adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be governed (Cheshire, Private
International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a "system" to
regulate the relations of the parties, including questions of their capacity to enter into the
contract, the formalities to be observed by them, matters of performance, and so forth (16
Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may just agree that
specific provisions of a foreign statute shall be deemed incorporated into their contract "as a
set of terms." By such reference to the provisions of the foreign law, the contract does not
become a foreign contract to be governed by the foreign law. The said law does not operate
as a statute but as a set of contractual terms deemed written in the contract (Anton, Private
International Law, 197 [1967]; Dicey and Morris, The Conflict of Laws, 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law in
Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]). Such party
expectation is protected by giving effect to the parties' own choice of the applicable law
(Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must,
however, bear some relationship to the parties or their transaction (Scoles and Hayes,
Conflict of Law 644-647 [1982]). There is no question that the contracts sought to be
enforced by claimants have a direct connection with the Bahrain law because the services
were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management Co. and the late husband of the
private respondent, expressly provided that in the event of illness or injury to the employee
arising out of and in the course of his employment and not due to his own misconduct,
"compensation shall be paid to employee in accordance with and subject to the limitation of
the Workmen's Compensation Act of the Republic of the Philippines or the Worker's
Insurance Act of registry of the vessel, whichever is greater." Since the laws of Singapore, the
place of registry of the vessel in which the late husband of private respondent served at the
time of his death, granted a better compensation package, we applied said foreign law in
preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor Relations Commission,
135 SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the facts of the cases at
bench. The issue in that case was whether the amount of the death compensation of a
Filipino seaman should be determined under the shipboard employment contract executed
in the Philippines or the Hongkong law. Holding that the shipboard employment contract was
controlling, the court differentiated said case from Norse Management Co. in that in the
latter case there was an express stipulation in the employment contract that the foreign law
would be applicable if it afforded greater compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right to due process when said
administrative agency granted Friday-pay differential, holiday-pay differential, annual-leave
differential and leave indemnity pay to the claimants listed in Annex B of the Resolution. At
first, NLRC reversed the resolution of the POEA Administrator granting these benefits on a
finding that the POEA Administrator failed to consider the evidence presented by AIBC and
BRII, that some findings of fact of the POEA Administrator were not supported by the
evidence, and that some of the evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-
36; 106-107). But instead of remanding the case to the POEA Administrator for a new
hearing, which means further delay in the termination of the case, NLRC decided to pass
upon the validity of the claims itself. It is this procedure that AIBC and BRII complain of as
being irregular and a "reversible error."
They pointed out that NLRC took into consideration evidence submitted on appeal, the same
evidence which NLRC found to have been "unilaterally submitted by the claimants and not
disclosed to the adverse parties" (Rollo, pp. 37-39).
NLRC noted that so many pieces of evidentiary matters were submitted to the POEA
administrator by the claimants after the cases were deemed submitted for resolution and
which were taken cognizance of by the POEA Administrator in resolving the cases. While
AIBC and BRII had no opportunity to refute said evidence of the claimants before the POEA
Administrator, they had all the opportunity to rebut said evidence and to present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves were able to
present before NLRC additional evidence which they failed to present before the POEA
Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of due process."
In deciding to resolve the validity of certain claims on the basis of the evidence of both
parties submitted before the POEA Administrator and NLRC, the latter considered that it was
not expedient to remand the cases to the POEA Administrator for that would only prolong
the already protracted legal controversies.
Even the Supreme Court has decided appealed cases on the merits instead of remanding
them to the trial court for the reception of evidence, where the same can be readily
determined from the uncontroverted facts on record (Development Bank of the Philippines
v. Intermediate Appellate Court, 190 SCRA 653 [1990]; Pagdonsalan v. National Labor
Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution
dated September 2, 1991 whose claims had been denied by the POEA Administrator "for lack
of proof" and for 69 claimants listed in Annex E of the same Resolution, whose claims had
been found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines, which empowers
it "[to] conduct investigation for the determination of a question, matter or controversy,
within its jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to remand a
case involving claims which had already been dismissed because such provision
contemplates only situations where there is still a question or controversy to be resolved
(Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of procedure and
evidence do not apply to the proceedings conducted by administrative agencies (First Asian
Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld Publishing House,
Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the Labor Code
of the Philippines and is now the bedrock of proceedings before NLRC.
Notwithstanding the non-applicability of technical rules of procedure and evidence in
administrative proceedings, there are cardinal rules which must be observed by the hearing
officers in order to comply with the due process requirements of the Constitution. These
cardinal rules are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court on the grounds
that NLRC had committed grave abuse of discretion amounting to lack of jurisdiction in
issuing the questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.
Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
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 Decision1 dated December 6, 2005 of
the Court of Appeals in CA-G.R. SP No. 76843 and its Resolution2 dated April 12, 2006,
denying the motion for reconsideration. The Court of Appeals had ruled that under Article 87
of the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo Dupo is
entitled to a service award or longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent as Civil
Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-Mojil
Group/Establishment (MMG). On February 26, 1992, respondent signed his first overseas
employment contract, renewable after one year. It was renewed five times on the following
dates: May 10, 1993, November 16, 1994, January 22, 1996, April 14, 1997, and March 26,
1998. All were fixed-period contracts for one year. The sixth and last contract stated that
respondent’s employment starts upon reporting to work and ends when he leaves the work
site. Respondent left Saudi Arabia on April 30, 1999 and arrived in the Philippines on May 1,
1999.
On May 28, 1999, respondent informed MMG, through the petitioner, that he needs to
extend his vacation because his son was hospitalized. He also sought a promotion with salary
adjustment.3 In reply, MMG informed respondent that his promotion is subject to
management’s review; that his services are still needed; that he was issued a plane ticket for
his return flight to Saudi Arabia on May 31, 1999; and that his decision regarding his
employment must be made within seven days, otherwise, MMG "will be compelled to cancel
[his] slot."4
On July 6, 1999, respondent resigned. In his letter to MMG, he also stated:
xxxx
I am aware that I still have to do a final settlement with the company and hope that during
my more than seven (7) [years] services, as the Saudi Law stated, I am entitled for a long
service award.5 (Emphasis supplied.)
xxxx
According to respondent, when he followed up his claim for long service award on December
7, 2000, petitioner informed him that MMG did not respond. 6
On December 11, 2000, respondent filed a complaint 7 for payment of service award against
petitioner before the National Labor Relations Commission (NLRC), Regional Arbitration
Branch, Cordillera Administrative Region, Baguio City. In support of his claim, respondent
averred in his position paper that:
xxxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5) years in a
company within the jurisdiction of Saudi Arabia, is entitled to the so-called long service
award which is known to others as longevity pay of at least one half month pay for every
year of service. In excess of five years an employee is entitled to one month pay for every
year of service. In both cases inclusive of all benefits and allowances.
This benefit was offered to complainant before he went on vacation, hence, this was
engrained in his mind. He reconstructed the computation of his long service award or
longevity pay and he arrived at the following computation exactly the same with the amount
he was previously offered [which is US$12,640.33]. 8 (Emphasis supplied.)
xxxx
Respondent said that he did not grab the offer for he intended to return after his vacation.
For its part, petitioner offered payment and prescription as defenses. Petitioner maintained
that MMG "pays its workers their Service Award or Severance Pay every conclusion of their
Labor Contracts pursuant to Article 87 of the [Saudi Labor Law]." Under Article 87, "payment
of the award is at the end or termination of the Labor Contract concluded for a specific
period." Based on the payroll,9 respondent was already paid his service award or severance
pay for his latest (sixth) employment contract.
Petitioner added that under Article 1310 of the Saudi Labor Law, the action to enforce
payment of the service award must be filed within one year from the termination of a labor
contract for a specific period. Respondent’s six contracts ended when he left Saudi Arabia on
the following dates: April 15, 1993, June 8, 1994, December 18, 1995, March 21, 1997, March
16, 1998 and April 30, 1999. Petitioner concluded that the one-year prescriptive period had
lapsed because respondent filed his complaint on December 11, 2000 or one year and seven
months after his sixth contract ended.11
In his June 18, 2001 Decision,12 the Labor Arbiter ordered petitioner to pay respondent
longevity pay of US$12,640.33 or ₱648,562.69 and attorney’s fees of ₱64,856.27 or a total of
₱713,418.96.13
The Labor Arbiter ruled that respondent’s seven-year employment with MMG had
sufficiently oriented him on the benefits given to workers; that petitioner was unable to
convincingly refute respondent’s claim that MMG offered him longevity pay before he went
on vacation on May 1, 1999; and that respondent’s claim was not barred by prescription
since his claim on July 6, 1999, made a month after his cause of action accrued, interrupted
the prescriptive period under the Saudi Labor Law until his claim was categorically denied.
Petitioner appealed. However, the NLRC dismissed the appeal and affirmed the Labor
Arbiter’s decision.14 The NLRC ruled that respondent is entitled to longevity pay which is
different from severance pay.
Aggrieved, petitioner brought the case to the Court of Appeals through a petition for
certiorari under Rule 65 of the Rules of Court. The Court of Appeals denied the petition and
affirmed the NLRC. The Court of Appeals ruled that service award is the same as longevity
pay, and that the severance pay received by respondent cannot be equated with service
award. The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack or in (sic) excess of
jurisdiction on the part of public respondent NLRC, the petition is denied. The NLRC decision
dated November 29, 2002 as well as and (sic) its January 31, 2003 Resolution are hereby
AFFIRMED in toto.
SO ORDERED.15
After its motion for reconsideration was denied, petitioner filed the instant petition raising
the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING NO GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE
SERVICE AWARD OF THE RESPONDENT [HAS] NOT PRESCRIBED WHEN HIS COMPLAINT WAS
FILED ON DECEMBER 11, 2000.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING IN THE CASE AT
BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE NO. 7
OF THE SAUDI LABOR AND WORKMEN LAW TO SUPPORT ITS FINDING THAT THE BASIS OF
THE SERVICE AWARD IS LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN
EMPLOYEE.16
Essentially, the issue is whether the Court of Appeals erred in ruling that respondent is
entitled to a service award or longevity pay of US$12,640.33 under the provisions of the
Saudi Labor Law. Related to this issue are petitioner’s defenses of payment and prescription.
Petitioner points out that the Labor Arbiter awarded longevity pay although the Saudi Labor
Law grants no such benefit, and the NLRC confused longevity pay and service award.
Petitioner maintains that the benefit granted by Article 87 of the Saudi Labor Law is service
award which was already paid by MMG each time respondent’s contract ended.
Petitioner insists that prescription barred respondent’s claim for service award as the
complaint was filed one year and seven months after the sixth contract ended. Petitioner
alleges that the Court of Appeals erred in ruling that respondent’s July 6, 1999 claim
interrupted the running of the prescriptive period. Such ruling is contrary to Article 13 of the
Saudi Labor Law which provides that no case or claim relating to any of the rights provided
for under said law shall be heard after the lapse of 12 months from the date of the
termination of the contract.
Respondent counters that he is entitled to longevity pay under the provisions of the Saudi
Labor Law and quotes extensively the decision of the Court of Appeals. He points out that
petitioner has not refuted the Labor Arbiter’s finding that MMG offered him longevity pay of
US$12,640.33 before his one-month vacation in the Philippines in 1999. Thus, he "submits
that such offer indeed exists" as he sees no reason for MMG to offer the benefit if no law
grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals. We find
that respondent’s service award under Article 87 of the Saudi Labor Law has already been
paid. Our computation will show that the severance pay received by respondent was his
service award.
Article 87 clearly grants a service award. It reads:
Article 87
Where the term of a labor contract concluded for a specified period comes to an end or
where the employer cancels a contract of unspecified period, the employer shall pay to the
workman an award for the period of his service to be computed on the basis of half a
month’s pay for each of the first five years and one month’s pay for each of the subsequent
years. The last rate of pay shall be taken as basis for the computation of the award. For
fractions of a year, the workman shall be entitled to an award which is proportionate to his
service period during that year. Furthermore, the workman shall be entitled to the service
award provided for at the beginning of this article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his
control.17 (Emphasis supplied.)
Respondent, however, has called the benefit other names such as long service award and
longevity pay. On the other hand, petitioner claimed that the service award is the same as
severance pay. Notably, the Labor Arbiter was unable to specify any law to support his award
of longevity pay.18 He anchored the award on his finding that respondent’s allegations were
more credible because his seven-year employment at MMG had sufficiently oriented him on
the benefits given to workers. To the NLRC, respondent is entitled to service award or
longevity pay under Article 87 and that longevity pay is different from severance pay. The
Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree with
respondent that service award is the same as longevity pay, and wrong to agree with
petitioner that service award is the same as severance pay? And why would it be correct to
say that service award is severance pay, and wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented. Respondent’s position paper
mentioned how his long service award or longevity pay is computed: half-month’s pay per
year of service and one-month’s pay per year after five years of service. Article 87 has the
same formula to compute the service award.
The payroll submitted by petitioner showed that respondent received severance pay of
SR2,786 for his sixth employment contract covering the period April 21, 1998 to April 29,
1999.19 The computation below shows that respondent’s severance pay of SR2,786 was his
service award under Article 87.
Service Award = ½ (SR5,438)20 + (9 days/365 days)21 x ½ (SR5,438)
Service Award = SR2,786.04
Respondent’s service award for the sixth contract is equivalent only to half-month’s pay plus
the proportionate amount for the additional nine days of service he rendered after one year.
Respondent’s employment contracts expressly stated that his employment ended upon his
departure from work. Each year he departed from work and successively new contracts were
executed before he reported for work anew. His service was not cumulative. Pertinently,
in Brent School, Inc. v. Zamora,22 we said that "a fixed term is an essential and natural
appurtenance" of overseas employment contracts,23 as in this case. We also said in that case
that under American law, "[w]here a contract specifies the period of its duration, it
terminates on the expiration of such period. A contract of employment for a definite period
terminates by its own terms at the end of such period." 24 As it is, Article 72 of the Saudi
Labor Law is also of similar import. It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its term.
If both parties continue to enforce the contract, thereafter, it shall be considered renewed
for an unspecified period.25
Regarding respondent’s claim that he was offered US$12,640.33 as longevity pay before he
returned to the Philippines on May 1, 1999, we find that he was not candid on this particular
point. His categorical assertion about the offer being "engrained in his mind" such that he
"reconstructed the computation … and arrived at the … computation exactly the same with
the amount he was previously offered" is not only beyond belief. Such assertion is also a
stark departure from his July 6, 1999 letter to MMG where he could only express his hope
that he was entitled to a long service award and where he never mentioned the supposed
previous offer. Moreover, respondent’s claim that his monthly compensation is
SR10,248.9226 is belied by the payroll which shows that he receives SR5,438 per month.
We therefore emphasize that such payroll should have prompted the lower tribunals to
examine closely respondent’s computation of his supposed longevity pay before adopting
that computation as their own.
On the matter of prescription, however, we cannot agree with petitioner that respondent’s
action has prescribed under Article 13 of the Saudi Labor Law. What applies is Article 291 of
our Labor Code which reads:
ART. 291. Money claims. — All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be forever barred.
xxxx
In Cadalin v. POEA’s Administrator,27 we held that Article 291 covers all money claims from
employer-employee relationship and is broader in scope than claims arising from a specific
law. It is not limited to money claims recoverable under the Labor Code, but applies also to
claims of overseas contract workers.28 The following ruling in Cadalin v. POEA’s Administrator
is instructive:
First to be determined is whether it is the Bahrain law on prescription of action based on the
Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing
law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after the lapse of
one year from the date of the expiry of the contract" x x x.
As a general rule, a foreign procedural law will not be applied in the
forum.1avvphi1 Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if
the action is based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec.
685; Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be
viewed either as procedural or substantive, depending on the characterization given such a
law.
xxxx
However, the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum has a "borrowing statute." Said statute has the
practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws, 152-153 [1938]). A "borrowing statute" directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law (Siegel,
Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes," one form
provides that an action barred by the laws of the place where it accrued, will not be enforced
in the forum even though the local statute has not run against it (Goodrich and Scoles,
Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:
"If by the laws of the state or country where the cause of action arose, the action is barred, it
is also barred in the Philippine Islands."
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article
2270 of said Code repealed only those provisions of the Code of Civil Procedure as to which
were inconsistent with it. There is no provision in the Civil Code of the Philippines, which is
inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras,
Philippine Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure]
cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction
of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum’s public
policy x x x. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976
as regards the claims in question would contravene the public policy on the protection to
labor.29
xxxx
Thus, in our considered view, respondent’s complaint was filed well within the three-year
prescriptive period under Article 291 of our Labor Code. This point, however, has already
been mooted by our finding that respondent’s service award had been paid, albeit the
payroll termed such payment as severance pay.
WHEREFORE, the petition is GRANTED. The assailed Decision dated December 6, 2005 and
Resolution dated April 12, 2006, of the Court of Appeals in CA-G.R. SP No. 76843, as well as
the Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case No. RAB-CAR-12-0649-00
and the Decision dated November 29, 2002 and Resolution dated January 31, 2003 of the
NLRC in NLRC CA No. 028994-01 (NLRC RAB-CAR-12-0649-00) are REVERSED and SET ASIDE.
The Complaint of respondent is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and
Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi,
Jr., presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949,
approving among things the final accounts of the executor, directing the executor to
reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen Christensen
Garcia as her legacy, and declaring Maria Lucy Christensen entitled to the residue of the
property to be enjoyed during her lifetime, and in case of death without issue, one-half of
said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in accordance with the
provisions of the will of the testator Edward E. Christensen. The will was executed in Manila
on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN
(now Mrs. Bernard Daney), who was born in the Philippines about twenty-eight
years ago, and who is now residing at No. 665 Rodger Young Village, Los
Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants
except my above named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to
Eduardo Garcia, about eighteen years of age and who, notwithstanding the fact
that she was baptized Christensen, is not in any way related to me, nor has she
been at any time adopted by me, and who, from all information I have now
resides in Egpit, Digos, Davao, Philippines, the sum of THREE THOUSAND SIX
HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in
trust for the said Maria Helen Christensen with the Davao Branch of the
Philippine National Bank, and paid to her at the rate of One Hundred Pesos
(P100.00), Philippine Currency per month until the principal thereof as well as
any interest which may have accrued thereon, is exhausted..
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said
MARIA LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as
aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A., all the
income from the rest, remainder, and residue of my property and estate, real,
personal and/or mixed, of whatsoever kind or character, and wheresoever
situated, of which I may be possessed at my death and which may have come to
me from any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account
and project of partition ratified the payment of only P3,600 to Helen Christensen Garcia and
proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia,
insofar as it deprives her (Helen) of her legitime as an acknowledged natural child, she having
been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased
Edward E. Christensen. The legal grounds of opposition are (a) that the distribution should be
governed by the laws of the Philippines, and (b) that said order of distribution is contrary
thereto insofar as it denies to Helen Christensen, one of two acknowledged natural children,
one-half of the estate in full ownership. In amplification of the above grounds it was alleged
that the law that should govern the estate of the deceased Christensen should not be the
internal law of California alone, but the entire law thereof because several foreign elements
are involved, that the forum is the Philippines and even if the case were decided in
California, Section 946 of the California Civil Code, which requires that the domicile of the
decedent should apply, should be applicable. It was also alleged that Maria Helen
Christensen having been declared an acknowledged natural child of the decedent, she is
deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States and of
the State of California at the time of his death, the successional rights and intrinsic validity of
the provisions in his will are to be governed by the law of California, in accordance with
which a testator has the right to dispose of his property in the way he desires, because the
right of absolute dominion over his property is sacred and inviolable (In re McDaniel's Estate,
77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in
page 179, Record on Appeal). Oppositor Maria Helen Christensen, through counsel, filed
various motions for reconsideration, but these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I would ultimately abandon the Philippines and make home in the State of California.
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME
COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN
AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE
EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE
APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW,
PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE
TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED
EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION
SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS.
V physical presence. "Residence simply requires bodily presence of an inhabitant
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN
CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of the
State of California at the time of his death. But there is also no question that at the time of
his death he was domiciled in the Philippines, as witness the following facts admitted by the
executor himself in appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show
that the deceased Edward E. Christensen was born on November 29, 1875 in
New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an appointed
school teacher, was on July 1, 1901, on board the U.S. Army Transport
"Sheridan" with Port of Embarkation as the City of San Francisco, in the State of
California, U.S.A. He stayed in the Philippines until 1904.
In December, 1904, Mr. Christensen returned to the United States and stayed
there for the following nine years until 1913, during which time he resided in,
and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913.
However, in 1928, he again departed the Philippines for the United States and
came back here the following year, 1929. Some nine years later, in 1938, he
again returned to his own country, and came back to the Philippines the
following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts
be admitted and approved by this Honorable Court, without prejudice to the
parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen was interned by the Japanese
Military Forces in the Philippines during World War II. Upon liberation, in April
1945, he left for the United States but returned to the Philippines in December,
1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as Exhibits
"AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473,
t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly
after the making of his last will and testament (now in question herein) which he
executed at his lawyers' offices in Manila on March 5, 1951. He died at the St.
Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are
persuaded by the fact that he was born in New York, migrated to California and resided there
for nine years, and since he came to the Philippines in 1913 he returned to California very
rarely and only for short visits (perhaps to relatives), and considering that he appears never
to have owned or acquired a home or properties in that state, which would indicate that he
Sec. 16. Residence is a term used with many shades of meaning from mere
temporary presence to the most permanent abode. Generally, however, it is
used to denote something more than mere physical presence. (Goodrich on
Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California
when he resided in Sacramento, California from 1904 to 1913, was never lost by his stay in
the Philippines, for the latter was a territory of the United States (not a state) until 1946 and
the deceased appears to have considered himself as a citizen of California by the fact that
when he executed his will in 1951 he declared that he was a citizen of that State; so that he
appears never to have intended to abandon his California citizenship by acquiring another.
This conclusion is in accordance with the following principle expounded by Goodrich in his
Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same
thing, a place of permanent abode. But domicile, as has been shown, has
acquired a technical meaning. Thus one may be domiciled in a place where he
has never been. And he may reside in a place where he has no domicile. The
man with two homes, between which he divides his time, certainly resides in
each one, while living in it. But if he went on business which would require his
presence for several weeks or months, he might properly be said to have
sufficient connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular business in
hand, not giving up his former "home," he could not be a domiciled New Yorker.
Acquisition of a domicile of choice requires the exercise of intention as well as
in a given place, while domicile requires bodily presence in that place and also
an intention to make it one's domicile." Residence, however, is a term used with
many shades of meaning, from the merest temporary presence to the most
permanent abode, and it is not safe to insist that any one use et the only proper
one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of
the Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the intrinsic
validity of testamentary provisions, shall be regulated by the national law of the
person whose succession is under consideration, whatever may be the nature of
the property and regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning of
the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the
United States, each state of the Union having its own private law applicable to its citizens
only and in force only within the state. The "national law" indicated in Article 16 of the Civil
Code above quoted can not, therefore, possibly mean or apply to any general American law.
So it can refer to no other than the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal
property? The decision of the court below, sustains the contention of the executor-appellee
that under the California Probate Code, a testator may dispose of his property by will in the
form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176
P. 2d 952. But appellant invokes the provisions of Article 946 of the Civil Code of California,
which is as follows:
If there is no law to the contrary, in the place where personal property is
situated, it is deemed to follow the person of its owner, and is governed by the
law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We have
checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on
the case cited in the decision and testified to by a witness. (Only the case of Kaufman is
correctly cited.) It is argued on executor's behalf that as the deceased Christensen was a
citizen of the State of California, the internal law thereof, which is that given in the
abovecited case, should govern the determination of the validity of the testamentary
provisions of Christensen's will, such law being in force in the State of California of which
Christensen was a citizen. Appellant, on the other hand, insists that Article 946 should be
applicable, and in accordance therewith and following the doctrine of the renvoi, the
question of the validity of the testamentary provision in question should be referred back to
the law of the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the
forum refers a jural matter to a foreign law for decision, is the reference to the
purely internal rules of law of the foreign system; i.e., to the totality of the
foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the
renvoi, that is, applied the Conflict of Laws rule of Illinois which referred the
matter back to Michigan law. But once having determined the the Conflict of
Laws principle is the rule looked to, it is difficult to see why the reference back
should not have been to Michigan Conflict of Laws. This would have resulted in
the "endless chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the internal
law of Illinois, thus rejecting the renvoi or the reference back. Yet there seems
no compelling logical reason why the original reference should be the internal
law rather than to the Conflict of Laws rule. It is true that such a solution avoids
going on a merry-go-round, but those who have accepted the renvoi theory
avoid this inextricabilis circulas by getting off at the second reference and at that
point applying internal law. Perhaps the opponents of the renvoi are a bit more
consistent for they look always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead
that greater uniformity will result from adoption of their respective views. And
still more strange is the fact that the only way to achieve uniformity in this
choice-of-law problem is if in the dispute the two states whose laws form the
legal basis of the litigation disagree as to whether the renvoi should be
accepted. If both reject, or both accept the doctrine, the result of the litigation
will vary with the choice of the forum. In the case stated above, had the
Michigan court rejected the renvoi, judgment would have been against the
woman; if the suit had been brought in the Illinois courts, and they too rejected
the renvoi, judgment would be for the woman. The same result would happen,
though the courts would switch with respect to which would hold liability, if
both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to
land is in question, and where the validity of a decree of divorce is challenged. In
these cases the Conflict of Laws rule of the situs of the land, or the domicile of
the parties in the divorce case, is applied by the forum, but any further
reference goes only to the internal law. Thus, a person's title to land, recognized
by the situs, will be recognized by every court; and every divorce, valid by the
domicile of the parties, will be valid everywhere. (Goodrich, Conflict of Laws,
Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving
movable property in Massachusetts, England, and France. The question arises as
to how this property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of
the conflict of laws as to intestate succession to movables calls for an
application of the law of the deceased's last domicile. Since by hypothesis X's
last domicile was France, the natural thing for the Massachusetts court to do
would be to turn to French statute of distributions, or whatever corresponds
thereto in French law, and decree a distribution accordingly. An examination of
French law, however, would show that if a French court were called upon to
determine how this property should be distributed, it would refer the
distribution to the national law of the deceased, thus applying the
Massachusetts statute of distributions. So on the surface of things the
Massachusetts court has open to it alternative course of action: (a) either to
apply the French law is to intestate succession, or (b) to resolve itself into a
French court and apply the Massachusetts statute of distributions, on the
assumption that this is what a French court would do. If it accepts the so-
called renvoi doctrine, it will follow the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws
rule of the forum refers to a foreign law, the conflict-of-laws rule of which, in
turn, refers the matter back again to the law of the forum. This is renvoi in the
narrower sense. The German term for this judicial process is 'Ruckverweisung.'"
(Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be resorted to as
governing a particular case, the further question may arise: Are the rules as to
the conflict of laws contained in such foreign law also to be resorted to? This is a
question which, while it has been considered by the courts in but a few
instances, has been the subject of frequent discussion by textwriters and
essayists; and the doctrine involved has been descriptively designated by them
as the "Renvoyer" to send back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative answer to the question postulated and
the operation of the adoption of the foreign law in toto would in many cases
result in returning the main controversy to be decided according to the law of
the forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The
theory of the doctrine of renvoi is that the court of the forum, in determining
the question before it, must take into account the whole law of the other
jurisdiction, but also its rules as to conflict of laws, and then apply the law to the
actual question which the rules of the other jurisdiction prescribe. This may be
the law of the forum. The doctrine of the renvoi has generally been repudiated
by the American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application in
a country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-
1918, pp. 529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws
are to be understood as incorporating not only the ordinary or internal law of
the foreign state or country, but its rules of the conflict of laws as well.
According to this theory 'the law of a country' means the whole of its law.
xxx xxx xxx
Von Bar presented his views at the meeting of the Institute of International Law,
at Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of
foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall
respect:
(a) The provisions of a foreign law which disclaims the right to bind
its nationals abroad as regards their personal statute, and desires
that said personal statute shall be determined by the law of the
domicile, or even by the law of the place where the act in question
occurred.
(b) The decision of two or more foreign systems of law, provided it
be certain that one of them is necessarily competent, which agree
in attributing the determination of a question to the same system
of law.
xxx xxx xxx
If, for example, the English law directs its judge to distribute the personal estate
of an Englishman who has died domiciled in Belgium in accordance with the law
of his domicile, he must first inquire whether the law of Belgium would
distribute personal property upon death in accordance with the law of domicile,
and if he finds that the Belgian law would make the distribution in accordance
with the law of nationality — that is the English law — he must accept this
reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule
applied in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of
laws rules of California are to be enforced jointly, each in its own intended and appropriate
sphere, the principle cited In re Kaufman should apply to citizens living in the State, but Republic of the Philippines
Article 946 should apply to such of its citizens as are not domiciled in California but in other SUPREME COURT
jurisdictions. The rule laid down of resorting to the law of the domicile in the determination Manila
of matters with foreign element involved is in accord with the general principle of American
law that the domiciliary law should govern in most matters or rights which follow the person
of the owner. EN BANC

When a man dies leaving personal property in one or more states, and leaves a G.R. No. L-23678 June 6, 1967
will directing the manner of distribution of the property, the law of the state
where he was domiciled at the time of his death will be looked to in deciding TESTATE ESTATE OF AMOS G. BELLIS, deceased.
legal questions about the will, almost as completely as the law of situs is PEOPLE'S BANK and TRUST COMPANY, executor.
consulted in questions about the devise of land. It is logical that, since the MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
domiciliary rules control devolution of the personal estate in case of intestate vs.
succession, the same rules should determine the validity of an attempted EDWARD A. BELLIS, ET AL., heirs-appellees.
testamentary dispostion of the property. Here, also, it is not that the domiciliary
has effect beyond the borders of the domiciliary state. The rules of the domicile
are recognized as controlling by the Conflict of Laws rules at the situs property, Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
and the reason for the recognition as in the case of intestate succession, is the Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
general convenience of the doctrine. The New York court has said on the point: Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
'The general principle that a dispostiton of a personal property, valid at the J. R. Balonkita for appellee People's Bank & Trust Company.
domicile of the owner, is valid anywhere, is one of the universal application. It Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
had its origin in that international comity which was one of the first fruits of
civilization, and it this age, when business intercourse and the process of
BENGZON, J.P., J.:
accumulating property take but little notice of boundary lines, the practical
wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict of
Laws, Sec. 164, pp. 442-443.) This is a direct appeal to Us, upon a question purely of law, from an order of the Court of
First Instance of Manila dated April 30, 1964, approving the project of partition filed by the
executor in Civil Case No. 37089 therein.1äwphï1.ñët
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as
the national law is the internal law of California. But as above explained the laws of
California have prescribed two sets of laws for its citizens, one for residents therein and The facts of the case are as follows:
another for those domiciled in other jurisdictions. Reason demands that We should enforce
the California internal law prescribed for its citizens residing therein, and enforce the conflict
of laws rules for the citizens domiciled abroad. If we must enforce the law of California as in Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States."
comity we are bound to go, as so declared in Article 16 of our Civil Code, then we must By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward
enforce the law of California in accordance with the express mandate thereof and as above A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis
explained, i.e., apply the internal law for residents therein, and its conflict-of-laws rule for and Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three
those domiciled abroad. legitimate children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had
three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.

It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place
where the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of
the Civil Code of the Philippines and that the law to the contrary in the Philippines is the
provision in said Article 16 that the national law of the deceased should govern. This
contention can not be sustained. As explained in the various authorities cited above the
national law mentioned in Article 16 of our Civil Code is the law on conflict of laws in the
California Civil Code, i.e., Article 946, which authorizes the reference or return of the
question to the law of the testator's domicile. The conflict of laws rule in California, Article
946, Civil Code, precisely refers back the case, when a decedent is not domiciled in California,
to the law of his domicile, the Philippines in the case at bar. The court of the domicile can not
and should not refer the case back to California; such action would leave the issue incapable
of determination because the case will then be like a football, tossed back and forth between
the two states, between the country of which the decedent was a citizen and the country of
his domicile. The Philippine court must apply its own law as directed in the conflict of laws
rule of the state of the decedent, if the question has to be decided, especially as the
application of the internal law of California provides no legitime for children while the
Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children
legally acknowledged forced heirs of the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105;
Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and
Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision can not
possibly apply in the case at bar, for two important reasons, i.e., the subject in each case
does not appear to be a citizen of a state in the United States but with domicile in the
Philippines, and it does not appear in each case that there exists in the state of which the
subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is
the Philippines, the validity of the provisions of his will depriving his acknowledged natural
child, the appellant, should be governed by the Philippine Law, the domicile, pursuant to Art.
946 of the Civil Code of California, not by the internal law of California..
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that
after all taxes, obligations, and expenses of administration are paid for, his distributable
estate should be divided, in trust, in the following order and manner: (a) $240,000.00 to his
first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr.,
Maria Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two
items have been satisfied, the remainder shall go to his seven surviving children by his first
and second wives, namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares.1äwphï1.ñët
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A.
His will was admitted to probate in the Court of First Instance of Manila on September 15,
1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests therein
including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to
the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma
Bellis, various amounts totalling P40,000.00 each in satisfaction of their respective legacies,
or a total of P120,000.00, which it released from time to time according as the lower court
approved and allowed the various motions or petitions filed by the latter three requesting
partial advances on account of their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and
filed its "Executor's Final Account, Report of Administration and Project of Partition" wherein
it reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her
of shares of stock amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis in the amount of P40,000.00 each or a total of
P120,000.00. In the project of partition, the executor — pursuant to the "Twelfth" clause of
the testator's Last Will and Testament — divided the residuary estate into seven equal
portions for the benefit of the testator's seven legitimate children by his first and second
marriages.

WHEREFORE, the decision appealed from is hereby reversed and the case returned to the
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective
lower court with instructions that the partition be made as the Philippine law on succession
oppositions to the project of partition on the ground that they were deprived of their
provides. Judgment reversed, with costs against appellees.
legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.

Padilla, Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and Makalintal,
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
JJ., concur.
evidenced by the registry receipt submitted on April 27, 1964 by the executor. 1
Bengzon, C.J., took no part.
After the parties filed their respective memoranda and other pertinent pleadings, the lower
court, on April 30, 1964, issued an order overruling the oppositions and approving the
executor's final account, report and administration and project of partition. Relying upon Art.
16 of the Civil Code, it applied the national law of the decedent, which in this case is Texas
law, which did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower court on June
11, 1964, oppositors-appellants appealed to this Court to raise the issue of which law must
apply — Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi,
applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine
is usually pertinent where the decedent is a national of one country, and a domicile of
another. In the present case, it is not disputed that the decedent was both a national of
Texas and a domicile thereof at the time of his death. 2 So that even assuming Texas has a
conflict of law rule providing that the domiciliary system (law of the domicile) should govern,
the same would not result in a reference back (renvoi) to Philippine law, but would still refer
to Texas law. Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae)
calling for the application of the law of the place where the properties are situated, renvoi
would arise, since the properties here involved are found in the Philippines. In the absence,
however, of proof as to the conflict of law rule of Texas, it should not be presumed different
from ours.3 Appellants' position is therefore not rested on the doctrine of renvoi. As stated,
they never invoked nor even mentioned it in their arguments. Rather, they argue that their
case falls under the circumstances mentioned in the third paragraph of Article 17 in relation
to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the
decedent, in intestate or testamentary successions, with regard to four items: (a) the order
of succession; (b) the amount of successional rights; (e) the intrinsic validity of the provisions
of the will; and (d) the capacity to succeed. They provide that —
ART. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the intrinsic
validity of testamentary provisions, shall be regulated by the national law of the
person whose succession is under consideration, whatever may he the nature of
the property and regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the
decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating
that —
Prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determinations
or conventions agreed upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new
Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of
the old Civil Code as Art. 16 in the new. It must have been their purpose to make the second
paragraph of Art. 16 a specific provision in itself which must be applied in testate and
intestate succession. As further indication of this legislative intent, Congress added a new
provision, under Art. 1039, which decrees that capacity to succeed is to be governed by the
national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our
System of legitimes, Congress has not intended to extend the same to the succession of
foreign nationals. For it has specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law. Specific provisions must prevail over
general ones.
Appellants would also point out that the decedent executed two wills — one to govern his
Texas estate and the other his Philippine estate — arguing from this that he intended
Philippine law to govern his Philippine estate. Assuming that such was the decedent's
intention in executing a separate Philippine will, it would not alter the law, for as this Court
ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect that
his properties shall be distributed in accordance with Philippine law and not with his national
law, is illegal and void, for his national law cannot be ignored in regard to those matters that
Article 10 — now Article 16 — of the Civil Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas,
U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly,
since the intrinsic validity of the provision of the will and the amount of successional rights
are to be determined under Texas law, the Philippine law on legitimes cannot be applied to
the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against
appellants. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ.,
concur.
EN BANC
March 8, 2016
G.R. No. 221697
MARY GRACE NATIVIDAD S. POE-LLAMANZARES, Petitioners,
vs.
COMELEC AND ESTRELLA C. ELAMPARO Respondents.
x-----------------------x
G.R. No. 221698-700
MARY GRACE NATIVIDAD S. POE-LLAMANZARES, Petitioners,
vs.
COMELEC, FRANCISCO S. TATAD, ANTONIO P. CONTRERAS AND AMADO D.
VALDEZ Respondents.
DECISION
PEREZ, J.:
Before the Court are two consolidated petitions under Rule 64 in relation to Rule 65 of the
Rules of Court with extremely urgent application for an ex parte issuance of temporary
restraining order/status quo ante order and/or writ of preliminary injunction assailing the
following: (1) 1 December 2015 Resolution of the Commission on Elections (COMELEC)
Second Division; (2) 23 December 2015 Resolution of the COMELEC En Banc, in SPA No. 15-
001 (DC); (3) 11 December 2015 Resolution of the COMELEC First Division; and ( 4) 23
December 2015 Resolution of the COMELEC En Banc, in SPA No. 15-002 (DC), SPA No. 15-007
(DC) and SPA No. 15-139 (DC) for having been issued without jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction.
The Facts
Mary Grace Natividad S. Poe-Llamanzares (petitioner) was found abandoned as a newborn
infant in the Parish Church of Jaro, Iloilo by a certain Edgardo Militar (Edgardo) on 3
September 1968. Parental care and custody over petitioner was passed on by Edgardo to his
relatives, Emiliano Militar (Emiliano) and his wife. Three days after, 6 September 1968,
Emiliano reported and registered petitioner as a foundling with the Office of the Civil
Registrar of Iloilo City (OCR-Iloilo). In her Foundling Certificate and Certificate of Live Birth,
the petitioner was given the name "Mary Grace Natividad Contreras Militar." 1
When petitioner was five (5) years old, celebrity spouses Ronald Allan Kelley Poe (a.k.a.
Fenando Poe, Jr.) and Jesusa Sonora Poe (a.k.a. Susan Roces) filed a petition for her adoption
with the Municipal Trial Court (MTC) of San Juan City. On 13 May 1974, the trial court
granted their petition and ordered that petitioner's name be changed from "Mary Grace
Natividad Contreras Militar" to "Mary Grace Natividad Sonora Poe." Although necessary
notations were made by OCR-Iloilo on petitioner's foundling certificate reflecting the court
decreed adoption,2 the petitioner's adoptive mother discovered only sometime in the second
half of 2005 that the lawyer who handled petitioner's adoption failed to secure from the
OCR-Iloilo a new Certificate of Live Birth indicating petitioner's new name and the name of
her adoptive parents. 3 Without delay, petitioner's mother executed an affidavit attesting to
the lawyer's omission which she submitted to the OCR-Iloilo. On 4 May 2006, OCR-Iloilo
issued a new Certificate of Live Birth in the name of Mary Grace Natividad Sonora Poe. 4
Having reached the age of eighteen (18) years in 1986, petitioner registered as a voter with
the local COMELEC Office in San Juan City. On 13 December 1986, she received her COMELEC
Voter's Identification Card for Precinct No. 196 in Greenhills, San Juan, Metro Manila. 5
On 4 April 1988, petitioner applied for and was issued Philippine Passport No. F927287 6 by
the Department of Foreign Affairs (DFA). Subsequently, on 5 April 1993 and 19 May 1998,
she renewed her Philippine passport and respectively secured Philippine Passport Nos.
L881511 and DD156616.7
Initially, the petitioner enrolled and pursued a degree in Development Studies at the
University of the Philippines 8 but she opted to continue her studies abroad and left for the
United States of America (U.S.) in 1988. Petitioner graduated in 1991 from Boston College in
Chestnuts Hill, Massachusetts where she earned her Bachelor of Arts degree in Political
Studies.9
On 27 July 1991, petitioner married Teodoro Misael Daniel V. Llamanzares (Llamanzares), a
citizen of both the Philippines and the U.S., at Sanctuario de San Jose Parish in San Juan
City. 10 Desirous of being with her husband who was then based in the U.S., the couple flew
back to the U.S. two days after the wedding ceremony or on 29 July 1991. 11
While in the U.S., the petitioner gave birth to her eldest child Brian Daniel (Brian) on 16 April
1992.12 Her two daughters Hanna MacKenzie (Hanna) and Jesusa Anika (Anika) were both
born in the Philippines on 10 July 1998 and 5 June 2004, respectively. 13
On 18 October 2001, petitioner became a naturalized American citizen. 14 She obtained U.S.
Passport No. 017037793 on 19 December 2001. 15
On 8 April 2004, the petitioner came back to the Philippines together with Hanna to support
her father's candidacy for President in the May 2004 elections. It was during this time that
she gave birth to her youngest daughter Anika. She returned to the U.S. with her two
daughters on 8 July 2004. 16
After a few months, specifically on 13 December 2004, petitioner rushed back to the
Philippines upon learning of her father's deteriorating medical condition. 17 Her father
slipped into a coma and eventually expired. The petitioner stayed in the country until 3
February 2005 to take care of her father's funeral arrangements as well as to assist in the
settlement of his estate.18
According to the petitioner, the untimely demise of her father was a severe blow to her
entire family. In her earnest desire to be with her grieving mother, the petitioner and her
husband decided to move and reside permanently in the Philippines sometime in the first
quarter of 2005.19 The couple began preparing for their resettlement including notification of
their children's schools that they will be transferring to Philippine schools for the next
semester;20 coordination with property movers for the relocation of their household goods,
furniture and cars from the U.S. to the Philippines; 21 and inquiry with Philippine authorities
as to the proper procedure to be followed in bringing their pet dog into the country. 22 As
early as 2004, the petitioner already quit her job in the U.S. 23
Finally, petitioner came home to the Philippines on 24 May 200524 and without delay,
secured a Tax Identification Number from the Bureau of Internal Revenue. Her three (3)
children immediately followed25 while her husband was forced to stay in the U.S. to
complete pending projects as well as to arrange the sale of their family home there. 26
The petitioner and her children briefly stayed at her mother's place until she and her
husband purchased a condominium unit with a parking slot at One Wilson Place
Condominium in San Juan City in the second half of 2005. 27 The corresponding Condominium
Certificates of Title covering the unit and parking slot were issued by the Register of Deeds of
San Juan City to petitioner and her husband on 20 February 2006. 28 Meanwhile, her children
of school age began attending Philippine private schools.
On 14 February 2006, the petitioner made a quick trip to the U.S. to supervise the disposal of
some of the family's remaining household belongings. 29 She travelled back to the Philippines
on 11 March 2006.30
In late March 2006, petitioner's husband officially informed the U.S. Postal Service of the
family's change and abandonment of their address in the U.S.31 The family home was
eventually sold on 27 April 2006.32 Petitioner's husband resigned from his job in the U.S. in
April 2006, arrived in the country on 4 May 2006 and started working for a major Philippine
company in July 2006.33
In early 2006, petitioner and her husband acquired a 509-square meter lot in Corinthian Hills,
Quezon City where they built their family home34 and to this day, is where the couple and
their children have been residing.35 A Transfer Certificate of Title covering said property was
issued in the couple's name by the Register of Deeds of Quezon City on 1June 2006.
On 7 July 2006, petitioner took her Oath of Allegiance to the Republic of the Philippines
pursuant to Republic Act (R.A.) No. 9225 or the Citizenship Retention and Re-acquisition Act
of 2003.36 Under the same Act, she filed with the Bureau of Immigration (BI) a sworn petition
to reacquire Philippine citizenship together with petitions for derivative citizenship on behalf
of her three minor children on 10 July 2006. 37 As can be gathered from its 18 July 2006
Order, the BI acted favorably on petitioner's petitions and declared that she is deemed to
have reacquired her Philippine citizenship while her children are considered as citizens of the
Philippines.38 Consequently, the BI issued Identification Certificates (ICs) in petitioner's name
and in the names of her three (3) children. 39
Again, petitioner registered as a voter of Barangay Santa Lucia, San Juan City on 31 August
2006.40 She also secured from the DFA a new Philippine Passport bearing the No.
XX4731999.41 This passport was renewed on 18 March 2014 and she was issued Philippine
Passport No. EC0588861 by the DFA.42
On 6 October 2010, President Benigno S. Aquino III appointed petitioner as Chairperson of
the Movie and Television Review and Classification Board (MTRCB). 43 Before assuming her
post, petitioner executed an "Affidavit of Renunciation of Allegiance to the United States of
America and Renunciation of American Citizenship" before a notary public in Pasig City on 20
October 2010,44 in satisfaction of the legal requisites stated in Section 5 of R.A. No.
9225.45 The following day, 21 October 2010 petitioner submitted the said affidavit to the
BI46 and took her oath of office as Chairperson of the MTRCB. 47 From then on, petitioner
stopped using her American passport.48
On 12 July 2011, the petitioner executed before the Vice Consul of the U.S. Embassy in
Manila an "Oath/Affirmation of Renunciation of Nationality of the United States." 49 On that
day, she accomplished a sworn questionnaire before the U.S. Vice Consul wherein she stated
that she had taken her oath as MTRCB Chairperson on 21 October 2010 with the intent,
among others, of relinquishing her American citizenship. 50 In the same questionnaire, the
petitioner stated that she had resided outside of the U.S., specifically in the Philippines, from
3 September 1968 to 29 July 1991 and from May 2005 to present.51
On 9 December 2011, the U.S. Vice Consul issued to petitioner a "Certificate of Loss of
Nationality of the United States" effective 21 October 2010.52
On 2 October 2012, the petitioner filed with the COMELEC her Certificate of Candidacy (COC)
for Senator for the 2013 Elections wherein she answered "6 years and 6 months" to the
question "Period of residence in the Philippines before May 13, 2013." 53 Petitioner obtained
the highest number of votes and was proclaimed Senator on 16 May 2013. 54
On 19 December 2013, petitioner obtained Philippine Diplomatic Passport No. DE0004530. 55
On 15 October 2015, petitioner filed her COC for the Presidency for the May 2016
Elections. 56 In her COC, the petitioner declared that she is a natural-born citizen and that her
residence in the Philippines up to the day before 9 May 2016 would be ten (10) years and
eleven (11) months counted from 24 May 2005. 57 The petitioner attached to her COC an
"Affidavit Affirming Renunciation of U.S.A. Citizenship" subscribed and sworn to before a
notary public in Quezon City on 14 October 2015. 58
Petitioner's filing of her COC for President in the upcoming elections triggered the filing of
several COMELEC cases against her which were the subject of these consolidated cases.
Origin of Petition for Certiorari in G.R. No. 221697
A day after petitioner filed her COC for President, Estrella Elamparo (Elamparo) filed a
petition to deny due course or cancel said COC which was docketed as SPA No. 15-001 (DC)
and raffled to the COMELEC Second Division. 59 She is convinced that the COMELEC has
jurisdiction over her petition.60 Essentially, Elamparo's contention is that petitioner
committed material misrepresentation when she stated in her COC that she is a natural-born
Filipino citizen and that she is a resident of the Philippines for at least ten (10) years and
eleven (11) months up to the day before the 9 May 2016 Elections. 61
On the issue of citizenship, Elamparo argued that petitioner cannot be considered as a
natural-born Filipino on account of the fact that she was a foundling. 62 Elamparo claimed
that international law does not confer natural-born status and Filipino citizenship on
foundlings.63 Following this line of reasoning, petitioner is not qualified to apply for
reacquisition of Filipino citizenship under R.A. No. 9225 for she is not a natural-born Filipino
citizen to begin with.64 Even assuming arguendo that petitioner was a natural-born Filipino,
she is deemed to have lost that status when she became a naturalized American
citizen.65 According to Elamparo, natural-born citizenship must be continuous from birth. 66
On the matter of petitioner's residency, Elamparo pointed out that petitioner was bound by
the sworn declaration she made in her 2012 COC for Senator wherein she indicated that she
had resided in the country for only six ( 6) years and six ( 6) months as of May 2013 Elections.
Elamparo likewise insisted that assuming arguendo that petitioner is qualified to regain her
natural-born status under R.A. No. 9225, she still fell short of the ten-year residency
requirement of the Constitution as her residence could only be counted at the earliest from
July 2006, when she reacquired Philippine citizenship under the said Act. Also on the
assumption that petitioner is qualified to reacquire lost Philippine Citizenship, Elamparo is of
the belief that she failed to reestablish her domicile in the Philippines. 67
Petitioner seasonably filed her Answer wherein she countered that:
(1) the COMELEC did not have jurisdiction over Elamparo's petition as it was
actually a petition for quo warranto which could only be filed if Grace Poe wins
in the Presidential elections, and that the Department of Justice (DOJ) has
primary jurisdiction to revoke the BI's July 18, 2006 Order;
(2) the petition failed to state a cause of action because it did not contain
allegations which, if hypothetically admitted, would make false the statement in
her COC that she is a natural-born Filipino citizen nor was there any allegation
that there was a willful or deliberate intent to misrepresent on her part;
(3) she did not make any material misrepresentation in the COC regarding her
citizenship and residency qualifications for:
a. the 1934 Constitutional Convention deliberations show that
foundlings were considered citizens;
b. foundlings are presumed under international law to have been
born of citizens of the place where they are found;
c. she reacquired her natural-born Philippine citizenship under the
provisions of R.A. No. 9225;
d. she executed a sworn renunciation of her American citizenship
prior to the filing of her COC for President in the May 9, 2016
Elections and that the same is in full force and effect and has not
been withdrawn or recanted;
e. the burden was on Elamparo in proving that she did not possess
natural-born status;
f. residence is a matter of evidence and that she reestablished her
domicile in the Philippines as early as May 24, 2005;
g. she could reestablish residence even before she reacquired
natural-born citizenship under R.A. No. 9225;
h. statement regarding the period of residence in her 2012 COC for
Senator was an honest mistake, not binding and should give way to
evidence on her true date of reacquisition of domicile;
i. Elamparo's petition is merely an action to usurp the sovereign
right of the Filipino people to decide a purely political question,
that is, should she serve as the country's next leader.68
After the parties submitted their respective Memoranda, the petition was deemed
submitted for resolution.
On 1 December 2015, the COMELEC Second Division promulgated a Resolution finding that
petitioner's COC, filed for the purpose of running for the President of the Republic of the
Philippines in the 9 May 2016 National and Local Elections, contained material
representations which are false. The fallo of the aforesaid Resolution reads:
WHEREFORE, in view of all the foregoing considerations, the instant Petition to Deny Due
Course to or Cancel Certificate of Candidacy is hereby GRANTED. Accordingly, the Certificate
of Candidacy for President of the Republic of the Philippines in the May 9, 2016 National and
Local Elections filed by respondent Mary Grace Natividad Sonora Poe Llamanzares is
hereby CANCELLED.69
Motion for Reconsideration of the 1 December 2015 Resolution was filed by petitioner which
the COMELEC En Banc resolved in its 23 December 2015 Resolution by denying the same. 70
Origin of Petition for Certiorari in G.R. Nos. 221698-700
This case stemmed from three (3) separate petitions filed by Francisco S. Tatad (Tatad),
Antonio P. Contreras (Contreras) and Amado D. Valdez (Valdez) against petitioner before the
COMELEC which were consolidated and raffled to its First Division.
In his petition to disqualify petitioner under Rule 25 of the COMELEC Rules of
Procedure,71 docketed as SPA No. 15-002 (DC), Tatad alleged that petitioner lacks the
requisite residency and citizenship to qualify her for the Presidency. 72
Tatad theorized that since the Philippines adheres to the principle of jus sanguinis, persons
of unknown parentage, particularly foundlings, cannot be considered natural-born Filipino
citizens since blood relationship is determinative of natural-born status.73 Tatad invoked the
rule of statutory construction that what is not included is excluded. He averred that the fact
that foundlings were not expressly included in the categories of citizens in the 193 5
Constitution is indicative of the framers' intent to exclude them.74 Therefore, the burden lies
on petitioner to prove that she is a natural-born citizen.75
Neither can petitioner seek refuge under international conventions or treaties to support her
claim that foundlings have a nationality. 76 According to Tatad, international conventions and
treaties are not self-executory and that local legislations are necessary in order to give effect
to treaty obligations assumed by the Philippines. 77 He also stressed that there is no standard
state practice that automatically confers natural-born status to foundlings.78
Similar to Elamparo's argument, Tatad claimed that petitioner cannot avail of the option to
reacquire Philippine citizenship under R.A. No. 9225 because it only applies to former
natural-born citizens and petitioner was not as she was a foundling.79
Referring to petitioner's COC for Senator, Tatad concluded that she did not comply with the
ten (10) year residency requirement.80 Tatad opined that petitioner acquired her domicile in
Quezon City only from the time she renounced her American citizenship which was
sometime in 2010 or 2011.81 Additionally, Tatad questioned petitioner's lack of intention to
abandon her U.S. domicile as evinced by the fact that her husband stayed thereat and her
frequent trips to the U.S.82
In support of his petition to deny due course or cancel the COC of petitioner, docketed as
SPA No. 15-139 (DC), Valdez alleged that her repatriation under R.A. No. 9225 did not bestow
upon her the status of a natural-born citizen.83 He advanced the view that former natural-
born citizens who are repatriated under the said Act reacquires only their Philippine
citizenship and will not revert to their original status as natural-born citizens.84
He further argued that petitioner's own admission in her COC for Senator that she had only
been a resident of the Philippines for at least six (6) years and six (6) months prior to the 13
May 2013 Elections operates against her. Valdez rejected petitioner's claim that she could
have validly reestablished her domicile in the Philippines prior to her reacquisition of
Philippine citizenship. In effect, his position was that petitioner did not meet the ten (10)
year residency requirement for President.
Unlike the previous COMELEC cases filed against petitioner, Contreras' petition,85 docketed
as SPA No. 15-007 (DC), limited the attack to the residency issue. He claimed that petitioner's
2015 COC for President should be cancelled on the ground that she did not possess the ten-
year period of residency required for said candidacy and that she made false entry in her
COC when she stated that she is a legal resident of the Philippines for ten (10) years and
eleven (11) months by 9 May 2016.86 Contreras contended that the reckoning period for
computing petitioner's residency in the Philippines should be from 18 July 2006, the date
when her petition to reacquire Philippine citizenship was approved by the BI. 87 He asserted
that petitioner's physical presence in the country before 18 July 2006 could not be valid
evidence of reacquisition of her Philippine domicile since she was then living here as an
American citizen and as such, she was governed by the Philippine immigration laws. 88
In her defense, petitioner raised the following arguments:
First, Tatad's petition should be dismissed outright for failure to state a cause of action. His
petition did not invoke grounds proper for a disqualification case as enumerated under
Sections 12 and 68 of the Omnibus Election Code. 89 Instead, Tatad completely relied on the
alleged lack of residency and natural-born status of petitioner which are not among the
recognized grounds for the disqualification of a candidate to an elective office. 90
Second, the petitions filed against her are basically petitions for quo warranto as they focus
on establishing her ineligibility for the Presidency. 91 A petition for quo warranto falls within
the exclusive jurisdiction of the Presidential Electoral Tribunal (PET) and not the COMELEC. 92
Third, the burden to prove that she is not a natural-born Filipino citizen is on the
respondents.93 Otherwise stated, she has a presumption in her favor that she is a natural-
born citizen of this country.
Fourth, customary international law dictates that foundlings are entitled to a nationality and
are presumed to be citizens of the country where they are found. 94 Consequently, the
petitioner is considered as a natural-born citizen of the Philippines.95
Fifth, she claimed that as a natural-born citizen, she has every right to be repatriated under
R.A. No. 9225 or the right to reacquire her natural-born status.96 Moreover, the official acts
of the Philippine Government enjoy the presumption of regularity, to wit: the issuance of the
18 July 2006 Order of the BI declaring her as natural-born citizen, her appointment as MTRCB
Chair and the issuance of the decree of adoption of San Juan RTC. 97 She believed that all
these acts reinforced her position that she is a natural-born citizen of the Philippines.98
Sixth, she maintained that as early as the first quarter of 2005, she started reestablishing her
domicile of choice in the Philippines as demonstrated by her children's resettlement and
schooling in the country, purchase of a condominium unit in San Juan City and the
construction of their family home in Corinthian Hills.99
Seventh, she insisted that she could legally reestablish her domicile of choice in the
Philippines even before she renounced her American citizenship as long as the three
determinants for a change of domicile are complied with. 100 She reasoned out that there was
no requirement that renunciation of foreign citizenship is a prerequisite for the acquisition of
a new domicile of choice.101
Eighth, she reiterated that the period appearing in the residency portion of her COC for
Senator was a mistake made in good faith. 102
In a Resolution103 promulgated on 11 December 2015, the COMELEC First Division ruled that
petitioner is not a natural-born citizen, that she failed to complete the ten (10) year
residency requirement, and that she committed material misrepresentation in her COC when
she declared therein that she has been a resident of the Philippines for a period of ten (10)
years and eleven (11) months as of the day of the elections on 9 May 2016. The COMELEC
First Division concluded that she is not qualified for the elective position of President of the
Republic of the Philippines. The dispositive portion of said Resolution reads:
WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES,
to GRANT the Petitions and cancel the Certificate of Candidacy of MARY GRACE NATIVIDAD
SONORA POE-LLAMANZARES for the elective position of President of the Republic of the
Philippines in connection with the 9 May 2016 Synchronized Local and National Elections.
Petitioner filed a motion for reconsideration seeking a reversal of the COMELEC First
Division's Resolution. On 23 December 2015, the COMELEC En Banc issued a Resolution
denying petitioner's motion for reconsideration.
Alarmed by the adverse rulings of the COMELEC, petitioner instituted the present petitions
for certiorari with urgent prayer for the issuance of an ex parte temporary
restraining order/status quo ante order and/or writ of preliminary injunction. On 28
December 2015, temporary restraining orders were issued by the Court enjoining the
COMELEC and its representatives from implementing the assailed COMELEC Resolutions until
further orders from the Court. The Court also ordered the consolidation of the two petitions
filed by petitioner in its Resolution of 12 January 2016. Thereafter, oral arguments were held
in these cases.
The Court GRANTS the petition of Mary Grace Natividad S. Poe-Llamanzares and to ANNUL
and SET ASIDE the:
1. Resolution dated 1 December 2015 rendered through its Second Division, in
SPA No. 15-001 (DC), entitled Estrella C. Elamparo, petitioner, vs. Mary Grace
Natividad Sonora Poe-Llamanzares.
2. Resolution dated 11 December 2015, rendered through its First Division, in
the consolidated cases SPA No. 15-002 (DC) entitled Francisco S. Tatad,
petitioner, vs. Mary Grace Natividad Sonora Poe-Llamanzares, respondent; SPA
No. 15-007 (DC) entitled Antonio P. Contreras, petitioner, vs. Mary Grace
Natividad Sonora Poe-Llamanzares, respondent; and SPA No. 15-139 (DC)
entitled Amado D. Valdez, petitioner, v. Mary Grace Natividad Sonora Poe-
Llamanzares, respondent.
3. Resolution dated 23 December 2015 of the Commission En Banc, upholding
the 1 December 2015 Resolution of the Second Division.
4. Resolution dated 23 December 2015 of the Commission En Banc, upholding
the 11 December 2015 Resolution of the First Division.
The procedure and the conclusions from which the questioned Resolutions emanated are
tainted with grave abuse of discretion amounting to lack of jurisdiction. The petitioner is a
QUALIFIED CANDIDATE for President in the 9 May 2016 National Elections.
The issue before the COMELEC is whether or not the COC of petitioner should be denied due
course or cancelled "on the exclusive ground" that she made in the certificate a false
material representation. The exclusivity of the ground should hedge in the discretion of the
COMELEC and restrain it from going into the issue of the qualifications of the candidate for
the position, if, as in this case, such issue is yet undecided or undetermined by the proper
authority. The COMELEC cannot itself, in the same cancellation case, decide the qualification
or lack thereof of the candidate.
We rely, first of all, on the Constitution of our Republic, particularly its provisions in Article
IX, C, Section 2:
Section 2. The Commission on Elections shall exercise the following powers and functions:
(1) Enforce and administer all laws and regulations relative to the conduct of an
election, plebiscite, initiative, referendum, and recall.
(2) Exercise exclusive original jurisdiction over all contests relating to the
elections, returns, and qualifications of all elective regional, provincial, and city
officials, and appellate jurisdiction over all contests involving elective municipal
officials decided by trial courts of general jurisdiction, or involving elective
barangay officials decided by trial courts of limited jurisdiction.
Decisions, final orders, or rulings of the Commission on election contests
involving elective municipal and barangay offices shall be final, executory, and
not appealable.
(3) Decide, except those involving the right to vote, all questions affecting
elections, including determination of the number and location of polling places,
appointment of election officials and inspectors, and registration of voters.
(4) Deputize, with the concurrence of the President, law enforcement agencies
and instrumentalities of the Government, including the Armed Forces of the
Philippines, for the exclusive purpose of ensuring free, orderly, honest, peaceful,
and credible elections.
(5) Register, after sufficient publication, political parties, organizations, or
coalitions which, in addition to other requirements, must present their platform
or program of government; and accredit citizens' arms of the Commission on
Elections. Religious denominations and sects shall not be registered. Those
which seek to achieve their goals through violence or unlawful means, or refuse
to uphold and adhere to this Constitution, or which are supported by any
foreign government shall likewise be refused registration.
Financial contributions from foreign governments and their agencies to political
parties, organizations, coalitions, or candidates related to elections constitute
interference in national affairs, and, when accepted, shall be an additional
ground for the cancellation of their registration with the Commission, in
addition to other penalties that may be prescribed by law.
(6) File, upon a verified complaint, or on its own initiative, petitions in court for
inclusion or exclusion of voters; investigate and, where appropriate, prosecute
cases of violations of election laws, including acts or omissions constituting
election frauds, offenses, and malpractices.
(7) Recommend to the Congress effective measures to minimize election
spending, including limitation of places where propaganda materials shall be
posted, and to prevent and penalize all forms of election frauds, offenses,
malpractices, and nuisance candidacies.
(8) Recommend to the President the removal of any officer or employee it has
deputized, or the imposition of any other disciplinary action, for violation or
disregard of, or disobedience to its directive, order, or decision.
(9) Submit to the President and the Congress a comprehensive report on the
conduct of each election, plebiscite, initiative, referendum, or recall.
Not any one of the enumerated powers approximate the exactitude of the provisions of
Article VI, Section 17 of the same basic law stating that:
The Senate and the House of Representatives shall each have an Electoral
Tribunal which shall be the sole judge of all contests relating to the election,
returns, and qualifications of their respective Members. Each Electoral Tribunal
shall be composed of nine Members, three of whom shall be Justices of the
Supreme Court to be designated by the Chief Justice, and the remaining six shall
be Members of the Senate or the House of Representatives, as the case may be,
who shall be chosen on the basis of proportional representation from the
political parties and the parties or organizations registered under the party-list
system represented therein. The senior Justice in the Electoral Tribunal shall be
its Chairman.
or of the last paragraph of Article VII, Section 4 which provides that:
The Supreme Court, sitting en banc, shall be the sole judge of all contests
relating to the election, returns, and qualifications of the President or Vice-
President, and may promulgate its rules for the purpose.
The tribunals which have jurisdiction over the question of the qualifications of the President,
the Vice-President, Senators and the Members of the House of Representatives was made
clear by the Constitution. There is no such provision for candidates for these positions.
Can the COMELEC be such judge?
The opinion of Justice Vicente V. Mendoza in Romualdez-Marcos v. Commission on
Elections,104 which was affirmatively cited in the En Banc decision in Fermin v. COMELEC105 is
our guide. The citation in Fermin reads:
Apparently realizing the lack of an authorized proceeding for declaring the ineligibility of
candidates, the COMELEC amended its rules on February 15, 1993 so as to provide in Rule 25
§ 1, the following:
Grounds for disqualification. - Any candidate who does not possess all the
qualifications of a candidate as provided for by the Constitution or by existing
law or who commits any act declared by law to be grounds for disqualification
may be disqualified from continuing as a candidate.
The lack of provision for declaring the ineligibility of candidates, however, cannot be supplied
by a mere rule. Such an act is equivalent to the creation of a cause of action which is a
substantive matter which the COMELEC, in the exercise of its rule-making power under Art.
IX, A, §6 of the Constitution, cannot do it. It is noteworthy that the Constitution withholds
from the COMELEC even the power to decide cases involving the right to vote, which
essentially involves an inquiry into qualifications based on age, residence and citizenship of
voters. [Art. IX, C, §2(3)]
The assimilation in Rule 25 of the COMELEC rules of grounds for ineligibility into grounds for
disqualification is contrary to the evident intention of the law. For not only in their grounds
but also in their consequences are proceedings for "disqualification" different from those for
a declaration of "ineligibility." "Disqualification" proceedings, as already stated, are based on
grounds specified in § 12 and §68 of the Omnibus Election Code and in §40 of the Local
Government Code and are for the purpose of barring an individual from becoming a
candidate or from continuing as a candidate for public office. In a word, their purpose is
to eliminate a candidate from the race either from the start or during its progress.
"Ineligibility," on the other hand, refers to the lack of the qualifications prescribed in the
Constitution or the statutes for holding public office and the purpose of the proceedings for
declaration of ineligibility is to remove the incumbent from office.
Consequently, that an individual possesses the qualifications for a public office does not
imply that he is not disqualified from becoming a candidate or continuing as a candidate for
a public office and vice versa. We have this sort of dichotomy in our Naturalization Law. (C.A.
No. 473) That an alien has the qualifications prescribed in §2 of the Law does not imply that
he does not suffer from any of [the] disqualifications provided in §4.
Before we get derailed by the distinction as to grounds and the consequences of the
respective proceedings, the importance of the opinion is in its statement that "the lack of
provision for declaring the ineligibility of candidates, however, cannot be supplied by a mere
rule". Justice Mendoza lectured in Romualdez-Marcos that:
Three reasons may be cited to explain the absence of an authorized proceeding for
determining before election the qualifications of a candidate.
First is the fact that unless a candidate wins and is proclaimed elected, there is no necessity
for determining his eligibility for the office. In contrast, whether an individual should be
disqualified as a candidate for acts constituting election offenses (e.g., vote buying, over
spending, commission of prohibited acts) is a prejudicial question which should be
determined lest he wins because of the very acts for which his disqualification is being
sought. That is why it is provided that if the grounds for disqualification are established, a
candidate will not be voted for; if he has been voted for, the votes in his favor will not be
counted; and if for some reason he has been voted for and he has won, either he will not be
proclaimed or his proclamation will be set aside.
Second is the fact that the determination of a candidates' eligibility, e.g., his citizenship or, as
in this case, his domicile, may take a long time to make, extending beyond the beginning of
the term of the office. This is amply demonstrated in the companion case (G.R. No.
120265, Agapito A. Aquino v. COMELEC) where the determination of Aquino's residence was
still pending in the COMELEC even after the elections of May 8, 1995. This is contrary to the
summary character proceedings relating to certificates of candidacy. That is why the law
makes the receipt of certificates of candidacy a ministerial duty of the COMELEC and its
officers. The law is satisfied if candidates state in their certificates of candidacy that they are
eligible for the position which they seek to fill, leaving the determination of their
qualifications to be made after the election and only in the event they are elected. Only in
cases involving charges of false representations made in certificates of candidacy is the
COMELEC given jurisdiction.
Third is the policy underlying the prohibition against pre-proclamation cases in elections for
President, Vice President, Senators and members of the House of Representatives. (R.A. No.
7166, § 15) The purpose is to preserve the prerogatives of the House of Representatives
Electoral Tribunal and the other Tribunals as "sole judges" under the Constitution of
the election, returns and qualifications of members of Congress of the President and Vice
President, as the case may be.106
To be sure, the authoritativeness of the Romualdez pronouncements as reiterated
in Fermin, led to the amendment through COMELEC Resolution No. 9523, on 25 September
2012 of its Rule 25. This, the 15 February1993 version of Rule 25, which states that:
Grounds for disqualification. -Any candidate who does not possess all the qualifications of a
candidate as provided for by the Constitution or by existing law or who commits any act
declared by law to be grounds for disqualification may be disqualified from continuing as a
candidate.107
was in the 2012 rendition, drastically changed to:
Grounds. - Any candidate who, in action or protest in which he is a party, is declared by final
decision of a competent court, guilty of, or found by the Commission to be suffering from
any disqualification provided by law or the Constitution.
A Petition to Disqualify a Candidate invoking grounds for a Petition to Deny to or Cancel a
Certificate of Candidacy or Petition to Declare a Candidate as a Nuisance Candidate, or a
combination thereof, shall be summarily dismissed.
Clearly, the amendment done in 2012 is an acceptance of the reality of absence of an
authorized proceeding for determining before election the qualifications of candidate. Such
that, as presently required, to disqualify a candidate there must be a declaration by a final
judgment of a competent court that the candidate sought to be disqualified "is guilty of or
found by the Commission to be suffering from any disqualification provided by law or the
Constitution."
Insofar as the qualification of a candidate is concerned, Rule 25 and Rule 23 are flipsides of
one to the other. Both do not allow, are not authorizations, are not vestment of jurisdiction,
for the COMELEC to determine the qualification of a candidate. The facts of qualification
must beforehand be established in a prior proceeding before an authority properly vested
with jurisdiction. The prior determination of qualification may be by statute, by executive
order or by a judgment of a competent court or tribunal.
If a candidate cannot be disqualified without a prior finding that he or she is suffering from a
disqualification "provided by law or the Constitution," neither can the certificate of
candidacy be cancelled or denied due course on grounds of false representations regarding
his or her qualifications, without a prior authoritative finding that he or she is not qualified,
such prior authority being the necessary measure by which the falsity of the representation
can be found. The only exception that can be conceded are self-evident facts of
unquestioned or unquestionable veracity and judicial confessions. Such are, anyway, bases
equivalent to prior decisions against which the falsity of representation can be determined.
The need for a predicate finding or final pronouncement in a proceeding under Rule 23 that
deals with, as in this case, alleged false representations regarding the candidate's citizenship
and residence, forced the COMELEC to rule essentially that since foundlings 108 are not
mentioned in the enumeration of citizens under the 1935 Constitution,109 they then cannot
be citizens. As the COMELEC stated in oral arguments, when petitioner admitted that she is a
foundling, she said it all. This borders on bigotry. Oddly, in an effort at tolerance, the
COMELEC, after saying that it cannot rule that herein petitioner possesses blood relationship
with a Filipino citizen when "it is certain that such relationship is indemonstrable,"
proceeded to say that "she now has the burden to present evidence to prove her natural
filiation with a Filipino parent."
The fact is that petitioner's blood relationship with a Filipino citizen is DEMONSTRABLE.
At the outset, it must be noted that presumptions regarding paternity is neither unknown
nor unaccepted in Philippine Law. The Family Code of the Philippines has a whole chapter on
Paternity and Filiation.110 That said, there is more than sufficient evider1ce that petitioner
has Filipino parents and is therefore a natural-born Filipino. Parenthetically, the burden of
proof was on private respondents to show that petitioner is not a Filipino citizen. The private
respondents should have shown that both of petitioner's parents were aliens. Her admission
that she is a foundling did not shift the burden to her because such status did not exclude
the possibility that her parents were Filipinos, especially as in this case where there is a high
probability, if not certainty, that her parents are Filipinos.
The factual issue is not who the parents of petitioner are, as their identities are unknown,
but whether such parents are Filipinos. Under Section 4, Rule 128:
Sect. 4. Relevancy, collateral matters - Evidence must have such a relation to the fact in issue
as to induce belief in its existence or no-existence. Evidence on collateral matters shall not be
allowed, except when it tends in any reasonable degree to establish the probability of
improbability of the fact in issue.
The Solicitor General offered official statistics from the Philippine Statistics Authority
(PSA)111 that from 1965 to 1975, the total number of foreigners born in the Philippines was
15,986 while the total number of Filipinos born in the country was 10,558,278. The statistical
probability that any child born in the Philippines in that decade is natural-born Filipino
was 99.83%. For her part, petitioner presented census statistics for Iloilo Province for 1960
and 1970, also from the PSA. In 1960, there were 962,532 Filipinos and 4,734 foreigners in
the province; 99.62% of the population were Filipinos. In 1970, the figures were 1,162,669
Filipinos and 5,304 foreigners, or 99.55%. Also presented were figures for the child producing
ages (15-49). In 1960, there were 230,528 female Filipinos as against 730 female foreigners
or 99.68%. In the same year, there were 210,349 Filipino males and 886 male aliens,
or 99.58%. In 1970, there were 270,299 Filipino females versus 1, 190 female aliens,
or 99.56%. That same year, there were 245,740 Filipino males as against only 1,165 male
aliens or 99.53%. COMELEC did not dispute these figures. Notably, Commissioner Arthur Lim
admitted, during the oral arguments, that at the time petitioner was found in 1968, the
majority of the population in Iloilo was Filipino. 112
Other circumstantial evidence of the nationality of petitioner's parents are the fact that she
was abandoned as an infant in a Roman Catholic Church in Iloilo City.1âwphi1 She also has
typical Filipino features: height, flat nasal bridge, straight black hair, almond shaped eyes and
an oval face.
There is a disputable presumption that things have happened according to the ordinary
course of nature and the ordinary habits of life. 113 All of the foregoing evidence, that a
person with typical Filipino features is abandoned in Catholic Church in a municipality where
the population of the Philippines is overwhelmingly Filipinos such that there would be more
than a 99% chance that a child born in the province would be a Filipino, would indicate more
than ample probability if not statistical certainty, that petitioner's parents are Filipinos. That
probability and the evidence on which it is based are admissible under Rule 128, Section 4 of
the Revised Rules on Evidence.
To assume otherwise is to accept the absurd, if not the virtually impossible, as the norm. In
the words of the Solicitor General:
Second. It is contrary to common sense because foreigners do not come to the Philippines so
they can get pregnant and leave their newborn babies behind. We do not face a situation
where the probability is such that every foundling would have a 50% chance of being a
Filipino and a 50% chance of being a foreigner. We need to frame our questions properly.
What are the chances that the parents of anyone born in the Philippines would be
foreigners? Almost zero. What are the chances that the parents of anyone born in the
Philippines would be Filipinos? 99.9%.
According to the Philippine Statistics Authority, from 2010 to 2014, on a yearly average,
there were 1,766,046 children born in the Philippines to Filipino parents, as opposed to
1,301 children in the Philippines of foreign parents. Thus, for that sample period, the ratio of
non-Filipino children to natural born Filipino children is 1:1357. This means that the
statistical probability that any child born in the Philippines would be a natural born Filipino is
99.93%.
From 1965 to 1975, the total number of foreigners born in the Philippines is 15,986 while the
total number of Filipinos born in the Philippines is 15,558,278. For this period, the ratio of
non-Filipino children is 1:661. This means that the statistical probability that any child born in
the Philippines on that decade would be a natural born Filipino is 99.83%.
We can invite statisticians and social anthropologists to crunch the numbers for us, but I am
confident that the statistical probability that a child born in the Philippines would be a
natural born Filipino will not be affected by whether or not the parents are known. If at all,
the likelihood that a foundling would have a Filipino parent might even be higher than 99.9%.
Filipinos abandon their children out of poverty or perhaps, shame. We do not imagine
foreigners abandoning their children here in the Philippines thinking those infants would
have better economic opportunities or believing that this country is a tropical paradise
suitable for raising abandoned children. I certainly doubt whether a foreign couple has ever
considered their child excess baggage that is best left behind.
To deny full Filipino citizenship to all foundlings and render them stateless just because there
may be a theoretical chance that one among the thousands of these foundlings might be the
child of not just one, but two, foreigners is downright discriminatory, irrational, and unjust. It
just doesn't make any sense. Given the statistical certainty - 99.9% - that any child born in
the Philippines would be a natural born citizen, a decision denying foundlings such status is
effectively a denial of their birthright. There is no reason why this Honorable Court should
use an improbable hypothetical to sacrifice the fundamental political rights of an entire class
of human beings. Your Honor, constitutional interpretation and the use of common sense are
not separate disciplines.
As a matter of law, foundlings are as a class, natural-born citizens. While the 1935
Constitution's enumeration is silent as to foundlings, there is no restrictive language which
would definitely exclude foundlings either. Because of silence and ambiguity in the
enumeration with respect to foundlings, there is a need to examine the intent of the
framers. In Nitafan v. Commissioner of Internal Revenue,114 this Court held that:
The ascertainment of that intent is but in keeping with the fundamental
principle of constitutional construction that the intent of the framers of the
organic law and of the people adopting it should be given effect. The primary
task in constitutional construction is to ascertain and thereafter assure the
realization of the purpose of the framers and of the people in the adoption of
the Constitution. It may also be safely assumed that the people in ratifying the
Constitution were guided mainly by the explanation offered by the framers. 115
As pointed out by petitioner as well as the Solicitor General, the deliberations of the 1934
Constitutional Convention show that the framers intended foundlings to be covered by the
enumeration. The following exchange is recorded:
Sr. Rafols: For an amendment. I propose that after subsection 2, the following is inserted:
"The natural children of a foreign father and a Filipino mother not recognized by the father.
xxxx
President:
[We] would like to request a clarification from the proponent of the amendment. The
gentleman refers to natural children or to any kind of illegitimate children?
Sr. Rafols:
To all kinds of illegitimate children. It also includes natural children of unknown
parentage, natural or illegitimate children of unknown parents.
Sr. Montinola:
For clarification. The gentleman said "of unknown parents." Current codes consider them
Filipino, that is, I refer to the Spanish Code wherein all children of unknown parentage born
in Spanish territory are considered Spaniards, because the presumption is that a child of
unknown parentage is the son of a Spaniard. This may be applied in the Philippines in that a
child of unknown parentage born in the Philippines is deemed to be Filipino, and there is no
need ...
Sr. Rafols:
There is a need, because we are relating the conditions that are [required] to be Filipino.
Sr. Montinola:
But that is the interpretation of the law, therefore, there is no [more] need for amendment.
Sr. Rafols:
The amendment should read thus:
"Natural or illegitimate of a foreign father and a Filipino mother recognized by one, or the
children of unknown parentage."
Sr. Briones:
The amendment [should] mean children born in the Philippines of unknown parentage.
Sr. Rafols:
The son of a Filipina to a Foreigner, although this [person] does not recognize the child, is not
unknown.
President:
Does the gentleman accept the amendment or not?
Sr. Rafols:
I do not accept the amendment because the amendment would exclude the children of a
Filipina with a foreigner who does not recognize the child. Their parentage is not unknown
and I think those of overseas Filipino mother and father [whom the latter] does not
recognize, should also be considered as Filipinos.
President:
The question in order is the amendment to the amendment from the Gentleman from Cebu,
Mr. Briones.
Sr. Busion:
Mr. President, don't you think it would be better to leave this matter in the hands of the
Legislature?
Sr. Roxas:
Mr. President, my humble opinion is that these cases are few and far in between, that the
constitution need [not] refer to them. By international law the principle that children or
people born in a country of unknown parents are citizens in this nation is recognized, and it is
not necessary to include a provision on the subject exhaustively. 116
Though the Rafols amendment was not carried out, it was not because there was any
objection to the notion that persons of "unknown parentage" are not citizens but only
because their number was not enough to merit specific mention. Such was the
account,117 cited by petitioner, of delegate and constitution law author Jose Aruego who
said:
During the debates on this provision, Delegate Rafols presented an amendment
to include as Filipino citizens the illegitimate children with a foreign father of a
mother who was a citizen of the Philippines, and also foundlings; but this
amendment was defeated primarily because the Convention believed that the
cases, being too few to warrant the inclusion of a provision in the Constitution
to apply to them, should be governed by statutory legislation. Moreover, it was
believed that the rules of international law were already clear to the effect that
illegitimate children followed the citizenship of the mother, and that foundlings
followed the nationality of the place where they were found, thereby making
unnecessary the inclusion in the Constitution of the proposed amendment.
This explanation was likewise the position of the Solicitor General during the 16 February
2016 Oral Arguments:
We all know that the Rafols proposal was rejected. But note that what was declined was the
proposal for a textual and explicit recognition of foundlings as Filipinos. And so, the way to
explain the constitutional silence is by saying that it was the view of Montinola and Roxas
which prevailed that there is no more need to expressly declare foundlings as Filipinos.
Obviously, it doesn't matter whether Montinola's or Roxas' views were legally correct.
Framers of a constitution can constitutionalize rules based on assumptions that are
imperfect or even wrong. They can even overturn existing rules. This is basic. What matters
here is that Montinola and Roxas were able to convince their colleagues in the convention
that there is no more need to expressly declare foundlings as Filipinos because they are
already impliedly so recognized.
In other words, the constitutional silence is fully explained in terms of linguistic efficiency
and the avoidance of redundancy. The policy is clear: it is to recognize foundlings, as a class,
as Filipinos under Art. IV, Section 1 (3) of the 1935 Constitution. This inclusive policy is
carried over into the 1973 and 1987 Constitution. It is appropriate to invoke a famous scholar
as he was paraphrased by Chief Justice Fernando: the constitution is not silently silent, it is
silently vocal. 118
The Solicitor General makes the further point that the framers "worked to create a just and
humane society," that "they were reasonable patriots and that it would be unfair to impute
upon them a discriminatory intent against foundlings." He exhorts that, given the grave
implications of the argument that foundlings are not natural-born Filipinos, the Court must
search the records of the 1935, 1973 and 1987 Constitutions "for an express intention to
deny foundlings the status of Filipinos. The burden is on those who wish to use the
constitution to discriminate against foundlings to show that the constitution really intended
to take this path to the dark side and inflict this across the board marginalization."
We find no such intent or language permitting discrimination against foundlings. On the
contrary, all three Constitutions guarantee the basic right to equal protection of the laws. All
exhort the State to render social justice. Of special consideration are several provisions in the
present charter: Article II, Section 11 which provides that the "State values the dignity of
every human person and guarantees full respect for human rights," Article XIII, Section 1
which mandates Congress to "give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social, economic,
and political inequalities x x x" and Article XV, Section 3 which requires the State to defend
the "right of children to assistance, including proper care and nutrition, and special
protection from all forms of neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development." Certainly, these provisions contradict an intent to
discriminate against foundlings on account of their unfortunate status.
Domestic laws on adoption also support the principle that foundlings are Filipinos. These
laws do not provide that adoption confers citizenship upon the adoptee. Rather, the adoptee
must be a Filipino in the first place to be adopted. The most basic of such laws is Article 15 of
the Civil Code which provides that "[l]aws relating to family rights, duties, status, conditions,
legal capacity of persons are binding on citizens of the Philippines even though living
abroad." Adoption deals with status, and a Philippine adoption court will have jurisdiction
only if the adoptee is a Filipino. In Ellis and Ellis v. Republic,119 a child left by an unidentified
mother was sought to be adopted by aliens. This Court said:
In this connection, it should be noted that this is a proceedings in rem, which no court may
entertain unless it has jurisdiction, not only over the subject matter of the case and over the
parties, but also over the res, which is the personal status of Baby Rose as well as that of
petitioners herein. Our Civil Code (Art. 15) adheres to the theory that jurisdiction over the
status of a natural person is determined by the latter's nationality. Pursuant to this theory,
we have jurisdiction over the status of Baby Rose, she being a citizen of the Philippines, but
not over the status of the petitioners, who are foreigners. 120 (Underlining supplied)
Recent legislation is more direct. R.A. No. 8043 entitled "An Act Establishing the Rules to
Govern the Inter-Country Adoption of Filipino Children and For Other Purposes" (otherwise
known as the "Inter-Country Adoption Act of 1995"), R.A. No. 8552, entitled "An Act
Establishing the Rules and Policies on the Adoption of Filipino Children and For Other
Purposes" (otherwise known as the Domestic Adoption Act of 1998) and this Court's A.M.
No. 02-6-02-SC or the "Rule on Adoption," all expressly refer to "Filipino children" and
include foundlings as among Filipino children who may be adopted.
It has been argued that the process to determine that the child is a foundling leading to the
issuance of a foundling certificate under these laws and the issuance of said certificate are
acts to acquire or perfect Philippine citizenship which make the foundling a naturalized
Filipino at best. This is erroneous. Under Article IV, Section 2 "Natural-born citizens are those
who are citizens of the Philippines from birth without having to perform any act to acquire or
perfect their Philippine citizenship." In the first place, "having to perform an act" means that
the act must be personally done by the citizen. In this instance, the determination of
foundling status is done not by the child but by the authorities. 121 Secondly, the object of the
process is the determination of the whereabouts of the parents, not the citizenship of the
child. Lastly, the process is certainly not analogous to naturalization proceedings to acquire
Philippine citizenship, or the election of such citizenship by one born of an alien father and a
Filipino mother under the 1935 Constitution, which is an act to perfect it.
In this instance, such issue is moot because there is no dispute that petitioner is a foundling,
as evidenced by a Foundling Certificate issued in her favor. 122 The Decree of Adoption issued
on 13 May 1974, which approved petitioner's adoption by Jesusa Sonora Poe and Ronald
Allan Kelley Poe, expressly refers to Emiliano and his wife, Rosario Militar, as her "foundling
parents," hence effectively affirming petitioner's status as a foundling. 123
Foundlings are likewise citizens under international law. Under the 1987 Constitution, an
international law can become part of the sphere of domestic law either by transformation or
incorporation. The transformation method requires that an international law be transformed
into a domestic law through a constitutional mechanism such as local legislation.124 On the
other hand, generally accepted principles of international law, by virtue of the incorporation
clause of the Constitution, form part of the laws of the land even if they do not derive from
treaty obligations. Generally accepted principles of international law include international
custom as evidence of a general practice accepted as law, and general principles of law
recognized by civilized nations.125 International customary rules are accepted as binding as a
result from the combination of two elements: the established, widespread, and consistent
practice on the part of States; and a psychological element known as the opinionjuris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a belief that the
practice in question is rendered obligatory by the existence of a rule of law requiring
it.126 "General principles of law recognized by civilized nations" are principles "established by
a process of reasoning" or judicial logic, based on principles which are "basic to legal systems
generally,"127 such as "general principles of equity, i.e., the general principles of fairness and
justice," and the "general principle against discrimination" which is embodied in the
"Universal Declaration of Human Rights, the International Covenant on Economic, Social and
Cultural Rights, the International Convention on the Elimination of All Forms of Racial
Discrimination, the Convention Against Discrimination in Education, the Convention (No.
111) Concerning Discrimination in Respect of Employment and Occupation." 128 These are the
same core principles which underlie the Philippine Constitution itself, as embodied in the
due process and equal protection clauses of the Bill of Rights. 129
Universal Declaration of Human Rights ("UDHR") has been interpreted by this Court as part
of the generally accepted principles of international law and binding on the State. 130 Article
15 thereof states:
1. Everyone has the right to a nationality.
2. No one shall be arbitrarily deprived of his nationality nor denied the right to
change his nationality.
The Philippines has also ratified the UN Convention on the Rights of the Child (UNCRC).
Article 7 of the UNCRC imposes the following obligations on our country:
Article 7
1. The child shall be registered immediately after birth and shall have the right from birth to
a name, the right to acquire a nationality and as far as possible, the right to know and be
cared for by his or her parents.
2. States Parties shall ensure the implementation of these rights in accordance with their
national law and their obligations under the relevant international instruments in this field,
in particular where the child would otherwise be stateless.
In 1986, the country also ratified the 1966 International Covenant on Civil and Political Rights
(ICCPR). Article 24 thereof provide for the right of every child "to acquire a nationality:"
Article 24
1. Every child shall have, without any discrimination as to race, colour, sex, language,
religion, national or social origin, property or birth, the right, to such measures of protection
as are required by his status as a minor, on the part of his family, society and the State.
2. Every child shall be registered immediately after birth and shall have a name.
3. Every child has the right to acquire a nationality.
The common thread of the UDHR, UNCRC and ICCPR is to obligate the Philippines to grant
nationality from birth and ensure that no child is stateless. This grant of nationality must be
at the time of birth, and it cannot be accomplished by the application of our present
naturalization laws, Commonwealth Act No. 473, as amended, and R.A. No. 9139, both of
which require the applicant to be at least eighteen (18) years old.
The principles found in two conventions, while yet unratified by the Philippines, are generally
accepted principles of international law. The first is Article 14 of the 1930 Hague Convention
on Certain Questions Relating to the Conflict of Nationality Laws under which a foundling is
presumed to have the "nationality of the country of birth," to wit:
Article 14
A child whose parents are both unknown shall have the nationality of the country of birth. If
the child's parentage is established, its nationality shall be determined by the rules applicable
in cases where the parentage is known.
A foundling is, until the contrary is proved, presumed to have been born on the territory of
the State in which it was found. (Underlining supplied)
The second is the principle that a foundling is presumed born of citizens of the country where
he is found, contained in Article 2 of the 1961 United Nations Convention on the Reduction
of Statelessness:
Article 2
A foundling found in the territory of a Contracting State shall, in the absence of proof to the
contrary, be considered to have been born within the territory of parents possessing the
nationality of that State.
That the Philippines is not a party to the 1930 Hague Convention nor to the 1961 Convention
on the Reduction of Statelessness does not mean that their principles are not binding. While
the Philippines is not a party to the 1930 Hague Convention, it is a signatory to the Universal
Declaration on Human Rights, Article 15(1) ofwhich131 effectively affirms Article 14 of the
1930 Hague Convention. Article 2 of the 1961 "United Nations Convention on the Reduction
of Statelessness" merely "gives effect" to Article 15(1) of the UDHR. 132 In Razon v.
Tagitis, 133 this Court noted that the Philippines had not signed or ratified the "International
Convention for the Protection of All Persons from Enforced Disappearance." Yet, we ruled
that the proscription against enforced disappearances in the said convention was
nonetheless binding as a "generally accepted principle of international law." Razon v.
Tagitis is likewise notable for declaring the ban as a generally accepted principle of
international law although the convention had been ratified by only sixteen states and had
not even come into force and which needed the ratification of a minimum of twenty states.
Additionally, as petitioner points out, the Court was content with the practice of
international and regional state organs, regional state practice in Latin America, and State
Practice in the United States.
Another case where the number of ratifying countries was not determinative is Mijares v.
Ranada, 134 where only four countries had "either ratified or acceded to"135 the 1966
"Convention on the Recognition and Enforcement of Foreign Judgments in Civil and
Commercial Matters" when the case was decided in 2005. The Court also pointed out that
that nine member countries of the European Common Market had acceded to the
Judgments Convention. The Court also cited U.S. laws and jurisprudence on recognition of
foreign judgments. In all, only the practices of fourteen countries were considered and yet,
there was pronouncement that recognition of foreign judgments was widespread practice.
Our approach in Razon and Mijares effectively takes into account the fact that "generally
accepted principles of international law" are based not only on international custom, but
also on "general principles of law recognized by civilized nations," as the phrase is
understood in Article 38.1 paragraph (c) of the ICJ Statute. Justice, fairness, equity and the
policy against discrimination, which are fundamental principles underlying the Bill of Rights
and which are "basic to legal systems generally,"136 support the notion that the right against
enforced disappearances and the recognition of foreign judgments, were correctly
considered as "generally accepted principles of international law" under the incorporation
clause.
Petitioner's evidence137 shows that at least sixty countries in Asia, North and South America,
and Europe have passed legislation recognizing foundlings as its citizen. Forty-two (42) of
those countries follow the jus sanguinis regime. Of the sixty, only thirty-three (33) are parties
to the 1961 Convention on Statelessness; twenty-six (26) are not signatories to the
Convention. Also, the Chief Justice, at the 2 February 2016 Oral Arguments pointed out that
in 166 out of 189 countries surveyed (or 87.83%), foundlings are recognized as citizens.
These circumstances, including the practice of jus sanguinis countries, show that it is a
generally accepted principle of international law to presume foundlings as having been born
of nationals of the country in which the foundling is found.
Current legislation reveals the adherence of the Philippines to this generally accepted
principle of international law. In particular, R.A. No. 8552, R.A. No. 8042 and this Court's
Rules on Adoption, expressly refer to "Filipino children." In all of them, foundlings are among
the Filipino children who could be adopted. Likewise, it has been pointed that the DFA issues
passports to foundlings. Passports are by law, issued only to citizens. This shows that even
the executive department, acting through the DFA, considers foundlings as Philippine
citizens.
Adopting these legal principles from the 1930 Hague Convention and the 1961 Convention
on Statelessness is rational and reasonable and consistent with the jus sanguinis regime in
our Constitution. The presumption of natural-born citizenship of foundlings stems from the
presumption that their parents are nationals of the Philippines. As the empirical data
provided by the PSA show, that presumption is at more than 99% and is a virtual certainty.
In sum, all of the international law conventions and instruments on the matter of nationality
of foundlings were designed to address the plight of a defenseless class which suffers from a
misfortune not of their own making. We cannot be restrictive as to their application if we are
a country which calls itself civilized and a member of the community of nations. The Solicitor
General's warning in his opening statement is relevant:
.... the total effect of those documents is to signify to this Honorable Court that those
treaties and conventions were drafted because the world community is concerned that the
situation of foundlings renders them legally invisible. It would be tragically ironic if this
Honorable Court ended up using the international instruments which seek to protect and
uplift foundlings a tool to deny them political status or to accord them second-class
citizenship.138
The COMELEC also ruled139 that petitioner's repatriation in July 2006 under the provisions of
R.A. No. 9225 did not result in the reacquisition of natural-born citizenship. The COMELEC
reasoned that since the applicant must perform an act, what is reacquired is not "natural-
born" citizenship but only plain "Philippine citizenship."
The COMELEC's rule arrogantly disregards consistent jurisprudence on the matter of
repatriation statutes in general and of R.A. No. 9225 in particular.
In the seminal case of Bengson Ill v. HRET, 140 repatriation was explained as follows:
Moreover, repatriation results in the recovery of the original nationality. This means that a
naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized
Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost
his Philippine citizenship, he will be restored to his former status as a natural-born Filipino.
R.A. No. 9225 is a repatriation statute and has been described as such in several cases. They
include Sobejana-Condon v. COMELEC141 where we described it as an
"abbreviated repatriation process that restores one's Filipino citizenship x x x." Also included
is Parreno v. Commission on Audit,142 which cited Tabasa v. Court of Appeals,143 where we
said that "[t]he repatriation of the former Filipino will allow him to recover his natural-born
citizenship. Parreno v. Commission on Audit144 is categorical that "if petitioner reacquires his
Filipino citizenship (under R.A. No. 9225), he will ... recover his natural-born citizenship."
The COMELEC construed the phrase "from birth" in the definition of natural citizens as
implying "that natural-born citizenship must begin at birth and remain uninterrupted and
continuous from birth." R.A. No. 9225 was obviously passed in line with Congress' sole
prerogative to determine how citizenship may be lost or reacquired. Congress saw it fit to
decree that natural-born citizenship may be reacquired even if it had been once lost. It is not
for the COMELEC to disagree with the Congress' determination.
More importantly, COMELEC's position that natural-born status must be continuous was
already rejected in Bengson III v. HRET145 where the phrase "from birth" was clarified to
mean at the time of birth: "A person who at the time of his birth, is a citizen of a particular
country, is a natural-born citizen thereof." Neither is "repatriation" an act to "acquire or
perfect" one's citizenship. In Bengson III v. HRET, this Court pointed out that there are only
two types of citizens under the 1987 Constitution: natural-born citizen and naturalized, and
that there is no third category for repatriated citizens:
It is apparent from the enumeration of who are citizens under the present Constitution that
there are only two classes of citizens: (1) those who are natural-born and (2) those who are
naturalized in accordance with law. A citizen who is not a naturalized Filipino, ie., did not
have to undergo the process of naturalization to obtain Philippine citizenship, necessarily is a
natural-born Filipino. Noteworthy is the absence in said enumeration of a separate category
for persons who, after losing Philippine citizenship, subsequently reacquire it. The reason
therefor is clear: as to such persons, they would either be natural-born or naturalized
depending on the reasons for the loss of their citizenship and the mode prescribed by the
applicable law for the reacquisition thereof. As respondent Cruz was not required by law to
go through naturalization proceedings in order to reacquire his citizenship, he is perforce a
natural-born Filipino. As such, he possessed all the necessary qualifications to be elected as
member of the House of Representatives.146
The COMELEC cannot reverse a judicial precedent. That is reserved to this Court. And while
we may always revisit a doctrine, a new rule reversing standing doctrine cannot be
retroactively applied. In Morales v. Court of Appeals and Jejomar Erwin S. Binay, Jr.,147 where
we decreed reversed the condonation doctrine, we cautioned that it "should be prospective
in application for the reason that judicial decisions applying or interpreting the laws of the
Constitution, until reversed, shall form part of the legal system of the Philippines." This Court
also said that "while the future may ultimately uncover a doctrine's error, it should be, as a
general rule, recognized as good law prior to its abandonment. Consequently, the people's
reliance thereupon should be respected."148
Lastly, it was repeatedly pointed out during the oral arguments that petitioner committed a
falsehood when she put in the spaces for "born to" in her application for repatriation under
R.A. No. 9225 the names of her adoptive parents, and this misled the BI to presume that she
was a natural-born Filipino. It has been contended that the data required were the names of
her biological parents which are precisely unknown.
This position disregards one important fact - petitioner was legally adopted. One of the
effects of adoption is "to sever all legal ties between the biological parents and the adoptee,
except when the biological parent is the spouse of the adoptee." 149 Under R.A. No. 8552,
petitioner was also entitled to an amended birth certificate "attesting to the fact that the
adoptee is the child of the adopter(s)" and which certificate "shall not bear any notation that
it is an amended issue."150 That law also requires that "[a]ll records, books, and papers
relating to the adoption cases in the files of the court, the Department [of Social Welfare and
Development], or any other agency or institution participating in the adoption proceedings
shall be kept strictly confidential."151 The law therefore allows petitioner to state that her
adoptive parents were her birth parents as that was what would be stated in her birth
certificate anyway. And given the policy of strict confidentiality of adoption records,
petitioner was not obligated to disclose that she was an adoptee.
Clearly, to avoid a direct ruling on the qualifications of petitioner, which it cannot make in
the same case for cancellation of COC, it resorted to opinionatedness which is,
moreover, erroneous. The whole process undertaken by COMELEC is wrapped in grave abuse
of discretion.
On Residence
The tainted process was repeated in disposing of the issue of whether or not petitioner
committed false material representation when she stated in her COC that she has before and
until 9 May 2016 been a resident of the Philippines for ten (10) years and eleven (11)
months.
Petitioner's claim that she will have been a resident for ten (10) years and eleven (11)
months on the day before the 2016 elections, is true.
The Constitution requires presidential candidates to have ten (10) years' residence in the
Philippines before the day of the elections. Since the forthcoming elections will be held on 9
May 2016, petitioner must have been a resident of the Philippines prior to 9 May 2016 for
ten (10) years. In answer to the requested information of "Period of Residence in the
Philippines up to the day before May 09, 2016," she put in "10 years 11 months" which
according to her pleadings in these cases corresponds to a beginning date of 25 May 2005
when she returned for good from the U.S.
When petitioner immigrated to the U.S. in 1991, she lost her original domicile, which is the
Philippines. There are three requisites to acquire a new domicile: 1. Residence or bodily
presence in a new locality; 2. an intention to remain there; and 3. an intention to abandon
the old domicile.152 To successfully effect a change of domicile, one must demonstrate an
actual removal or an actual change of domicile; a bona fide intention of abandoning the
former place of residence and establishing a new one and definite acts which correspond
with the purpose. In other words, there must basically be animus manendi coupled
with animus non revertendi. The purpose to remain in or at the domicile of choice must be
for an indefinite period of time; the change of residence must be voluntary; and the
residence at the place chosen for the new domicile must be actual. 153
Petitioner presented voluminous evidence showing that she and her family abandoned their
U.S. domicile and relocated to the Philippines for good. These evidence include petitioner's
former U.S. passport showing her arrival on 24 May 2005 and her return to the Philippines
every time she travelled abroad; e-mail correspondences starting in March 2005 to
September 2006 with a freight company to arrange for the shipment of their household
items weighing about 28,000 pounds to the Philippines; e-mail with the Philippine Bureau of
Animal Industry inquiring how to ship their dog to the Philippines; school records of her
children showing enrollment in Philippine schools starting June 2005 and for succeeding
years; tax identification card for petitioner issued on July 2005; titles for condominium and
parking slot issued in February 2006 and their corresponding tax declarations issued in April
2006; receipts dated 23 February 2005 from the Salvation Army in the U.S. acknowledging
donation of items from petitioner's family; March 2006 e-mail to the U.S. Postal Service
confirming request for change of address; final statement from the First American Title
Insurance Company showing sale of their U.S. home on 27 April 2006; 12 July 2011 filled-up
questionnaire submitted to the U.S. Embassy where petitioner indicated that she had been a
Philippine resident since May 2005; affidavit from Jesusa Sonora Poe (attesting to the return
of petitioner on 24 May 2005 and that she and her family stayed with affiant until the
condominium was purchased); and Affidavit from petitioner's husband (confirming that the
spouses jointly decided to relocate to the Philippines in 2005 and that he stayed behind in
the U.S. only to finish some work and to sell the family home).
The foregoing evidence were undisputed and the facts were even listed by the COMELEC,
particularly in its Resolution in the Tatad, Contreras and Valdez cases.
However, the COMELEC refused to consider that petitioner's domicile had been timely
changed as of 24 May 2005. At the oral arguments, COMELEC Commissioner Arthur Lim
conceded the presence of the first two requisites, namely, physical presence and animus
manendi, but maintained there was no animus non-revertendi.154 The COMELEC disregarded
the import of all the evidence presented by petitioner on the basis of the position that the
earliest date that petitioner could have started residence in the Philippines was in July 2006
when her application under R.A. No. 9225 was approved by the BI. In this regard, COMELEC
relied on Coquilla v. COMELEC,155 Japzon v. COMELEC156 and Caballero v. COMELEC. 157 During
the oral arguments, the private respondents also added Reyes v. COMELEC.158 Respondents
contend that these cases decree that the stay of an alien former Filipino cannot be counted
until he/she obtains a permanent resident visa or reacquires Philippine citizenship, a visa-
free entry under a balikbayan stamp being insufficient. Since petitioner was still an American
(without any resident visa) until her reacquisition of citizenship under R.A. No. 9225, her stay
from 24 May 2005 to 7 July 2006 cannot be counted.
But as the petitioner pointed out, the facts in these four cases are very different from her
situation. In Coquilla v. COMELEC,159 the only evidence presented was a community tax
certificate secured by the candidate and his declaration that he would be running in the
elections. Japzon v. COMELEC160 did not involve a candidate who wanted to count residence
prior to his reacquisition of Philippine citizenship. With the Court decreeing that residence is
distinct from citizenship, the issue there was whether the candidate's acts after reacquisition
sufficed to establish residence. In Caballero v. COMELEC, 161 the candidate admitted that his
place of work was abroad and that he only visited during his frequent vacations. In Reyes v.
COMELEC,162 the candidate was found to be an American citizen who had not even
reacquired Philippine citizenship under R.A. No. 9225 or had renounced her U.S. citizenship.
She was disqualified on the citizenship issue. On residence, the only proof she offered was a
seven-month stint as provincial officer. The COMELEC, quoted with approval by this Court,
said that "such fact alone is not sufficient to prove her one-year residency."
It is obvious that because of the sparse evidence on residence in the four cases cited by the
respondents, the Court had no choice but to hold that residence could be counted only from
acquisition of a permanent resident visa or from reacquisition of Philippine citizenship. In
contrast, the evidence of petitioner is overwhelming and taken together leads to no other
conclusion that she decided to permanently abandon her U.S. residence (selling the house,
taking the children from U.S. schools, getting quotes from the freight company, notifying the
U.S. Post Office of the abandonment of their address in the U.S., donating excess items to
the Salvation Army, her husband resigning from U.S. employment right after selling the U.S.
house) and permanently relocate to the Philippines and actually re-established her residence
here on 24 May 2005 (securing T.I.N, enrolling her children in Philippine schools, buying
property here, constructing a residence here, returning to the Philippines after all trips
abroad, her husband getting employed here). Indeed, coupled with her eventual application
to reacquire Philippine citizenship and her family's actual continuous stay in the Philippines
over the years, it is clear that when petitioner returned on 24 May 2005 it was for good.
In this connection, the COMELEC also took it against petitioner that she had entered the
Philippines visa-free as a balikbayan. A closer look at R.A. No. 6768 as amended, otherwise
known as the "An Act Instituting a Balikbayan Program," shows that there is no overriding
intent to treat balikbayans as temporary visitors who must leave after one year. Included in
the law is a former Filipino who has been naturalized abroad and "comes or returns to the
Philippines." 163 The law institutes a balikbayan program "providing the opportunity to avail
of the necessary training to enable the balikbayan to become economically self-reliant
members of society upon their return to the country" 164 in line with the government's
"reintegration program."165 Obviously, balikbayans are not ordinary transients.
Given the law's express policy to facilitate the return of a balikbayan and help him
reintegrate into society, it would be an unduly harsh conclusion to say in absolute terms that
the balikbayan must leave after one year. That visa-free period is obviously granted him to
allow him to re-establish his life and reintegrate himself into the community before he
attends to the necessary formal and legal requirements of repatriation. And that is exactly
what petitioner did - she reestablished life here by enrolling her children and buying
property while awaiting the return of her husband and then applying for repatriation shortly
thereafter.
No case similar to petitioner's, where the former Filipino's evidence of change in domicile is
extensive and overwhelming, has as yet been decided by the Court. Petitioner's evidence of
residence is unprecedented. There is no judicial precedent that comes close to the facts of
residence of petitioner. There is no indication in Coquilla v. COMELEC,166 and the other cases
cited by the respondents that the Court intended to have its rulings there apply to a situation
where the facts are different. Surely, the issue of residence has been decided particularly on
the facts-of-the case basis.
To avoid the logical conclusion pointed out by the evidence of residence of petitioner, the
COMELEC ruled that petitioner's claim of residence of ten (10) years and eleven (11) months
by 9 May 2016 in her 2015 COC was false because she put six ( 6) years and six ( 6) months as
"period of residence before May 13, 2013" in her 2012 COC for Senator. Thus, according to
the COMELEC, she started being a Philippine resident only in November 2006. In doing so,
the COMELEC automatically assumed as true the statement in the 2012 COC and the 2015
COC as false.
As explained by petitioner in her verified pleadings, she misunderstood the date required in
the 2013 COC as the period of residence as of the day she submitted that COC in 2012. She
said that she reckoned residency from April-May 2006 which was the period when the U.S.
house was sold and her husband returned to the Philippines. In that regard, she was advised
by her lawyers in 2015 that residence could be counted from 25 May 2005.
Petitioner's explanation that she misunderstood the query in 2012 (period of residence
before 13 May 2013) as inquiring about residence as of the time she submitted the COC, is
bolstered by the change which the COMELEC itself introduced in the 2015 COC which is now
"period of residence in the Philippines up to the day before May 09, 2016." The COMELEC
would not have revised the query if it did not acknowledge that the first version was vague.
That petitioner could have reckoned residence from a date earlier than the sale of her U.S.
house and the return of her husband is plausible given the evidence that she had returned a
year before. Such evidence, to repeat, would include her passport and the school records of
her children.
It was grave abuse of discretion for the COMELEC to treat the 2012 COC as a binding and
conclusive admission against petitioner. It could be given in evidence against her, yes, but it
was by no means conclusive. There is precedent after all where a candidate's mistake as to
period of residence made in a COC was overcome by evidence. In Romualdez-Marcos v.
COMELEC,167 the candidate mistakenly put seven (7) months as her period of residence
where the required period was a minimum of one year. We said that "[i]t is the fact of
residence, not a statement in a certificate of candidacy which ought to be decisive in
determining whether or not an individual has satisfied the constitutions residency
qualification requirement." The COMELEC ought to have looked at the evidence presented
and see if petitioner was telling the truth that she was in the Philippines from 24 May 2005.
Had the COMELEC done its duty, it would have seen that the 2012 COC and the 2015
COC both correctly stated the pertinent period of residency.
The COMELEC, by its own admission, disregarded the evidence that petitioner actually and
physically returned here on 24 May 2005 not because it was false, but only because
COMELEC took the position that domicile could be established only from petitioner's
repatriation under R.A. No. 9225 in July 2006. However, it does not take away the fact that in
reality, petitioner had returned from the U.S. and was here to stay permanently, on 24 May
2005. When she claimed to have been a resident for ten (10) years and eleven (11) months,
she could do so in good faith.
For another, it could not be said that petitioner was attempting to hide anything. As already
stated, a petition for quo warranto had been filed against her with the SET as early as August
2015. The event from which the COMELEC pegged the commencement of residence,
petitioner's repatriation in July 2006 under R.A. No. 9225, was an established fact to repeat,
for purposes of her senatorial candidacy.
Notably, on the statement of residence of six (6) years and six (6) months in the 2012 COC,
petitioner recounted that this was first brought up in the media on 2 June 2015 by Rep.
Tobias Tiangco of the United Nationalist Alliance. Petitioner appears to have answered the
issue immediately, also in the press. Respondents have not disputed petitioner's evidence on
this point. From that time therefore when Rep. Tiangco discussed it in the media, the stated
period of residence in the 2012 COC and the circumstances that surrounded the statement
were already matters of public record and were not hidden.
Petitioner likewise proved that the 2012 COC was also brought up in the SET petition for quo
warranto. Her Verified Answer, which was filed on 1 September 2015, admitted that she
made a mistake in the 2012 COC when she put in six ( 6) years and six ( 6) months as she
misunderstood the question and could have truthfully indicated a longer period. Her answer
in the SET case was a matter of public record. Therefore, when petitioner accomplished her
COC for President on 15 October 2015, she could not be said to have been attempting to hide
her erroneous statement in her 2012 COC for Senator which was expressly mentioned in her
Verified Answer.
The facts now, if not stretched to distortion, do not show or even hint at an intention to hide
the 2012 statement and have it covered by the 2015 representation. Petitioner, moreover,
has on her side this Court's pronouncement that:
Concededly, a candidate's disqualification to run for public office does not necessarily
constitute material misrepresentation which is the sole ground for denying due course to,
and for the cancellation of, a COC. Further, as already discussed, the candidate's
misrepresentation in his COC must not only refer to a material fact (eligibility and
qualifications for elective office), but should evince a deliberate intent to mislead, misinform
or hide a fact which would otherwise render a candidate ineligible. It must be made with an
intention to deceive the electorate as to one's qualifications to run for public office. 168
In sum, the COMELEC, with the same posture of infallibilism, virtually ignored a good number
of evidenced dates all of which can evince animus manendi to the Philippines and animus
non revertedi to the United States of America. The veracity of the events of coming and
staying home was as much as dismissed as inconsequential, the focus having been fixed at
the petitioner's "sworn declaration in her COC for Senator" which the COMELEC said
"amounts to a declaration and therefore an admission that her residence in the Philippines
only commence sometime in November 2006"; such that "based on this declaration,
[petitioner] fails to meet the residency requirement for President." This conclusion, as
already shown, ignores the standing jurisprudence that it is the fact of residence, not the
statement of the person that determines residence for purposes of compliance with the
constitutional requirement of residency for election as President. It ignores the easily
researched matter that cases on questions of residency have been decided favorably for the
candidate on the basis of facts of residence far less in number, weight and substance than
that presented by petitioner.169 It ignores, above all else, what we consider as a primary
reason why petitioner cannot be bound by her declaration in her COC for Senator which
declaration was not even considered by the SET as an issue against her eligibility for Senator.
When petitioner made the declaration in her COC for Senator that she has been a resident
for a period of six (6) years and six (6) months counted up to the 13 May 2013 Elections, she
naturally had as reference the residency requirements for election as Senator which was
satisfied by her declared years of residence. It was uncontested during the oral arguments
before us that at the time the declaration for Senator was made, petitioner did not have as
yet any intention to vie for the Presidency in 2016 and that the general public was never
made aware by petitioner, by word or action, that she would run for President in 2016.
Presidential candidacy has a length-of-residence different from that of a senatorial
candidacy. There are facts of residence other than that which was mentioned in the COC for
Senator. Such other facts of residence have never been proven to be false, and these, to
repeat include:
[Petitioner] returned to the Philippines on 24 May 2005. (petitioner's] husband however
stayed in the USA to finish pending projects and arrange the sale of their family home.
Meanwhile [petitioner] and her children lived with her mother in San Juan City. [Petitioner]
enrolled Brian in Beacon School in Taguig City in 2005 and Hanna in Assumption College in
Makati City in 2005. Anika was enrolled in Learning Connection in San Juan in 2007, when
she was already old enough to go to school.
In the second half of 2005, [petitioner] and her husband acquired Unit 7F of One Wilson
Place Condominium in San Juan. [Petitioner] and her family lived in Unit 7F until the
construction of their family home in Corinthian Hills was completed.
Sometime in the second half of 2005, [petitioner's] mother discovered that her former
lawyer who handled [petitioner's] adoption in 1974 failed to secure from the Office of the
Civil Registrar of Iloilo a new Certificate of Live Birth indicating [petitioner's] new name and
stating that her parents are "Ronald Allan K. Poe" and "Jesusa L. Sonora."
In February 2006, [petitioner] travelled briefly to the US in order to supervise the disposal of
some of the family's remaining household belongings.1a\^/phi1 [Petitioner] returned to the
Philippines on 11 March 2006.
In late March 2006, [petitioner's] husband informed the United States Postal Service of the
family's abandonment of their address in the US.
The family home in the US was sole on 27 April 2006.
In April 2006, [petitioner's] husband resigned from his work in the US. He returned to the
Philippines on 4 May 2006 and began working for a Philippine company in July 2006.
In early 2006, [petitioner] and her husband acquired a vacant lot in Corinthian Hills, where
they eventually built their family home. 170
In light of all these, it was arbitrary for the COMELEC to satisfy its intention to let the case fall
under the exclusive ground of false representation, to consider no other date than that
mentioned by petitioner in her COC for Senator.
All put together, in the matter of the citizenship and residence of petitioner for her
candidacy as President of the Republic, the questioned Resolutions of the COMELEC in
Division and En Banc are, one and all, deadly diseased with grave abuse of discretion from
root to fruits.
WHEREFORE, the petition is GRANTED. The Resolutions, to wit:
1. dated 1 December 2015 rendered through the COMELEC Second Division, in SPA No. 15-
001 (DC), entitled Estrella C. Elamparo, petitioner, vs. Mary Grace Natividad Sonora Poe-
Llamanzares, respondent, stating that:
[T]he Certificate of Candidacy for President of the Republic of the Philippines in the May 9,
2016 National and Local Elections filed by respondent Mary Grace Natividad Sonora Poe-
Llamanzares is hereby GRANTED.
2. dated 11 December 2015, rendered through the COMELEC First Division, in the
consolidated cases SPA No. 15-002 (DC) entitled Francisco S. Tatad, petitioner, vs. Mary
Grace Natividad Sonora Poe-Llamanzares, respondent; SPA No. 15-007 (DC) entitled Antonio
P. Contreras, petitioner, vs. Mary Grace Natividad Sonora Poe-Llamanzares, respondent; and
SPA No. 15-139 (DC) entitled Amado D. Valdez, petitioner, v. Mary Grace Natividad Sonora
Poe-Llamanzares, respondent; stating that:
WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES, to
GRANT the petitions and cancel the Certificate of Candidacy of MARY GRACE NATIVIDAD
SONORA POE-LLAMANZARES for the elective position of President of the Republic of the
Philippines in connection with the 9 May 2016 Synchronized Local and National Elections.
3. dated 23 December 2015 of the COMELEC En Banc, upholding the 1 December 2015
Resolution of the Second Division stating that:
WHEREFORE, premises considered, the Commission RESOLVED, as it hereby RESOLVES, to
DENY the Verified Motion for Reconsideration of SENATOR MARY GRACE NATIVIDAD
SONORA POE-LLAMANZARES. The Resolution dated 11 December 2015 of the Commission
First Division is AFFIRMED.
4. dated 23 December 2015 of the COMELEC En Banc, upholding the 11 December 2015
Resolution of the First Division.
are hereby ANNULED and SET ASIDE. Petitioner MARY GRACE NATIVIDAD SONORA POE-
LLAMANZARES is DECLARED QUALIFIED to be a candidate for President in the National and
Local Elections of 9 May 2016.
SO ORDERED.
EN BANC
G.R. No. 142840 May 7, 2001
ANTONIO BENGSON III, petitioner,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and TEODORO C. CRUZ, respondents.
CONCURRING OPINION
DISSENTING OPINION
KAPUNAN, J.:
The citizenship of respondent Teodoro C. Cruz is at issue in this case, in view of the
constitutional requirement that "no person shall be a Member of the House of
Representative unless he is a natural-born citizen."1
Respondent Cruz was a natural-born citizen of the Philippines. He was born in San Clemente,
Tarlac, on April 27, 1960, of Filipino parents. The fundamental law then applicable was the
1935 Constitution.2
On November 5, 1985, however, respondent Cruz enlisted in the United States Marine Corps
and without the consent of the Republic of the Philippines, took an oath of allegiance to the
United States. As a Consequence, he lost his Filipino citizenship for under Commonwealth
Act No. 63, section 1(4), a Filipino citizen may lose his citizenship by, among other,
"rendering service to or accepting commission in the armed forces of a foreign country." Said
provision of law reads:
SECTION 1. How citizenship may be lost. – A Filipino citizen may lose his
citizenship in any of the following ways and/or events:
xxx
(4) By rendering services to, or accepting commission in, the armed of a foreign
country: Provided, That the rendering of service to, or the acceptance of such
commission in, the armed forces of a foreign country, and the taking of an oath
of allegiance incident thereto, with the consent of the Republic of the
Philippines, shall not divest a Filipino of his Philippine citizenship if either of the
following circumstances is present:
(a) The Republic of the Philippines has a defensive and/or offensive pact of
alliance with said foreign country; or
(b) The said foreign country maintains armed forces on Philippine territory with
the consent of the Republic of the Philippines: Provided, That the Filipino citizen
concerned, at the time of rendering said service, or acceptance of said
commission, and taking the oath of allegiance incident thereto, states that he
does so only in connection with his service to said foreign country; And
provided, finally, That any Filipino citizen who is rendering service to, or is
commissioned in, the armed forces of a foreign country under any of the
circumstances mentioned in paragraph (a) or (b), shall not be Republic of the
Philippines during the period of his service to, or commission in, the armed
forces of said country. Upon his discharge from the service of the said foreign
country, he shall be automatically entitled to the full enjoyment of his civil and
politically entitled to the full enjoyment of his civil political rights as a Filipino
citizen x x x.
Whatever doubt that remained regarding his loss of Philippine citizenship was erased by his
naturalization as a U.S. citizen on June 5, 1990, in connection with his service in the U.S.
Marine Corps.
On March 17, 1994, respondent Cruz reacquired his Philippine citizenship through
repatriation under Republic Act No. 2630. 3 He ran for and was elected as the Representative
of the Second District of Pangasinan in the May 11, 1998 elections. He won by a convincing
margin of 26,671 votes over petitioner Antonio Bengson III, who was then running for
reelection.1âwphi1.nêt
Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent House
of Representatives Electoral Tribunal (HRET) claiming that respondent Cruz was not qualified
to become a member of the House of Representatives since he is not a natural-born citizen
as required under Article VI, section 6 of the Constitution. 4
On March 2, 2000, the HRET rendered its decision 5 dismissing the petition for quo
warranto and declaring Cruz the duly elected Representative of the Second District of
Pangasinan in the May 1998 elections. The HRET likewise denied petitioner's motion for
reconsideration of the decision in its resolution dated April 27, 2000. 6
Petitioner thus filed the present petition for certiorari assailing the HRET's decision on the
following grounds:
1. The HRET committed serious errors and grave abuse of discretion, amounting
to excess of jurisdiction, when it ruled that private respondent is a natural-born
citizen of the Philippines despite the fact that he had ceased being such in view
of the loss and renunciation of such citizenship on his part.
2. The HRET committed serious errors and grave abuse of discretion, amounting
to excess of jurisdiction, when it considered private respondent as a citizen of
 the Philippines despite the fact he did not validly acquire his Philippine
citizenship.
3. Assuming that private respondent's acquisition of Philippine citizenship was
invalid, the HRET committed serious errors and grave abuse of discretion,
amounting to excess of jurisdiction, when it dismissed the petition despite the
fact that such reacquisition could not legally and constitutionally restore his
natural-born status.7
The issue now before us is whether respondent Cruz, a natural-born Filipino who became an
American citizen, can still be considered a natural-born Filipino upon his reacquisition of
Philippine citizenship.
Petitioner asserts that respondent Cruz may no longer be considered a natural-born Filipino
since he lost h is Philippine citizenship when he swore allegiance to the United States in
1995, and had to reacquire the same by repatriation. He insists that Article citizens are those
who are from birth with out having to perform any act to acquire or perfect such citizenship.
Respondent on the other hand contends that he reacquired his status as natural-born citizen
when he was repatriated since the phrase "from birth" in Article IV, Section 2 refers to the
innate, inherent and inborn characteristic of being a natural-born citizen.
The petition is without merit.
The 1987 Constitution enumerates who are Filipino citizens as follow:
(1) Those who are citizens of the Philippines at the time of the adoption of this
Constitution;
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973 of Filipino mother, who elect Philippine
citizenship upon reaching the age of majority, and
(4) Those who are naturalized in accordance with law. 8
There are two ways of acquiring citizenship: (1) by birth, and (2) by naturalization. These
ways of acquiring citizenship correspond to the two kinds of citizens: the natural-born
citizen, and the naturalized citizen. A person who at the time of his birth is a citizen of a
particular country, is a natural-born citizen thereof.9
As defined in the same Constitution, natural-born citizens "are those citizens of the
Philippines from birth without having to perform any act to acquire or perfect his Philippine
citezenship."10
On the other hand, naturalized citizens are those who have become Filipino citizens through
naturalization, generally under Commonwealth Act No. 473, otherwise known as the Revised
Naturalization Law, which repealed the former Naturalization Law (Act No. 2927), and by
Republic Act No. 530.11 To be naturalized, an applicant has to prove that he possesses all the
qualifications12 and none of the disqualification13 provided by law to become a Filipino
citizen. The decision granting Philippine citizenship becomes executory only after two (2)
years from its promulgation when the court is satisfied that during the intervening period,
the applicant has (1) not left the Philippines; (2) has dedicated himself to a lawful calling or
profession; (3) has not been convicted of any offense or violation of Government
promulgated rules; or (4) committed any act prejudicial to the interest of the nation or
contrary to any Government announced policies. 14
Filipino citizens who have lost their citizenship may however reacquire the same in the
manner provided by law. Commonwealth Act. No. (C.A. No. 63), enumerates the three
modes by which Philippine citizenship may be reacquired by a former citizen: (1) by
naturalization, (2) by repatriation, and (3) by direct act of Congress. 15
Naturalization is mode for both acquisition and reacquisition of Philippine citizenship. As a
mode of initially acquiring Philippine citizenship, naturalization is governed by
Commonwealth Act No. 473, as amended. On the other hand, naturalization as a mode for
reacquiring Philippine citizenship is governed by Commonwealth Act No. 63.16 Under this
law, a former Filipino citizen who wishes to reacquire Philippine citizenship must possess
certain qualifications17 and none of the disqualification mentioned in Section 4 of C.A. 473. 18
Repatriation, on the other hand, may be had under various statutes by those who lost their
citizenship due to: (1) desertion of the armed forces; 19 services in the armed forces of the
allied forces in World War II;20 (3) service in the Armed Forces of the United States at any
other time,21 (4) marriage of a Filipino woman to an alien; 22 and (5) political economic
necessity.23
As distinguished from the lengthy process of naturalization, repatriation simply consists of
the taking of an oath of allegiance to the Republic of the Philippine and registering said oath
in the Local Civil Registry of the place where the person concerned resides or last resided.
In Angat v. Republic,24 we held:
xxx. Parenthetically, under these statutes [referring to RA Nos. 965 and 2630],
the person desiring to reacquire Philippine citizenship would not even be
required to file a petition in court, and all that he had to do was to take an oath
of allegiance to the Republic of the Philippines and to register that fact with the
civil registry in the place of his residence or where he had last resided in the
Philippines. [Italics in the original.25
Moreover, repatriation results in the recovery of the original nationality. 26 This means that a
naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized
Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost
his Philippine citizenship, he will be restored to his former status as a natural-born Filipino.
In respondent Cruz's case, he lost his Filipino citizenship when he rendered service in the
Armed Forces of the United States. However, he subsequently reacquired Philippine
citizenship under R.A. No. 2630, which provides:
Section 1. Any person who had lost his Philippine citizenship by rendering
service to, or accepting commission in, the Armed Forces of the United States,
or after separation from the Armed Forces of the United States, acquired United
States citizenship, may reacquire Philippine citizenship by taking an oath of
allegiance to the Republic of the Philippines and registering the same with Local
Civil Registry in the place where he resides or last resided in the Philippines. The
said oath of allegiance shall contain a renunciation of any other citizenship.
Having thus taken the required oath of allegiance to the Republic and having registered the
same in the Civil Registry of Magantarem, Pangasinan in accordance with the aforecited
provision, respondent Cruz is deemed to have recovered his original status as a natural-born
citizen, a status which he acquired at birth as the son of a Filipino father. 27 It bears stressing
that the act of repatriation allows him to recover, or return to, his original status before he
lost his Philippine citizenship.
Petitioner's contention that respondent Cruz is no longer a natural-born citizen since he had
to perform an act to regain his citizenship is untenable. As correctly explained by the HRET in
its decision, the term "natural-born citizen" was first defined in Article III, Section 4 of the
1973 Constitution as follows:
Sec. 4. A natural-born citizen is one who is a citizen of the Philippines from birth
without having to perform any act to acquire or perfect his Philippine
citizenship.
Two requisites must concur for a person to be considered as such: (1) a person must be a
Filipino citizen birth and (2) he does not have to perform any act to obtain or perfect his
Philippine citizenship.
Under the 1973 Constitution definition, there were two categories of Filipino citizens which
were not considered natural-born: (1) those who were naturalized and (2) those born before
January 17, 1973,38 of Filipino mothers who, upon reaching the age of majority, elected
Philippine citizenship. Those "naturalized citizens" were not considered natural-born
obviously because they were not Filipino at birth and had to perform an act to acquire
Philippine citizenship. Those born of Filipino mothers before the effectively of the 1973
Constitution were likewise not considered natural-born because they also had to perform an
act to perfect their Philippines citizenship.
The present Constitution, however, now consider those born of Filipino mothers before the
effectivity of the 1973 Constitution and who elected Philippine citizenship upon reaching the
majority age as natural-born. After defining who re natural-born citizens, Section 2 of Article
IV adds a sentence: "Those who elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens." Consequently, only naturalized
Filipinos are considered not natural-born citizens. It is apparent from the enumeration of
who are citizens under the present Constitution that there are only two classes of citizens:
(1) those who are natural-born and (2) those who are naturalized in accordance with law. A
citizen who is not a naturalized Filipino, i.e., did not have to undergo the process of
naturalization to obtain Philippine citizenship, necessarily is natural-born Filipino.
Noteworthy is the absence in said enumeration of a separate category for persons who, after
losing Philippine citizenship, subsequently reacquire it. The reason therefor is clear: as to
such persons, they would either be natural-born or naturalized depending on the reasons for
the loss of their citizenship and the mode prescribed by the applicable law for the
reacquisition thereof. As respondent Cruz was not required by law to go through
naturalization proceeding in order to reacquire his citizenship, he is perforce a natural-born
Filipino. As such, he possessed all the necessary qualifications to be elected as member of
the House of Representatives.
A final point. The HRET has been empowered by the Constitution to be the "sole judge" of all
contests relating to the election, returns, and qualifications of the members of the
House.29 The Court's jurisdiction over the HRET is merely to check "whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction" on the part of
the latter.30 In the absence thereof, there is no occasion for the Court to exercise its
corrective power and annul the decision of the HRET nor to substitute the Court's judgement
for that of the latter for the simple reason that it is not the office of a petition for certiorari
to inquire into the correctness of the assailed decision.31 There is no such showing of grave
abuse of discretion in this case.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 135083 May 26, 1999
ERNESTO S. MERCADO, petitioner,
vs.
EDUARDO BARRIOS MANZANO and the COMMISSION ON ELECTIONS, respondents.
MENDOZA, J.:
Petitioner Ernesto S. Mercado and private respondent Eduardo B. Manzano were candidates
for vice mayor of the City of Makati in the May 11, 1998 elections. The other one was Gabriel
V. Daza III. The results of the election were as follows:
Eduardo B. Manzano 103,853
Ernesto S. Mercado 100,894
Gabriel V. Daza III 54,2751
The proclamation of private respondent was suspended in view of a pending petition for
disqualification filed by a certain Ernesto Mamaril who alleged that private respondent was
not a citizen of the Philippines but of the United States.
In its resolution, dated May 7, 1998,2 the Second Division of the COMELEC granted the
petition of Mamaril and ordered the cancellation of the certificate of candidacy of private
respondent on the ground that he is a dual citizen and, under §40(d) of the Local
Government Code, persons with dual citizenship are disqualified from running for any
elective position. The COMELEC's Second Division said:
What is presented before the Commission is a petition for
disqualification of Eduardo Barrios Manzano as candidate for the
office of Vice-Mayor of Makati City in the May 11, 1998 elections.
The petition is based on the ground that the respondent is an
American citizen based on the record of the Bureau of Immigration
and misrepresented himself as a natural-born Filipino citizen.
In his answer to the petition filed on April 27, 1998, the respondent
admitted that he is registered as a foreigner with the Bureau of
Immigration under Alien Certificate of Registration No. B-31632 and
alleged that he is a Filipino citizen because he was born in 1955 of a
Filipino father and a Filipino mother. He was born in the United
States, San Francisco, California, September 14, 1955, and is
considered in American citizen under US Laws. But notwithstanding
his registration as an American citizen, he did not lose his Filipino
citizenship.
Judging from the foregoing facts, it would appear that respondent
Manzano is born a Filipino and a US citizen. In other words, he
holds dual citizenship.
The question presented is whether under our laws, he is
disqualified from the position for which he filed his certificate of
candidacy. Is he eligible for the office he seeks to be elected?
Under Section 40(d) of the Local Government Code, those holding
dual citizenship are disqualified from running for any elective local
position.
WHEREFORE, the Commission hereby declares the respondent
Eduardo Barrios Manzano DISQUALIFIED as candidate for Vice-
Mayor of Makati City.
On May 8, 1998, private respondent filed a motion for reconsideration. 3 The motion
remained pending even until after the election held on May 11, 1998.
Accordingly, pursuant to Omnibus Resolution No. 3044, dated May 10, 1998, of the
COMELEC, the board of canvassers tabulated the votes cast for vice mayor of Makati City but
suspended the proclamation of the winner.
On May 19, 1998, petitioner sought to intervene in the case for disqualification. 4 Petitioner's
motion was opposed by private respondent.
The motion was not resolved. Instead, on August 31, 1998, the COMELEC en banc rendered
its resolution. Voting 4 to 1, with one commissioner abstaining, the COMELEC en
banc reversed the ruling of its Second Division and declared private respondent qualified to
run for vice mayor of the City of Makati in the May 11, 1998 elections. 5 The pertinent
portions of the resolution of the COMELEC en banc read:
As aforesaid, respondent Eduardo Barrios Manzano was born in San
Francisco, California, U.S.A. He acquired US citizenship by operation
of the United States Constitution and laws under the principle of jus
soli.
He was also a natural born Filipino citizen by operation of the 1935
Philippine Constitution, as his father and mother were Filipinos at
the time of his birth. At the age of six (6), his parents brought him
to the Philippines using an American passport as travel document.
His parents also registered him as an alien with the Philippine
Bureau of Immigration. He was issued an alien certificate of
registration. This, however, did not result in the loss of his
Philippine citizenship, as he did not renounce Philippine citizenship
and did not take an oath of allegiance to the United States.
It is an undisputed fact that when respondent attained the age of
majority, he registered himself as a voter, and voted in the
elections of 1992, 1995 and 1998, which effectively renounced his
US citizenship under American law. Under Philippine law, he no
longer had U.S. citizenship.
At the time of the May 11, 1998 elections, the resolution of the
Second Division, adopted on May 7, 1998, was not yet final.
Respondent Manzano obtained the highest number of votes among
the candidates for vice-mayor of Makati City, garnering one
hundred three thousand eight hundred fifty three (103,853) votes
over his closest rival, Ernesto S. Mercado, who obtained one
hundred thousand eight hundred ninety four (100,894) votes, or a
margin of two thousand nine hundred fifty nine (2,959) votes.
Gabriel Daza III obtained third place with fifty four thousand two
hundred seventy five (54,275) votes. In applying election laws, it
would be far better to err in favor of the popular choice than be
embroiled in complex legal issues involving private international
law which may well be settled before the highest court (Cf. Frivaldo
vs. Commission on Elections, 257 SCRA 727).
WHEREFORE, the Commission en banc hereby REVERSES the
resolution of the Second Division, adopted on May 7, 1998,
ordering the cancellation of the respondent's certificate of
candidacy.
We declare respondent Eduardo Luis Barrios Manzano to be
QUALIFIED as a candidate for the position of vice-mayor of Makati
City in the May 11, 1998, elections.
ACCORDINGLY, the Commission directs the Makati City Board of
Canvassers, upon proper notice to the parties, to reconvene and
 proclaim the respondent Eduardo Luis Barrios Manzano as the
winning candidate for vice-mayor of Makati City.
Pursuant to the resolution of the COMELEC en banc, the board of canvassers, on the evening
of August 31, 1998, proclaimed private respondent as vice mayor of the City of Makati.
This is a petition for certiorari seeking to set aside the aforesaid resolution of the
COMELEC en banc and to declare private respondent disqualified to hold the office of vice
mayor of Makati City. Petitioner contends that —
[T]he COMELEC en banc ERRED in holding that:
A. Under Philippine law, Manzano was no longer a U.S. citizen when
he:
1. He renounced his U.S. citizenship when
he attained the age of majority when he
was already 37 years old; and,
2. He renounced his U.S. citizenship when
he (merely) registered himself as a voter
and voted in the elections of 1992, 1995
and 1998.
B. Manzano is qualified to run for and or hold the elective office of
Vice-Mayor of the City of Makati;
C. At the time of the May 11, 1998 elections, the resolution of the
Second Division adopted on 7 May 1998 was not yet final so that,
effectively, petitioner may not be declared the winner even
assuming that Manzano is disqualified to run for and hold the
elective office of Vice-Mayor of the City of Makati.
We first consider the threshold procedural issue raised by private respondent Manzano —
whether petitioner Mercado his personality to bring this suit considering that he was not an
original party in the case for disqualification filed by Ernesto Mamaril nor was petitioner's
motion for leave to intervene granted.
I. PETITIONER'S RIGHT TO BRING THIS SUIT
Private respondent cites the following provisions of Rule 8 of the Rules of Procedure of the
COMELEC in support of his claim that petitioner has no right to intervene and, therefore,
cannot bring this suit to set aside the ruling denying his motion for intervention:
Sec. 1. When proper and when may be permitted to intervene. —
Any person allowed to initiate an action or proceeding may, before
or during the trial of an action or proceeding, be permitted by the
Commission, in its discretion to intervene in such action or
proceeding, if he has legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or
when he is so situated as to be adversely affected by such action or
proceeding.
xxx xxx xxx
Sec. 3. Discretion of Commission. — In allowing or disallowing a
motion for intervention, the Commission or the Division, in the
exercise of its discretion, shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the
rights of the original parties and whether or not the intervenor's
rights may be fully protected in a separate action or proceeding.
Private respondent argues that petitioner has neither legal interest in the
matter in litigation nor an interest to protect because he is "a defeated
candidate for the vice-mayoralty post of Makati City [who] cannot be
proclaimed as the Vice-Mayor of Makati City if the private respondent be
ultimately disqualified by final and executory judgment."
The flaw in this argument is it assumes that, at the time petitioner sought to intervene in the
proceedings before the COMELEC, there had already been a proclamation of the results of
the election for the vice mayoralty contest for Makati City, on the basis of which petitioner
came out only second to private respondent. The fact, however, is that there had been no
proclamation at that time. Certainly, petitioner had, and still has, an interest in ousting
private respondent from the race at the time he sought to intervene. The rule in Labo v.
COMELEC,6 reiterated in several cases,7 only applies to cases in which the election of the
respondent is contested, and the question is whether one who placed second to the
disqualified candidate may be declared the winner. In the present case, at the time
petitioner filed a "Motion for Leave to File Intervention" on May 20, 1998, there had been no
proclamation of the winner, and petitioner's purpose was precisely to have private
respondent disqualified "from running for [an] elective local position" under §40(d) of R.A.
No. 7160. If Ernesto Mamaril (who originally instituted the disqualification proceedings), a
registered voter of Makati City, was competent to bring the action, so was petitioner since
the latter was a rival candidate for vice mayor of Makati City.
Nor is petitioner's interest in the matter in litigation any less because he filed a motion for
intervention only on May 20, 1998, after private respondent had been shown to have
garnered the highest number of votes among the candidates for vice mayor. That petitioner
had a right to intervene at that stage of the proceedings for the disqualification against
private respondent is clear from §6 of R.A. No. 6646, otherwise known as the Electoral
Reform Law of 1987, which provides:
Any candidate who his been declared by final judgment to be
disqualified shall not be voted for, and the votes cast for him shall
not be counted. If for any reason a candidate is not declared by
final judgment before an election to be disqualified and he is voted
for and receives the winning number of votes in such election, the
Court or Commission shall continue with the trial and hearing of
action, inquiry, or protest and, upon motion of the complainant or
any intervenor, may during the pendency thereof order the
suspension of the proclamation of such candidate whenever the
evidence of guilt is strong.
Under this provision, intervention may be allowed in proceedings for disqualification even
after election if there has yet been no final judgment rendered.
The failure of the COMELEC en banc to resolve petitioner's motion for intervention was
tantamount to a denial of the motion, justifying petitioner in filing the instant petition
for certiorari. As the COMELEC en banc instead decided the merits of the case, the present
petition properly deals not only with the denial of petitioner's motion for intervention but
also with the substantive issues respecting private respondent's alleged disqualification on
the ground of dual citizenship.
This brings us to the next question, namely, whether private respondent Manzano possesses
dual citizenship and, if so, whether he is disqualified from being a candidate for vice mayor of
Makati City.
II. DUAL CITIZENSHIP AS A GROUND FOR DISQUALIFICATION
The disqualification of private respondent Manzano is being sought under §40 of the Local
Government Code of 1991 (R.A. No. 7160), which declares as "disqualified from running for
any elective local position: . . . (d) Those with dual citizenship." This provision is incorporated
in the Charter of the City of Makati. 8
Invoking the maxim dura lex sed lex, petitioner, as well as the Solicitor General, who sides
with him in this case, contends that through §40(d) of the Local Government Code, Congress
has "command[ed] in explicit terms the ineligibility of persons possessing dual allegiance to
hold local elective office."
To begin with, dual citizenship is different from dual allegiance. The former arises when, as a
result of the concurrent application of the different laws of two or more states, a person is
simultaneously considered a national by the said states. 9 For instance, such a situation may
arise when a person whose parents are citizens of a state which adheres to the principle
of jus sanguinis is born in a state which follows the doctrine of jus soli. Such a person, ipso
facto and without any voluntary act on his part, is concurrently considered a citizen of both
states. Considering the citizenship clause (Art. IV) of our Constitution, it is possible for the
following classes of citizens of the Philippines to possess dual citizenship:
(1) Those born of Filipino fathers and/or mothers in foreign
countries which follow the principle of jus soli;
(2) Those born in the Philippines of Filipino mothers and alien
fathers if by the laws of their father's' country such children are
citizens of that country;
(3) Those who marry aliens if by the laws of the latter's country the
former are considered citizens, unless by their act or omission they
are deemed to have renounced Philippine citizenship.
There may be other situations in which a citizen of the Philippines may, without performing
any act, be also a citizen of another state; but the above cases are clearly possible given the
constitutional provisions on citizenship.
Dual allegiance, on the other hand, refers to the situation in which a person simultaneously
owes, by some positive act, loyalty to two or more states. While dual citizenship is
involuntary, dual allegiance is the result of an individual's volition.
With respect to dual allegiance, Article IV, §5 of the Constitution provides: "Dual allegiance of
citizens is inimical to the national interest and shall be dealt with by law." This provision was
included in the 1987 Constitution at the instance of Commissioner Blas F. Ople who
explained its necessity as follows: 10
. . . I want to draw attention to the fact that dual allegiance is not
dual citizenship. I have circulated a memorandum to the Bernas
Committee according to which a dual allegiance — and I reiterate a
dual allegiance — is larger and more threatening than that of mere
double citizenship which is seldom intentional and, perhaps, never
insidious. That is often a function of the accident of mixed
marriages or of birth on foreign soil. And so, I do not question
double citizenship at all.
What we would like the Committee to consider is to take
constitutional cognizance of the problem of dual allegiance. For
example, we all know what happens in the triennial elections of the
Federation of Filipino-Chinese Chambers of Commerce which
consists of about 600 chapters all over the country. There is a
Peking ticket, as well as a Taipei ticket. Not widely known is the fact
chat the Filipino-Chinese community is represented in the
Legislative Yuan of the Republic of China in Taiwan. And until
recently, sponsor might recall, in Mainland China in the People's
Republic of China, they have the Associated Legislative Council for
overseas Chinese wherein all of Southeast Asia including some
European and Latin countries were represented, which was
dissolved after several years because of diplomatic friction. At that
time, the Filipino-Chinese were also represented in that Overseas
Council.
When I speak of double allegiance, therefore, I speak of this
unsettled kind of allegiance of Filipinos, of citizens who are already
Filipinos but who, by their acts, may be said to be bound by a
second allegiance, either to Peking or Taiwan. I also took close note
of the concern expressed by some Commissioners yesterday,
including Commissioner Villacorta, who were concerned about the
lack of guarantees of thorough assimilation, and especially
Commissioner Concepcion who has always been worried about
minority claims on our natural resources.
Dull allegiance can actually siphon scarce national capital to Taiwan,
Singapore, China or Malaysia, and this is already happening. Some
of the great commercial places in downtown Taipei are Filipino-
owned, owned by Filipino-Chinese — it is of common knowledge in
Manila. It can mean a tragic capital outflow when we have to
endure a capital famine which also means economic stagnation,
worsening unemployment and social unrest.
And so, this is exactly what we ask — that the Committee kindly
consider incorporating a new section, probably Section 5, in the
article on Citizenship which will read as follows: DUAL ALLEGIANCE
IS INIMICAL TO CITIZENSHIP AND SHALL BE DEALT WITH
ACCORDING TO LAW.
In another session of the Commission, Ople spoke on the problem of these citizens with dual
allegiance, thus: 11
. . . A significant number of Commissioners expressed their concern
about dual citizenship in the sense that it implies a double
allegiance under a double sovereignty which some of us who spoke
then in a freewheeling debate thought would be repugnant to the
sovereignty which pervades the Constitution and to citizenship
itself which implies a uniqueness and which elsewhere in the
Constitution is defined in terms of rights and obligations exclusive
to that citizenship including, of course, the obligation to rise to the
defense of the State when it is threatened, and back of this,
Commissioner Bernas, is, of course, the concern for national
security. In the course of those debates, I think some noted the fact
that as a result of the wave of naturalizations since the decision to
establish diplomatic relations with the People's Republic of China
was made in 1975, a good number of these naturalized Filipinos still
routinely go to Taipei every October 10; and it is asserted that some
of them do renew their oath of allegiance to a foreign government
maybe just to enter into the spirit of the occasion when the
anniversary of the Sun Yat-Sen Republic is commemorated. And so,
I have detected a genuine and deep concern about double
citizenship, with its attendant risk of double allegiance which is
repugnant to our sovereignty and national security. I appreciate
what the Committee said that this could be left to the
determination of a future legislature. But considering the scale of
the problem, the real impact on the security of this country, arising
from, let us say, potentially great numbers of double citizens
professing double allegiance, will the Committee entertain a
proposed amendment at the proper time that will prohibit, in
effect, or regulate double citizenship?
Clearly, in including §5 in Article IV on citizenship, the concern of the Constitutional
Commission was not with dual citizens per se but with naturalized citizens who maintain
their allegiance to their countries of origin even after their naturalization. Hence, the phrase
"dual citizenship" in R.A. No. 7160, §40(d) and in R.A. No. 7854, §20 must be understood as
referring to "dual allegiance." Consequently, persons with mere dual citizenship do not fall
under this disqualification. Unlike those with dual allegiance, who must, therefore, be
subject to strict process with respect to the termination of their status, for candidates with
dual citizenship, it should suffice if, upon the filing of their certificates of candidacy, they
elect Philippine citizenship to terminate their status as persons with dual citizenship
considering that their condition is the unavoidable consequence of conflicting laws of
different states. As Joaquin G. Bernas, one of the most perceptive members of the
Constitutional Commission, pointed out: "[D]ual citizenship is just a reality imposed on us
because we have no control of the laws on citizenship of other countries. We recognize a
child of a Filipino mother. But whether she is considered a citizen of another country is
something completely beyond our control." 12
By electing Philippine citizenship, such candidates at the same time forswear allegiance to
the other country of which they are also citizens and thereby terminate their status as dual
citizens. It may be that, from the point of view of the foreign state and of its laws, such an
individual has not effectively renounced his foreign citizenship. That is of no moment as the
following discussion on §40(d) between Senators Enrile and Pimentel clearly shows: 13
SENATOR ENRILE. Mr. President, I would like to ask clarification of
line 41, page 17: "Any person with dual citizenship" is disqualified
to run for any elective local position. Under the present
Constitution, Mr. President, someone whose mother is a citizen of
the Philippines but his father is a foreigner is a natural-born citizen
of the Republic. There is no requirement that such a natural born
citizen, upon reaching the age of majority, must elect or give up
Philippine citizenship.
On the assumption that this person would carry two passports, one
belonging to the country of his or her father and one belonging to
the Republic of the Philippines, may such a situation disqualify the
person to run for a local government position?
SENATOR PIMENTEL. To my mind, Mr. President, it only means that
at the moment when he would want to run for public office, he has
to repudiate one of his citizenships.
SENATOR ENRILE. Suppose he carries only a Philippine passport but
the country of origin or the country of the father claims that
person, nevertheless, as a citizen? No one can renounce. There are
such countries in the world.
SENATOR PIMENTEL. Well, the very fact that he is running for public
office would, in effect, be an election for him of his desire to be
considered as a Filipino citizen.
SENATOR ENRILE. But, precisely, Mr. President, the Constitution
does not require an election. Under the Constitution, a person
whose mother is a citizen of the Philippines is, at birth, a citizen
without any overt act to claim the citizenship.
SENATOR PIMENTEL. Yes. What we are saying, Mr. President, is:
Under the Gentleman's example, if he does not renounce his other
citizenship, then he is opening himself to question. So, if he is really
interested to run, the first thing he should do is to say in the
Certificate of Candidacy that: "I am a Filipino citizen, and I have only
one citizenship."
 SENATOR ENRILE. But we are talking from the viewpoint of
Philippine law, Mr. President. He will always have one citizenship,
and that is the citizenship invested upon him or her in the
Constitution of the Republic.
SENATOR PIMENTEL. That is true, Mr. President. But if he exercises
acts that will prove that he also acknowledges other citizenships,
then he will probably fall under this disqualification.
This is similar to the requirement that an applicant for naturalization must renounce "all
allegiance and fidelity to any foreign prince, potentate, state, or sovereignty" 14 of which at
the time he is a subject or citizen before he can be issued a certificate of naturalization as a
citizen of the Philippines. In Parado v. Republic, 15 it was held:
[W]hen a person applying for citizenship by naturalization takes an
oath that he renounce, his loyalty to any other country or
government and solemnly declares that he owes his allegiance to
the Republic of the Philippines, the condition imposed by law is
satisfied and compiled with. The determination whether such
renunciation is valid or fully complies with the provisions of our
Naturalization Law lies within the province and is an exclusive
prerogative of our courts. The latter should apply the law duly
enacted by the legislative department of the Republic. No foreign
law may or should interfere with its operation and application. If
the requirement of the Chinese Law of Nationality were to be read
into our Naturalization Law, we would be applying not what our
legislative department has deemed it wise to require, but what a
foreign government has thought or intended to exact. That, of
course, is absurd. It must be resisted by all means and at all cost. It
would be a brazen encroachment upon the sovereign will and
power of the people of this Republic.
III. PETITIONER'S ELECTION OF PHILIPPINE CITIZENSHIP
The record shows that private respondent was born in San Francisco, California on
September 4, 1955, of Filipino parents. Since the Philippines adheres to the principle of jus
sanguinis, while the United States follows the doctrine of jus soli, the parties agree that, at
birth at least, he was a national both of the Philippines and of the United States. However,
the COMELEC en banc held that, by participating in Philippine elections in 1992, 1995, and
1998, private respondent "effectively renounced his U.S. citizenship under American law," so
that now he is solely a Philippine national.
Petitioner challenges this ruling. He argues that merely taking part in Philippine elections is
not sufficient evidence of renunciation and that, in any event, as the alleged renunciation
was made when private respondent was already 37 years old, it was ineffective as it should
have been made when he reached the age of majority.
In holding that by voting in Philippine elections private respondent renounced his American
citizenship, the COMELEC must have in mind §349 of the Immigration and Nationality Act of
the United States, which provided that "A person who is a national of the United States,
whether by birth or naturalization, shall lose his nationality by: . . . (e) Voting in a political
election in a foreign state or participating in an election or plebiscite to determine the
sovereignty over foreign territory." To be sure this provision was declared unconstitutional
by the U.S. Supreme Court in Afroyim v. Rusk 16 as beyond the power given to the U.S.
Congress to regulate foreign relations. However, by filing a certificate of candidacy when he
ran for his present post, private respondent elected Philippine citizenship and in effect
renounced his American citizenship. Private respondent's certificate of candidacy, filed on
March 27, 1998, contained the following statements made under oath:
6. I AM A FILIPINO CITIZEN (STATE IF
"NATURAL-BORN" OR "NATURALIZED")
NATURAL-BORN
xxx xxx xxx
10. I AM A REGISTERED VOTER OF PRECINCT NO. 747-A, BARANGAY
SAN LORENZO, CITY/MUNICIPALITY OF MAKATI, PROVINCE OF NCR.
11. I AM NOT A PERMANENT RESIDENT OF, OR IMMIGRANT TO, A
FOREIGN COUNTRY.
12. I AM ELIGIBLE FOR THE OFFICE I SEEK TO BE ELECTED. I WILL
SUPPORT AND DEFEND THE CONSTITUTION OF THE PHILIPPINES
AND WILL MAINTAIN TRUE FAITH AND ALLEGIANCE THERETO; THAT
I WILL OBEY THE LAWS, LEGAL ORDERS AND DECREES
PROMULGATED BY THE DULY CONSTITUTED AUTHORITIES OF THE
REPUBLIC OF THE PHILIPPINES; AND THAT I IMPOSE THIS
OBLIGATION UPON MYSELF VOLUNTARILY, WITHOUT MENTAL
RESERVATION OR PURPOSE OF EVASION. I HEREBY CERTIFY THAT
THE FACTS STATED HEREIN ARE TRUE AND CORRECT OF MY OWN
PERSONAL KNOWLEDGE.
The filing of such certificate of candidacy sufficed to renounce his American citizenship,
effectively removing any disqualification he might have as a dual citizen. Thus, in Frivaldo
v. COMELEC it was held: 17
It is not disputed that on January 20, 1983 Frivaldo became an
American. Would the retroactivity of his repatriation not effectively
give him dual citizenship, which under Sec. 40 of the Local
Government Code would disqualify him "from running for any
elective local position?" We answer this question in the negative, as
there is cogent reason to hold that Frivaldo was really STATELESS at
the time he took said oath of allegiance and even before that, when
he ran for governor in 1988. In his Comment, Frivaldo wrote that he
"had long renounced and had long abandoned his American
citizenship — long before May 8, 1995. At best, Frivaldo was
stateless in the interim — when he abandoned and renounced his
US citizenship but before he was repatriated to his Filipino
citizenship."
On this point, we quote from the assailed Resolution dated
December 19, 1995:
By the laws of the United States,
petitioner Frivaldo lost his American
citizenship when he took his oath of
allegiance to the Philippine Government
when he ran for Governor in 1988, in
1992, and in 1995. Every certificate of
candidacy contains an oath of allegiance
to the Philippine Government.
These factual findings that Frivaldo has lost his foreign nationality
long before the elections of 1995 have not been effectively
rebutted by Lee. Furthermore, it is basic that such findings of the
Commission are conclusive upon this Court, absent any showing of
capriciousness or arbitrariness or abuse.
There is, therefore, no merit in petitioner's contention that the oath of allegiance contained
in private respondent's certificate of candidacy is insufficient to constitute renunciation that,
to be effective, such renunciation should have been made upon private respondent reaching
the age of majority since no law requires the election of Philippine citizenship to be made
upon majority age.
Finally, much is made of the fact that private respondent admitted that he is registered as an
American citizen in the Bureau of Immigration and Deportation and that he holds an
American passport which he used in his last travel to the United States on April 22, 1997.
There is no merit in this. Until the filing of his certificate of candidacy on March 21, 1998, he
had dual citizenship. The acts attributed to him can be considered simply as the assertion of
his American nationality before the termination of his American citizenship. What this Court
said in Aznar v. COMELEC 18 applies mutatis mundatis to private respondent in the case at
bar:
. . . Considering the fact that admittedly Osmeña was both a Filipino
and an American, the mere fact that he has a Certificate staring he
is an American does not mean that he is not still a Filipino. . . . [T]he
Certification that he is an American does not mean that he is not
still a Filipino, possessed as he is, of both nationalities or
citizenships. Indeed, there is no express renunciation here of
Philippine citizenship; truth to tell, there is even no implied
renunciation of said citizenship. When We consider that the
renunciation needed to lose Philippine citizenship must be
"express," it stands to reason that there can be no such loss of
Philippine citizenship when there is no renunciation, either
"express" or "implied."
To recapitulate, by declaring in his certificate of candidacy that he is a Filipino citizen; that he
is not a permanent resident or immigrant of another country; that he will defend and
support the Constitution of the Philippines and bear true faith and allegiance thereto and
that he does so without mental reservation, private respondent has, as far as the laws of this
country are concerned, effectively repudiated his American citizenship and anything which
he may have said before as a dual citizen.
On the other hand, private respondent's oath of allegiance to the Philippines, when
considered with the fact that he has spent his youth and adulthood, received his education,
practiced his profession as an artist, and taken part in past elections in this country, leaves
no doubt of his election of Philippine citizenship.
His declarations will be taken upon the faith that he will fulfill his undertaking made under
oath. Should he betray that trust, there are enough sanctions for declaring the loss of his
Philippine citizenship through expatriation in appropriate proceedings. In Yu v. Defensor-
Santiago, 19 we sustained the denial of entry into the country of petitioner on the ground
that, after taking his oath as a naturalized citizen, he applied for the renewal of his
Portuguese passport and declared in commercial documents executed abroad that he was a
Portuguese national. A similar sanction can be taken against any one who, in electing
Philippine citizenship, renounces his foreign nationality, but subsequently does some act
constituting renunciation of his Philippine citizenship.
WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.1âwphi1.nêt
SO ORDERED.
EN BANC
G.R. No. 137000 August 9, 2000
CIRILO R. VALLES, petitioner,
vs.
COMMISSION ON ELECTIONS and ROSALIND YBASCO LOPEZ, respondents.
DECISION
PURISIMA, J.:
This is a petition for certiorari under Rule 65, pursuant to Section 2, Rule 64 of the 1997 Rules
of Civil Procedure, assailing Resolutions dated July 17, 1998 and January 15, 1999,
respectively, of the Commission on Elections in SPA No. 98-336, dismissing the petition for
disqualification filed by the herein petitioner, Cirilo R. Valles, against private respondent
Rosalind Ybasco Lopez, in the May 1998 elections for governor of Davao Oriental.
Rosalind Ybasco Lopez was born on May 16, 1934 in Napier Terrace, Broome, Western
Australia, to the spouses, Telesforo Ybasco, a Filipino citizen and native of Daet, Camarines
Norte, and Theresa Marquez, an Australian. In 1949, at the age of fifteen, she left Australia
and came to settle in the Philippines.
On June 27, 1952, she was married to Leopoldo Lopez, a Filipino citizen, at the Malate
Catholic Church in Manila. Since then, she has continuously participated in the electoral
process not only as a voter but as a candidate, as well. She served as Provincial Board
Member of the Sangguniang Panlalawigan of Davao Oriental. In 1992, she ran for and was
elected governor of Davao Oriental. Her election was contested by her opponent, Gil Taojo,
Jr., in a petition for quo warranto, docketed as EPC No. 92-54, alleging as ground therefor her
alleged Australian citizenship. However, finding no sufficient proof that respondent had
renounced her Philippine citizenship, the Commission on Elections en banc dismissed the
petition, ratiocinating thus:
"A cursory reading of the records of this case vis-a-vis the impugned resolution shows that
respondent was able to produce documentary proofs of the Filipino citizenship of her late
father... and consequently, prove her own citizenship and filiation by virtue of the Principle
of Jus Sanguinis, the perorations of the petitioner to the contrary notwithstanding.
On the other hand, except for the three (3) alleged important documents . . . no other
evidence substantial in nature surfaced to confirm the allegations of petitioner that
respondent is an Australian citizen and not a Filipino. Express renunciation of citizenship as a
mode of losing citizenship under Commonwealth Act No. 63 is an equivocal and deliberate
act with full awareness of its significance and consequence. The evidence adduced by
petitioner are inadequate, nay meager, to prove that respondent contemplated renunciation
of her Filipino citizenship".1
In the 1995 local elections, respondent Rosalind Ybasco Lopez ran for re-election as governor
of Davao Oriental. Her opponent, Francisco Rabat, filed a petition for disqualification,
docketed as SPA No. 95-066 before the COMELEC, First Division, contesting her Filipino
citizenship but the said petition was likewise dismissed by the COMELEC, reiterating
substantially its decision in EPC 92-54.
The citizenship of private respondent was once again raised as an issue when she ran for re-
election as governor of Davao Oriental in the May 11, 1998 elections. Her candidacy was
questioned by the herein petitioner, Cirilo Valles, in SPA No. 98-336.
On July 17, 1998, the COMELEC’s First Division came out with a Resolution dismissing the
petition, and disposing as follows:
"Assuming arguendo that res judicata does not apply and We are to dispose the instant case
on the merits trying it de novo, the above table definitely shows that petitioner herein has
presented no new evidence to disturb the Resolution of this Commission in SPA No. 95-066.
The present petition merely restates the same matters and incidents already passed upon by
this Commission not just in 1995 Resolution but likewise in the Resolution of EPC No. 92-54.
Not having put forth any new evidence and matter substantial in nature, persuasive in
character or sufficiently provocative to compel reversal of such Resolutions, the dismissal of
the present petition follows as a matter of course.
xxx xxx xxx
"WHEREFORE, premises considered and there being no new matters and issues tendered,
We find no convincing reason or impressive explanation to disturb and reverse the
Resolutions promulgated by this Commission in EPC 92-54 and SPA. 95-066. This Commission
RESOLVES as it hereby RESOLVES to DISMISS the present petition.
SO ORDERED."2
Petitioner interposed a motion for reconsideration of the aforesaid Resolution but to no
avail. The same was denied by the COMELEC in its en banc Resolution of January 15, 1999.
Undaunted, petitioner found his way to this Court via the present petition; questioning the
citizenship of private respondent Rosalind Ybasco Lopez.
The Commission on Elections ruled that private respondent Rosalind Ybasco Lopez is a
Filipino citizen and therefore, qualified to run for a public office because (1) her father,
Telesforo Ybasco, is a Filipino citizen, and by virtue of the principle of jus sanguinis she was a
Filipino citizen under the 1987 Philippine Constitution; (2) she was married to a Filipino,
thereby making her also a Filipino citizen ipso jure under Section 4 of Commonwealth Act
473; (3) and that, she renounced her Australian citizenship on January 15, 1992 before the
Department of Immigration and Ethnic Affairs of Australia and her Australian passport was
accordingly cancelled as certified to by the Australian Embassy in Manila; and (4)
furthermore, there are the COMELEC Resolutions in EPC No. 92-54 and SPA Case No. 95-066,
declaring her a Filipino citizen duly qualified to run for the elective position of Davao Oriental
governor.
Petitioner, on the other hand, maintains that the private respondent is an Australian citizen,
placing reliance on the admitted facts that:
a) In 1988, private respondent registered herself with the Bureau of Immigration
as an Australian national and was issued Alien Certificate of Registration No.
404695 dated September 19, 1988;
b) On even date, she applied for the issuance of an Immigrant Certificate of
Residence (ICR), and
c) She was issued Australian Passport No. H700888 on March 3, 1988.
Petitioner theorizes that under the aforestated facts and circumstances, the private
respondent had renounced her Filipino citizenship. He contends that in her application for
alien certificate of registration and immigrant certificate of residence, private respondent
expressly declared under oath that she was a citizen or subject of Australia; and said
declaration forfeited her Philippine citizenship, and operated to disqualify her to run for
elective office.
As regards the COMELEC’s finding that private respondent had renounced her Australian
citizenship on January 15, 1992 before the Department of Immigration and Ethnic Affairs of
Australia and had her Australian passport cancelled on February 11, 1992, as certified to by
the Australian Embassy here in Manila, petitioner argues that the said acts did not
automatically restore the status of private respondent as a Filipino citizen. According to
petitioner, for the private respondent to reacquire Philippine citizenship she must comply
with the mandatory requirements for repatriation under Republic Act 8171; and the election
of private respondent to public office did not mean the restoration of her Filipino citizenship
since the private respondent was not legally repatriated. Coupled with her alleged
renunciation of Australian citizenship, private respondent has effectively become a stateless
person and as such, is disqualified to run for a public office in the Philippines; petitioner
concluded.
Petitioner theorizes further that the Commission on Elections erred in applying the principle
of res judicata to the case under consideration; citing the ruling in Moy Ya Lim Yao vs.
Commissioner of Immigration,3 that:
"xxx Everytime the citizenship of a person is material or indispensable in a judicial or
administrative case, whatever the corresponding court or administrative authority decides
therein as to such citizenship is generally not considered as res adjudicata, hence it has to be
threshed out again and again as the occasion may demand. xxx"
The petition is unmeritorious.
The Philippine law on citizenship adheres to the principle of jus sanguinis. Thereunder, a
child follows the nationality or citizenship of the parents regardless of the place of his/her
birth, as opposed to the doctrine of jus soli which determines nationality or citizenship on
the basis of place of birth.
Private respondent Rosalind Ybasco Lopez was born on May 16, 1934 in Napier Terrace,
Broome, Western Australia, to the spouses, Telesforo Ybasco, a Filipino citizen and native of
Daet, Camarines Norte, and Theresa Marquez, an Australian. Historically, this was a year
before the 1935 Constitution took into effect and at that time, what served as the
Constitution of the Philippines were the principal organic acts by which the United States
governed the country. These were the Philippine Bill of July 1, 1902 and the Philippine
Autonomy Act of August 29, 1916, also known as the Jones Law.
Among others, these laws defined who were deemed to be citizens of the Philippine islands.
The Philippine Bill of 1902 defined Philippine citizens as:
SEC. 4 xxx all inhabitants of the Philippine Islands continuing to reside therein who were
Spanish subjects on the eleventh day of April, eighteen hundred and ninety-nine, and then
resided in the Philippine Islands, and their children born subsequent thereto, shall be
deemed and held to be citizens of the Philippine Islands and as such entitled to the
protection of the United States, except such as shall have elected to preserve their allegiance
to the Crown of Spain in accordance with the provisions of the treaty of peace between the
United States and Spain signed at Paris December tenth, eighteen hundred and ninety-eight.
(underscoring ours)
The Jones Law, on the other hand, provides:
SEC. 2 That all inhabitants of the Philippine Islands who were Spanish subjects on the
eleventh day of April, eighteen hundred and ninety-nine, and then resided in said Islands,
and their children born subsequent thereto, shall be deemed and held to be citizens of the
Philippine Islands, except such as shall have elected to preserve their allegiance to the Crown
of Spain in accordance with the provisions of the treaty of peace between the United States
and Spain, signed at Paris December tenth, eighteen hundred and ninety-eight, and except
such others as have since become citizens of some other country: Provided, That the
Philippine Legislature, herein provided for, is hereby authorized to provide by law for the
acquisition of Philippine citizenship by those natives of the Philippine Islands who cannot
come within the foregoing provisions, the natives of the insular possessions of the United
States, and such other persons residing in the Philippine Islands who are citizens of the
United States, or who could become citizens of the United States under the laws of the
United States if residing therein. (underscoring ours)
Under both organic acts, all inhabitants of the Philippines who were Spanish subjects on April
11, 1899 and resided therein including their children are deemed to be Philippine citizens.
Private respondent’s father, Telesforo Ybasco, was born on January 5, 1879 in Daet,
Camarines Norte, a fact duly evidenced by a certified true copy of an entry in the Registry of
Births. Thus, under the Philippine Bill of 1902 and the Jones Law, Telesforo Ybasco was
deemed to be a Philippine citizen. By virtue of the same laws, which were the laws in force at
the time of her birth, Telesforo’s daughter, herein private respondent Rosalind Ybasco Lopez,
is likewise a citizen of the Philippines.
The signing into law of the 1935 Philippine Constitution has established the principle of jus
sanguinis as basis for the acquisition of Philippine citizenship, to wit:
(1) Those who are citizens of the Philippine Islands at the time of the adoption
of this Constitution.
(2) Those born in the Philippine Islands of foreign parents who, before the
adoption of this Constitution had been elected to public office in the Philippine
Islands.
(3) Those whose fathers are citizens of the Philippines.
(4) Those whose mothers are citizens of the Philippines and, upon reaching the
age of majority, elect Philippine citizenship.
(5) Those who are naturalized in accordance with law.
So also, the principle of jus sanguinis, which confers citizenship by virtue of blood
relationship, was subsequently retained under the 19734 and 19875 Constitutions. Thus, the
herein private respondent, Rosalind Ybasco Lopez, is a Filipino citizen, having been born to a
Filipino father. The fact of her being born in Australia is not tantamount to her losing her
Philippine citizenship. If Australia follows the principle of jus soli, then at most, private
respondent can also claim Australian citizenship resulting to her possession of dual
citizenship.
Petitioner also contends that even on the assumption that the private respondent is a
Filipino citizen, she has nonetheless renounced her Philippine citizenship. To buttress this
contention, petitioner cited private respondent’s application for an Alien Certificate of
Registration (ACR) and Immigrant Certificate of Residence (ICR), on September 19, 1988, and
the issuance to her of an Australian passport on March 3, 1988.
Under Commonwealth Act No. 63, a Filipino citizen may lose his citizenship:
(1) By naturalization in a foreign country;
(2) By express renunciation of citizenship;
(3) By subscribing to an oath of allegiance to support the constitution or laws of
a foreign country upon attaining twenty-one years of age or more;
(4) By accepting commission in the military, naval or air service of a foreign
country;
(5) By cancellation of the certificate of naturalization;
(6) By having been declared by competent authority, a deserter of the Philippine
armed forces in time of war, unless subsequently, a plenary pardon or amnesty
has been granted: and
(7) In case of a woman, upon her marriage, to a foreigner if, by virtue of the laws
in force in her husband’s country, she acquires his nationality.
In order that citizenship may be lost by renunciation, such renunciation must be express.
Petitioner’s contention that the application of private respondent for an alien certificate of
registration, and her Australian passport, is bereft of merit. This issue was put to rest in the
case of Aznar vs. COMELEC6 and in the more recent case of Mercado vs. Manzano and
COMELEC.7
In the case of Aznar, the Court ruled that the mere fact that respondent Osmena was a
holder of a certificate stating that he is an American did not mean that he is no longer a
Filipino, and that an application for an alien certificate of registration was not tantamount to
renunciation of his Philippine citizenship.
And, in Mercado vs. Manzano and COMELEC, it was held that the fact that respondent
Manzano was registered as an American citizen in the Bureau of Immigration and
Deportation and was holding an American passport on April 22, 1997, only a year before he
filed a certificate of candidacy for vice-mayor of Makati, were just assertions of his American
nationality before the termination of his American citizenship.
Thus, the mere fact that private respondent Rosalind Ybasco Lopez was a holder of an
Australian passport and had an alien certificate of registration are not acts constituting an
effective renunciation of citizenship and do not militate against her claim of Filipino
citizenship. For renunciation to effectively result in the loss of citizenship, the same must be
express.8 As held by this court in the aforecited case of Aznar, an application for an alien
certificate of registration does not amount to an express renunciation or repudiation of one’s
citizenship. The application of the herein private respondent for an alien certificate of
registration, and her holding of an Australian passport, as in the case of Mercado vs.
Manzano, were mere acts of assertion of her Australian citizenship before she effectively
renounced the same. Thus, at the most, private respondent had dual citizenship - she was an
Australian and a Filipino, as well.
Moreover, under Commonwealth Act 63, the fact that a child of Filipino parent/s was born in
another country has not been included as a ground for losing one’s Philippine citizenship.
Since private respondent did not lose or renounce her Philippine citizenship, petitioner’s
claim that respondent must go through the process of repatriation does not hold water.
Petitioner also maintains that even on the assumption that the private respondent had dual
citizenship, still, she is disqualified to run for governor of Davao Oriental; citing Section 40 of
Republic Act 7160 otherwise known as the Local Government Code of 1991, which states:
"SEC. 40. Disqualifications. The following persons are disqualified from running for any
elective local position:
xxx xxx xxx
(d) Those with dual citizenship;
xxx xxx xxx
Again, petitioner’s contention is untenable.
In the aforecited case of Mercado vs. Manzano, the Court clarified "dual citizenship" as used
in the Local Government Code and reconciled the same with Article IV, Section 5 of the 1987
Constitution on dual allegiance.9 Recognizing situations in which a Filipino citizen may,
without performing any act, and as an involuntary consequence of the conflicting laws of
different countries, be also a citizen of another state, the Court explained that dual
citizenship as a disqualification must refer to citizens with dual allegiance. The Court
succinctly pronounced:
"xxx the phrase ‘dual citizenship’ in R.A. No. 7160, xxx 40 (d) and in R.A. No. 7854, xxx 20
must be understood as referring to ‘dual allegiance’. Consequently, persons with mere dual
citizenship do not fall under this disqualification."
Thus, the fact that the private respondent had dual citizenship did not automatically
disqualify her from running for a public office. Furthermore, it was ruled that for candidates
with dual citizenship, it is enough that they elect Philippine citizenship upon the filing of their
certificate of candidacy, to terminate their status as persons with dual citizenship. 10 The filing
of a certificate of candidacy sufficed to renounce foreign citizenship, effectively removing
any disqualification as a dual citizen. 11 This is so because in the certificate of candidacy, one
declares that he/she is a Filipino citizen and that he/she will support and defend the
Constitution of the Philippines and will maintain true faith and allegiance thereto. Such
declaration, which is under oath, operates as an effective renunciation of foreign citizenship.
Therefore, when the herein private respondent filed her certificate of candidacy in 1992,
such fact alone terminated her Australian citizenship.
Then, too, it is significant to note that on January 15 1992, private respondent executed a
Declaration of Renunciation of Australian Citizenship, duly registered in the Department of
Immigration and Ethnic Affairs of Australia on May 12, 1992. And, as a result, on February 11,
1992, the Australian passport of private respondent was cancelled, as certified to by Second
Secretary Richard F. Munro of the Embassy of Australia in Manila. As aptly appreciated by
the COMELEC, the aforesaid acts were enough to settle the issue of the alleged dual
citizenship of Rosalind Ybasco Lopez. Since her renunciation was effective, petitioner’s claim
that private respondent must go through the whole process of repatriation holds no water.
Petitioner maintains further that when citizenship is raised as an issue in judicial or
administrative proceedings, the resolution or decision thereon is generally not
considered res judicata in any subsequent proceeding challenging the same; citing the case
of Moy Ya Lim Yao vs. Commissioner of Immigration.12 He insists that the same issue of
citizenship may be threshed out anew.
Petitioner is correct insofar as the general rule is concerned, i.e. the principle of res
judicata generally does not apply in cases hinging on the issue of citizenship. However, in the
case of Burca vs. Republic,13 an exception to this general rule was recognized. The Court ruled
in that case that in order that the doctrine of res judicata may be applied in cases of
citizenship, the following must be present:
1) a person’s citizenship be raised as a material issue in a controversy where said
person is a party;
2) the Solicitor General or his authorized representative took active part in the
resolution thereof, and
3) the finding on citizenship is affirmed by this Court.
Although the general rule was set forth in the case of Moy Ya Lim Yao, the case did not
foreclose the weight of prior rulings on citizenship. It elucidated that reliance may somehow
be placed on these antecedent official findings, though not really binding, to make the effort
easier or simpler.14 Indeed, there appears sufficient basis to rely on the prior rulings of the
Commission on Elections in SPA. No. 95-066 and EPC 92-54 which resolved the issue of
citizenship in favor of the herein private respondent. The evidence adduced by petitioner is
substantially the same evidence presented in these two prior cases. Petitioner failed to show
any new evidence or supervening event to warrant a reversal of such prior resolutions.
However, the procedural issue notwithstanding, considered on the merits, the petition
cannot prosper.
WHEREFORE, the petition is hereby DISMISSED and the COMELEC Resolutions, dated July 17,
1998 and January 15, 1999, respectively, in SPA No. 98-336 AFFIRMED.
Private respondent Rosalind Ybasco Lopez is hereby adjudged qualified to run for governor of
Davao Oriental. No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.
Bellosillo, J., abroad on official business.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-83882 January 24, 1989
IN RE PETITION FOR HABEAS CORPUS OF WILLIE YU, petitioner,
vs.
MIRIAM DEFENSOR-SANTIAGO, BIENVENIDO P. ALANO, JR., MAJOR PABALAN, DELEO
HERNANDEZ, BLODDY HERNANDEZ, BENNY REYES and JUN ESPIRITU SANTO, respondent.
Pelaez, Adriano and Gregorio and Bonifacio A. Alentajan for petitioner.
Chavez, Hechanova & Lim Law Offices collaborating counsel for petitioner.
Augusto Jose y. Arreza for respondents.
PADILLA, J.:
The present controversy originated with a petition for habeas corpus filed with the Court on
4 July 1988 seeking the release from detention of herein petitioner. 1 After manifestation and
motion of the Solicitor General of his decision to refrain from filing a return of the writ on
behalf of the CID, respondent Commissioner thru counsel filed the return. 2 Counsel for the
parties were heard in oral argument on 20 July 1988. The parties were allowed to submit
marked exhibits, and to file memoranda. 3 An internal resolution of 7 November 1988
referred the case to the Court en banc. In its 10 November 1988 resolution, denying the
petition for habeas corpus, the Court disposed of the pending issues of (1) jurisdiction of the
CID over a naturalized Filipino citizen and (2) validity of warrantless arrest and detention of
the same person.
Petitioner filed a motion for reconsideration with prayer for restraining order dated 24
November 1988. 4 On 29 November 1988, the Court resolved to deny with finality the
aforesaid motion for reconsideration, and further resolved to deny the urgent motion for
issuance of a restraining order dated 28 November 1988. 5
Undaunted, petitioner filed a motion for clarification with prayer for restraining order on 5
December 1988.
Acting on said motion, a temporary restraining order was issued by the Court on 7 December
1988. 6 Respondent Commissioner filed a motion to lift TRO on 13 December 1988, the basis
of which is a summary judgment of deportation against Yu issued by the CID Board of
Commissioners on 2 December 1988. 7 Petitioner also filed a motion to set case for oral
argument on 8 December 1988.
In the meantime, an urgent motion for release from arbitrary detention 8 was filed by
petitioner on 13 December 1988. A memorandum in furtherance of said motion for release
dated 14 December 1988 was filed on 15 December 1988 together with a vigorous
opposition to the lifting of the TRO.
The lifting of the Temporary Restraining Order issued by the Court on 7 December 1988 is
urgently sought by respondent Commissioner who was ordered to cease and desist from
immediately deporting petitioner Yu pending the conclusion of hearings before the Board of
Special Inquiry, CID. To finally dispose of the case, the Court will likewise rule on petitioner's
motion for clarification with prayer for restraining order dated 5 December 1988, 9 urgent
motion for release from arbitrary detention dated 13 December 1988, 10 the memorandum
in furtherance of said motion for release dated 14 December 1988, 11 motion to set case for
oral argument dated 8 December 1988. 12
Acting on the motion to lift the temporary restraining order (issued on 7 December 1988)
dated 9 December 1988, 13 and the vigorous opposition to lift restraining order dated 15
December 1988, 14 the Court resolved to give petitioner Yu a non-extendible period of three
(3) days from notice within which to explain and prove why he should still be considered a
citizen of the Philippines despite his acquisition and use of a Portuguese passport. 15
Petitioner filed his compliance with the resolution of 15 December 1988 on 20 December
1988 16 followed by an earnest request for temporary release on 22 December 1988.
Respondent filed on 2 January 1989 her comment reiterating her previous motion to lift
temporary restraining order. Petitioner filed a reply thereto on 6 January 1989.
Petitioner's own compliance reveals that he was originally issued a Portuguese passport in
1971, 17 valid for five (5) years and renewed for the same period upon presentment before
the proper Portuguese consular officer. Despite his naturalization as a Philippine citizen on
10 February 1978, on 21 July 1981, petitioner applied for and was issued Portuguese
Passport No. 35/81 serial N. 1517410 by the Consular Section of the Portuguese Embassy in
Tokyo. Said Consular Office certifies that his Portuguese passport expired on 20 July
1986. 18 While still a citizen of the Philippines who had renounced, upon his naturalization,
"absolutely and forever all allegiance and fidelity to any foreign prince, potentate, state or
sovereignty" and pledged to "maintain true faith and allegiance to the Republic of the
Philippines," 19 he declared his nationality as Portuguese in commercial documents he
signed, specifically, the Companies registry of Tai Shun Estate Ltd. 20 filed in Hongkong
sometime in April 1980.
To the mind of the Court, the foregoing acts considered together constitute an express
renunciation of petitioner's Philippine citizenship acquired through naturalization. In Board
of Immigration Commissioners us, Go Gallano, 21 express renunciation was held to mean a
renunciation that is made known distinctly and explicitly and not left to inference or
implication. Petitioner, with full knowledge, and legal capacity, after having renounced
Portuguese citizenship upon naturalization as a Philippine citizen 22 resumed or reacquired
his prior status as a Portuguese citizen, applied for a renewal of his Portuguese
passport 23 and represented himself as such in official documents even after he had become
a naturalized Philippine citizen. Such resumption or reacquisition of Portuguese citizenship is
grossly inconsistent with his maintenance of Philippine citizenship.
This Court issued the aforementioned TRO pending hearings with the Board of Special
Inquiry, CID. However, pleadings submitted before this Court after the issuance of said TRO
have unequivocally shown that petitioner has expressly renounced his Philippine citizenship.
The material facts are not only established by the pleadings — they are not disputed by
petitioner. A rehearing on this point with the CID would be unnecessary and superfluous.
Denial, if any, of due process was obviated when petitioner was given by the Court the
opportunity to show proof of continued Philippine citizenship, but he has failed.
While normally the question of whether or not a person has renounced his Philippine
citizenship should be heard before a trial court of law in adversary proceedings, this has
become unnecessary as this Court, no less, upon the insistence of petitioner, had to look into
the facts and satisfy itself on whether or not petitioner's claim to continued Philippine
citizenship is meritorious.
Philippine citizenship, it must be stressed, is not a commodity or were to be displayed when
required and suppressed when convenient. This then resolves adverse to the petitioner his
motion for clarification and other motions mentioned in the second paragraph, page 3 of this
Decision.
WHEREFORE, premises considered, petitioner's motion for release from detention is DENIED.
Respondent's motion to lift the temporary restraining order is GRANTED. This Decision is
immediately executory.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24530 October 31, 1968
BOARD OF IMMIGRATION COMMISSIONERS and COMMISSIONER OF
IMMIGRATION, petitioners,
vs.
BEATO GO CALLANO, MANUEL GO CALLANO, GONZALO GO CALLANO, JULIO GO CALLANO
and THE COURT OF APPEALS, respondents.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Frine C. Zaballero
and Solicitor Bernardo P. Pardo for petitioners.
Demetrio B. Salem for respondents.
DIZON, J.:
On July 13, 1962, the Department of Foreign Affairs informed the Commissioner of
Immigration that, on the basis of the findings made by the National Bureau of Investigation,
the signatures of former Secretary of Foreign Affairs, Felixberto M. Serrano, on certain
documents, amongst them cable authorization No. 2230-V (File No. 23617) authorizing the
documentation of Beato Go Callano and others, were not authentic. Thereupon, the
Department declared several documents among them the cable authorization just
mentioned to be null, void and of no effect, and the documentation made by the Philippine
Consulate General at Hongkong pursuant to said cable authorization consisting of the
certificates of registration and identity issued to Beato Go Callano and his brothers Manuel,
Gonzalo and Julio for travel to the Philippines were cancelled. All this was done without
previous notice served nor hearing granted to said parties.
On August 21 of the same year, the Board of Immigration Commissioners, exercising its
power of review under Section 27 (b) of Commonwealth Act No. 613, as amended, issued,
also without any previous notice and hearing, an order reversing the decision of the Board of
Special Inquiry dated January 4, 1962, admitting Beato and his three brothers for entry as
citizens; ordering their exclusion as aliens not properly documented for admission pursuant
to Section 27 (a) (17) of the Philippine Immigration Act of 1940, as amended, and ordering
that they be returned to the port whence they came or to the country of which they were
nationals, upon the ground that they had been able "to enter this country and gain
admission as Filipino citizens by the fraudulently secured authorization." On the same date
(August 21, 1962) the Commissioner of Immigration issued a warrant of exclusion
commanding the deportation officer "to carry out the exclusion of the above-named
applicants (the Go Callano brothers) on the first available transportation and on the same
class of accommodation in which they arrived to the port whence they came or to the
country of which they are nationals."
The warrant of exclusion, for one reason or another, was not served immediately upon the
parties ordered deported, who, on November 16, 1962, filed in the Court of First Instance of
Manila an action for injunction to restrain the Board of Immigration Commissioners and the
Commissioner of Immigration from executing the order of exclusion or deportation already
mentioned. They based their action on the following grounds: (1) that the Board had no
jurisdiction to exclude them from the Philippines because they were not aliens but Filipino
citizens, and (2) that the order of exclusion was issued by the Board without due process and
in violation of the Constitution. Months later, the Court of First Instance issued a writ of
preliminary injunction restraining the respondents in the case from deporting the
petitioners. After trial, the Court rendered judgment finding that, according to petitioners'
undisputed evidence, "the petitioners herein are the illegitimate children of Emilia Callano, a
Filipino citizen, with her common-law husband — a Chinese citizen," and concluding that
"until the petitioners left for China in 1947, they must be considered as citizens of the
Philippines as they were born of a Filipino mother and an alien father who, however, was not
married to their mother."
Notwithstanding the above finding and conclusion, however, the Court dismissed the case
holding that "the petitioners are citizens of the Republic of China and not being properly
documented for entry into the Philippines as found by the Immigration Commissioner, the
writ of preliminary injunction heretofore issued by this Court shall be deemed dissolved
upon finality of this decision." The grounds upon which the Court based its decision were: (1)
because petitioners stayed in China for a period of fifteen years before returning to the
Philippines, they must be considered as citizens of the Chinese Republic; (2) as petitioners
were recognized by their alien father as his children, they became Chinese citizens under the
Chinese law of nationality. While the Court also found that the cable authorization
mentioned heretofore was a forgery, it held that, for the purpose of the petition before it, "it
was immaterial to determine the genuineness or falsity of the cable authorization. For if the
petitioners are Filipino citizens, they are entitled to remain within the territorial jurisdiction
of the Republic in whatever way they might have entered."
After the denial of herein respondents' motion for re-consideration, they appealed to the
Court of Appeals where they raised the following issues: (a) that being Filipino citizens by
birth, they did not lose their citizenship nor acquire Chinese citizenship, neither by their
prolonged stay in China nor by their alleged recognition by their Chinese father, and (b) that
the cablegram authorization was not a forgery.
In due time the Court of Appeals rendered the decision now under review by certiorari,
reversing that of the lower court.
Like the court of origin, the Court of Appeals found that herein respondents were the
illegitimate children of Go Chiao Lin, a Chinese citizen, and Emilia Callano, a Filipino citizen,
who started living maritally in Malitbog, Leyte, in 1934; that out of their illegitimate union
were born the following: Beato, in Sugod, Leyte, on September 28, 1936; Manuel, in Libagon,
Leyte, on June 17, 1941; Gonzalo, in Malitbog, Leyte, on April 17, 1943, and Julio in Malitbog,
Leyte, on January 31, 1945. The Court of Appeals also found that in 1946, Go Chiao Lin,
Emilia and their four sons went to Amoy, China, on vacation, but Go died there the same
year. In 1948, Emilia had to return to the Philippines as the maid of Consul Eutiquio Sta.
Romana because she was penniless, leaving her children behind. Subsequently the latter
were able to go to Hongkong, where they sought and obtained employment. In 1961, they
applied with the Philippine Consul General in Hongkong for entry into the Philippines as
Filipino citizens. On December 12 of that year, the Consulate received a cablegram from the
Department of Foreign Affairs authorizing it to investigate whether the petitioners for entry
were the illegitimate children of Emilia Callano a Filipino citizen, and, if satisfied, after a
thorough screening, to issue the corresponding document certifying that they were Filipino
citizens. The Consulate made thereafter the appropriate investigation, and on the basis of
evidence presented consisting of the sworn statements of the applicants, their birth
certificates and blood test reports, said office issued late that month a certificate of
registration and identity to the effect that the applicant had submitted sufficient evidence of
their citizenship and identity and had been allowed to register in the Consulate as Filipino
citizens and to travel directly to the Philippines.
On December 26 of the same year 1961, they arrived in Manila by plane from Hongkong. As
the Immigration Inspector at the airport was of the opinion that their travel documents did
not constitute conclusive proof of citizenship, he referred their case to the Board of Special
Inquiry No. 2. Thereupon the latter conducted an investigation at which the respondents
presented oral and documentary evidence to sustain their right to admission as Filipinos
(Exhs. B, D, E and H; pp. 93-98; 99-100; 101-102; 104 of the Record). Upon these evidence,
the Board on January 4, 1962, promulgated a decision finding the Go Callano brothers to be
the illegitimate children of Emilia Callano, a Filipino citizen, and entitled to admission, as they
were in fact admitted, as Filipino citizens.
That Go Chiao Lin, a Chinese citizen, and Emilia Callano a Filipino, lived maritally in several
municipalities of Leyte since 1934 and that out of their union the four private respondents
were born, are facts found, after appropriate proceedings, first, by the Philippine Consulate
General in Hongkong; second, by the Board of Special Inquiry who investigated their case in
Manila upon their arrival thereat in 1961; third, by the Court of First Instance of Manila, and
lastly, by the Court of Appeals. These facts, according to well settled jurisprudence, are not
reviewable by Us in this appeal by certiorari.
In this appeal, the Board of Immigration Commissioners and the Commissioner of
Immigration maintain the following propositions: (1) that, in view of the fact that the cable
authorization referred to heretofore is a forgery, all the proceedings had in connection
therewith are void and, as a result, the private respondents must be deported as aliens not
properly documented; (2) that, granting that they were Filipino citizens when they left the
Philippines in 1946, they lost that citizenship, firstly, by staying in China for a period of fifteen
years, and secondly, because they were recognized by their common-law father, they
became citizens of the Republic of China in accordance with the Chinese Nationality Law.
The Court of First Instance of Manila declared the cablegram authorization a forgery on the
strength of the testimony of Mr. Logan — a handwriting expert. This finding, however, was
reversed by the Court of Appeals, the pertinent portion of its decision being the following:
The next question raised by the petitioners-appellants is whether the
Government has satisfactorily proved that the signature of the Secretary of
Foreign Affairs on the cable authorization, Exhibit 1, is a forgery. Felipe P. Logan,
chief of the questioned documents division of the National Bureau of
Investigation, testified that he made a comparative examination of the signature
of the Department Secretary on Exhibit 1 and the signatures of the same official
on the detail orders, Exhibits 3-G to 3-L, and from the significant differences in
the writing characteristics which he observed and concluded that the signature
on Exhibit 1 was not written by the Department Secretary.
Before it can be said that the questioned signature is a forgery there must be
competent proof that the specimens are the genuine signature of the Secretary.
According to witness, Logan, he knows that the signatures on the detail orders
are genuine "because they were submitted to me by an agent who took them
from the files of the Department of Foreign Affairs" (p. 52, transcript). The
foregoing testimony of the witness does not prove the genuineness of the
specimen signatures, more so because the agent who allegedly took the detail
others from the files of the Foreign Affairs Department was not presented as a
witness. The NBI expert concluded, from his observation that there are
significant differences between the questioned signature and the specimen
signatures on the detail orders, that the former is a forgery. But the conclusion
is stultified by the admission of the same witness that even between the
specimen signatures there are variations in the handwriting characteristics of
the signatory (p. 24, transcript). Our appreciation of the evidence showed that
there are variations indeed between the specimen signatures (Exhibits S-1 to S-
5); there are distinct similarities even between the questioned signature and the
specimen signatures (cf. Q-5, S-4 and S-5). Upon the evidence presented by the
Government, it cannot be said that the forgery of the questioned signature has
been satisfactorily proven.
Even if the competent proofs were presented showing that the questioned
signature is a forgery, the forgery of the signature on the cable authorization
would not have nullified the documentation of the petitioners by the consulate
in Hongkong. We were not cited to any specific rule or regulation of the
Department of Foreign Affairs stating that the prior authorization of this
Department is necessary before the consular official abroad can act in
documentation cases. On the other hand, as per resolution of the Cabinet of
August 24, 1948, the President suggested and the Cabinet "resolved to restore
the prewar practice of entrusting to our respective consular officials abroad the
duty of receiving all visa applications and investigating the qualifications of the
applicants." (cited in Espina, Immigration Laws, 1956 Ed., p. 142.) It is evident
from the aforequoted resolution that the Executive branch of the Government
intended that the right to screen applicants for entry into this country should be
lodged in the consular officials abroad. Giving effect to this intention, the
Supreme Court stated in Ng Gioc Lin vs. The Secretary of the Department of
Foreign Affairs, G.R. No. L-2175, March 31, 1950, "that although the foreign
service has been placed under the over-all direction and supervision of the
Department of Foreign Affairs by Executive Order No. 18 (42 Off. Gaz., 2064),
this does not necessarily mean that the Department Secretary takes the place of
the consular officers abroad in the matter of the issuance of passport visas, for
the Secretary cannot relieve those officers of their responsibility under the law.
... The reason of the law in conferring upon the consuls themselves the duty and
power to grant passports and visas is obvious. The applicant for visa is in a
foreign country and the Philippine consular officer there is naturally in a better
position than the home office to determine through investigation conducted on
the spot whether or not the said applicant is qualified to enter the Philippines."
It can be deduced from the foregoing that the documentation of the petitioners
in Hongkong was not vitiated by a substantial defect even assuming that it was
done without prior authorization from the Foreign Affairs Department.
It must be stated in this connection that the petitioners became Philippine
citizens because of their relation with their mother who is a Filipino. Their status
was conferred on them neither by the documentation by the consulate in
Hongkong nor by the finding of the Board of Special Inquiry in Manila.
Consequently, whatever defects there are in the proceedings before the
consulate and the board of inquiry cannot affect their status. Therefore, even
assuming that the petitioners were not properly documented, there is no basis
for the finding of the respondent Board that they are aliens who can be
excluded.
Due, therefore, to the pronouncement made by the Court of Appeals regarding the
insufficiency of the evidence presented by herein petitioners to prove the alleged forgery —
again, a matter not now within our power to review — the questioned cablegram must be
deemed to be authentic. But be that as it may, we agree with both the Court of First Instance
of origin and the Court of Appeals that, even assuming that said document was forged, this
would not automatically render void all the proceedings had before the Philippine Consulate
in Hongkong and the Board of Special Inquiry, both of which ended with a definite finding
that the Callanos were Filipino citizens. That these proceedings and finding can not be
nullified by the Department of Foreign Affairs summarily and without giving the parties
concerned an opportunity to be heard is too evident to require any demonstration.
To the other questions relied upon by herein petitioners, the following portions of the
decision of the Court of Appeals would seem to be sufficient answer:
The question, whether petitioners who are admittedly Filipino citizens at birth
subsequently acquired Chinese citizenship under the Chinese Law of Nationality
by reason of recognition or a prolonged stay in China, is a fit subject for the
Chinese law and the Chinese court to determine, which cannot be resolved by a
Philippine court without encroaching on the legal system of China. For, the
settled rule of international law, affirmed by the Hague Convention on Conflict
of Nationality Laws of April 12, 1930 and by the International Court of Justice, is
that "Any question as to whether a person possesses the nationality of a
particular state should be determined in accordance with laws of that state ."
(quoted in Salonga, Private International Law, 1957 Ed., p. 112.) There was no
necessity of deciding that question because so far as concerns the petitioners'
status, the only question in this proceeding is: Did the petitioners lose their
Philippine citizenship upon the performance of certain acts or the happening of
certain events in China? In deciding this question no foreign law can be applied.
The petitioners are admittedly Filipino citizens at birth, and their status must be
governed by Philippine law wherever they may be, in conformity with Article 15
(formerly Article 9) of the Civil Code which provides as follows: "Laws relating to
family rights and duties, or to the status, conditions and legal capacity of
persons are binding upon citizens of the Philippines, even though living abroad."
Under Article IV, Section 2, of the Philippine Constitution, "Philippine citizenship
may be lost or reacquired in the manner provided by law," which implies that
the question of whether a Filipino has lost his Philippine citizenship shall be
determined by no other than the Philippine law.
Section 1 of Commonwealth Act No. 63, as amended by Republic Act No. 106,
provides that a Filipino citizen may lose his citizenship by naturalization in a
foreign country; express renunciation of citizenship; subscribing to an oath of
 allegiance to support the constitution or laws of a foreign country; rendering
service to, or accepting a commission in, the armed forces of a foreign country;
cancellation of the certificate of naturalization; declaration by competent
authority that he is a deserter of the Philippine armed forces in time of war; in
the case of a woman by marriage to a foreigner if, by virtue of laws in force in
her husband's country, she acquires his nationality. Recognition of the
petitioners by their alien father is not among the ground for losing Philippine
citizenship under Philippine law, and it cannot be said that the petitioners lost
their former status by reason of such recognition. About the only mode of losing
Philippine citizenship which closely bears on the petitioners is renunciation. But
even renunciation cannot be cited in support of the conclusion that petition lost
their Philippine citizenship because the law requires an express
renunciation which means a renunciation that is made known distinctly and
explicitly and not left to inference or implication; a renunciation manifested by
direct and appropriate language, as distinguished from that which is inferred
from conduct. (Opinion No. 69 of the Secretary of Justice, Series of 1940.)
Indeed, as the Supreme Court held in U.S. v. Ong Tianse, 29 Phil. 332, a case for
deportation, where Ong, a natural child of a Filipino mother and a Chinese
father, born in the Philippines, was brought by his parents to China when he was
4 years old, where he remained for 18 or 19 years, returning to the Philippines
at 25 years of age, "The fact that a minor child in those conditions was taken to
China and remained there for several years is not sufficient ground upon which
to hold that he has changed his nationality, when, after reaching his majority, he
did not express his desire to choose the nationality of his father." The import of
the foregoing pronouncement is that of itself a protracted stay in a foreign
country does not amount to renunciation. Moreover, herein petitioners were all
minors when they where brought to China in 1446. They were without legal
capacity to renounce their status. Upon their return to the Philippines only
Beato Go Callano had attained the age of majority, but even as to him there
could not have been renunciation because he did not manifest by direct and
appropriate language that he was disclaiming Philippine citizenship. On the
contrary, after he has attained the age of majority, he applied for registration as
a Philippine citizen and sought entry into this country, which are clear indicia of
his intent to continue his former status. The foregoing shows that the
petitioners have not lost their Philippine citizenship.
Lasty, petitioners claim that the private respondents are barred from questioning the
decision of the Board of Immigration Commissioners dated August 21, 1962 and the warrant
of exclusion issued by the Commissioner of Immigration on the same date, because they did
not appeal from either to the Secretary of Justice.
We find this to be without merit for the reason that, as stated before, both orders were
issued without previous notice and hearing and were, therefore, in violation of due process.
As a matter of fact, even in the case of an alien,decisions of the Board of Immigration
Commissioners, like that of any other administrative body, do not constitute res judicata so
as to bar a re-examination of the alien's right to enter or stay (Ong Se Lun, et al. vs. Board of
Immigration, G.R. No. L-6017, September 16, 1954), and the courts can grant relief if said
Board abused its powers, or committed serious legal errors, or denied the alien a fair hearing
(Lao Tang Bun vs. Fabre, 81 Phil. 682).
WHEREFORE, the decision under review is hereby affirmed, with costs. It is so ordered.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Sanchez, Castro, Fernando and Capistrano,
JJ., concur.
Zaldivar and Angeles, JJ., took no part.
THIRD DIVISION
G.R. No. 199113, March 18, 2015
RENATO M. DAVID, Petitioner, v. EDITHA A. AGBAY AND PEOPLE OF THE
PHILIPPINES, Respondents.
DECISION
VILLARAMA, JR., J.:
This is a petition for review under Rule 45 seeking to reverse the Order1 dated October 8,
2011 of the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro, which denied the
petition for certiorari filed by Renato M. David (petitioner). Petitioner assailed the
Order2 dated March 22, 2011 of the Municipal Trial Court (MTC) of Socorro, Oriental
Mindoro denying his motion for redetermination of probable cause.
The factual antecedents:chanRoblesvirtualLawlibrary
In 1974, petitioner migrated to Canada where he became a Canadian citizen by
naturalization. Upon their retirement, petitioner and his wife returned to the Philippines.
Sometime in 2000, they purchased a 600-square meter lot along the beach in Tambong,
Gloria, Oriental Mindoro where they constructed a residential house. However, in the year
2004, they came to know that the portion where they built their house is public land and
part of the salvage zone.
On April 12, 2007, petitioner filed a Miscellaneous Lease Application 3 (MLA) over the subject
land with the Department of Environment and Natural Resources (DENR) at the Community
Environment and Natural Resources Office (CENRO) in Socorro. In the said application,
petitioner indicated that he is a Filipino citizen.
Private respondent Editha A. Agbay opposed the application on the ground that petitioner, a
Canadian citizen, is disqualified to own land. She also filed a criminal complaint for
falsification of public documents under Article 172 of the Revised Penal Code (RPC) (I.S. No.
08-6463) against the petitioner.
Meanwhile, petitioner re-acquired his Filipino citizenship under the provisions of Republic
Act No. 9225,4 (R.A. 9225) as evidenced by Identification Certificate No. 266-10-075 issued by
the Consulate General of the Philippines (Toronto) on October 11, 2007.
In his defense, petitioner averred that at the time he filed his application, he had intended to
re-acquire Philippine citizenship and that he had been assured by a CENRO officer that he
could declare himself as a Filipino. He further alleged that he bought the property from the
Agbays who misrepresented to him that the subject property was titled land and they have
the right and authority to convey the same. The dispute had in fact led to the institution of
civil and criminal suits between him and private respondent’s family.
On January 8, 2008,6 the Office of the Provincial Prosecutor issued its Resolution 7 finding
probable cause to indict petitioner for violation of Article 172 of the RPC and recommending
the filing of the corresponding information in court. Petitioner challenged the said resolution
in a petition for review he filed before the Department of Justice (DOJ).
On June 3, 2008, the CENRO issued an order rejecting petitioner’s MLA. It ruled that
petitioner’s subsequent re-acquisition of Philippine citizenship did not cure the defect in his
MLA which was void ab initio.8chanroblesvirtuallawlibrary
In the meantime, on July 26, 2010, the petition for review filed by petitioner was denied by
the DOJ which held that the presence of the elements of the crime of falsification of public
document suffices to warrant indictment of the petitioner notwithstanding the absence of
any proof that he gained or intended to injure a third person in committing the act of
falsification.9 Consequently, an information for Falsification of Public Document was filed
before the MTC (Criminal Case No. 2012) and a warrant of arrest was issued against the
petitioner.
On February 11, 2011, after the filing of the Information and before his arrest, petitioner
filed an Urgent Motion for Re-Determination of Probable Cause10 in the MTC. Interpreting
the provisions of the law relied upon by petitioner, the said court denied the motion, holding
that R.A. 9225 makes a distinction between those who became foreign citizens during its
effectivity, and those who lost their Philippine citizenship before its enactment when the
governing law was Commonwealth Act No. 6311 (CA 63). Since the crime for which petitioner
was charged was alleged and admitted to have been committed on April 12, 2007 before he
had re-acquired his Philippine citizenship, the MTC concluded that petitioner was at that
time still a Canadian citizen. Thus, the MTC ordered:chanRoblesvirtualLawlibrary
WHEREFORE, for lack of jurisdiction over the person of the accused, and for lack of merit, the
motion is DENIED.
SO ORDERED.12
In his motion for reconsideration,13 petitioner questioned the foregoing order denying him
relief on the ground of lack of jurisdiction and insisted that the issue raised is purely legal. He
argued that since his application had yet to receive final evaluation and action by the DENR
Region IV-B office in Manila, it is academic to ask the citizenship of the applicant (petitioner)
who had re-acquired Philippine citizenship six months after he applied for lease of public
land. The MTC denied the motion for reconsideration. 14chanroblesvirtuallawlibrary
Dissatisfied, petitioner elevated the case to the RTC via a petition15 for certiorari under Rule
65, alleging grave abuse of discretion on the part of the MTC. He asserted that first,
jurisdiction over the person of an accused cannot be a pre-condition for the re-
determination of probable cause by the court that issues a warrant of arrest; and second, the
March 22, 2011 Order disregarded the legal fiction that once a natural-born Filipino citizen
who had been naturalized in another country re-acquires his citizenship under R.A. 9225, his
Filipino citizenship is thus deemed not to have been lost on account of said naturalization.
In his Comment and Opposition,16 the prosecutor emphasized that the act of falsification was
already consummated as petitioner has not yet re-acquired his Philippine citizenship, and his
subsequent oath to re-acquire Philippine citizenship will only affect his citizenship status and
not his criminal act which was long consummated prior to said oath of allegiance.
On October 8, 2011, the RTC issued the assailed Order denying the petition for certiorari
after finding no grave abuse of discretion committed by the lower court,
thus:chanRoblesvirtualLawlibrary
ACCORDINGLY, the petition is hereby DENIED. At any rate petitioner is not left without any
remedy or recourse because he can proceed to trial where he can make use of his claim to
be a Filipino citizen as his defense to be adjudicated in a full blown trial, and in case of
conviction, to appeal such conviction.
 terms “re-acquire” and “retain” to describe the legal effect of taking the oath of allegiance to
SO ORDERED.17 the Republic of the Philippines. This is also evident from the title of the law using both re-
Petitioner is now before us arguing that – acquisition and retention.

In fine, for those who were naturalized in a foreign country, they shall be deemed to have re-
A. By supporting the prosecution of the petitioner for falsification, the lower court acquired their Philippine citizenship which was lost pursuant to CA 63, under which
has disregarded the undisputed fact that petitioner is a natural-born Filipino naturalization in a foreign country is one of the ways by which Philippine citizenship may be
citizen, and that by re-acquiring the same status under R.A. No. 9225 he was by lost. As its title declares, R.A. 9225 amends CA 63 by doing away with the provision in the old
legal fiction “deemed not to have lost” it at the time of his naturalization in law which takes away Philippine citizenship from natural-born Filipinos who become
Canada and through the time when he was said to have falsely claimed naturalized citizens of other countries and allowing dual citizenship, 21 and also provides for
Philippine citizenship. the procedure for re-acquiring and retaining Philippine citizenship. In the case of those who
became foreign citizens after R.A. 9225 took effect, they shall retain Philippine citizenship
B. By compelling petitioner to first return from his legal residence in Canada and to despite having acquired foreign citizenship provided they took the oath of allegiance under
surrender or allow himself to be arrested under a warrant for his alleged false the new law.
claim to Philippine citizenship, the lower court has pre-empted the right of
petitioner through his wife and counsel to question the validity of the said Petitioner insists we should not distinguish between re-acquisition and retention in R.A.
warrant of arrest against him before the same is implemented, which is 9225. He asserts that in criminal cases, that interpretation of the law which favors the
tantamount to a denial of due process.18 accused is preferred because it is consistent with the constitutional presumption of
innocence, and in this case it becomes more relevant when a seemingly difficult question of
law is expected to have been understood by the accused, who is a non-lawyer, at the time of
In his Comment, the Solicitor General contends that petitioner’s argument regarding the the commission of the alleged offense. He further cites the letter-reply dated January 31,
retroactivity of R.A. 9225 is without merit. It is contended that this Court’s rulings in Frivaldo 201122 of the Bureau of Immigration (BI) to his query, stating that his status as a natural-born
v. Commission on Elections19 and Altarejos v. Commission on Elections 20 on the retroactivity Filipino will be governed by Section 2 of R.A. 9225.
of one’s re-acquisition of Philippine citizenship to the date of filing his application therefor
cannot be applied to the case of herein petitioner. Even assuming for the sake of argument These contentions have no merit.
that such doctrine applies in the present situation, it will still not work for petitioner’s cause
for the simple reason that he had not alleged, much less proved, that he had already applied That the law distinguishes between re-acquisition and retention of Philippine citizenship was
for reacquisition of Philippine citizenship before he made the declaration in the Public Land made clear in the discussion of the Bicameral Conference Committee on the Disagreeing
Application that he is a Filipino. Moreover, it is stressed that in falsification of public Provisions of House Bill No. 4720 and Senate Bill No. 2130 held on August 18, 2003, where
document, it is not necessary that the idea of gain or intent to injure a third person be Senator Franklin Drilon was responding to the query of Representative Exequiel
present. As to petitioner’s defense of good faith, such remains to be a defense which may be Javier:chanRoblesvirtualLawlibrary
properly raised and proved in a full-blown trial. REP. JAVIER. I have some questions in Section 3. Here, under Section 3 of the Senate version,
“Any provision of law on the contrary notwithstanding, natural-born citizens of the
On the issue of jurisdiction over the person of accused (petitioner), the Solicitor General Philippines who, after the effectivity of this Act, shall… and so forth, ano, shall retain their
opines that in seeking an affirmative relief from the MTC when he filed his Urgent Motion for Philippine citizenship.
Re-determination of Probable Cause, petitioner is deemed to have submitted his person to
the said court’s jurisdiction by his voluntary appearance. Nonetheless, the RTC correctly Now in the second paragraph, natural-born citizens who have lost their citizenship by reason
ruled that the lower court committed no grave abuse of discretion in denying the petitioner’s of their naturalization after the effectivity of this Act are deemed to have reacquired…
motion after a judicious, thorough and personal evaluation of the parties’ arguments
contained in their respective pleadings, and the evidence submitted before the court. THE CHAIRMAN (SEN. DRILON). Prior to the effectivity.

In sum, the Court is asked to resolve whether (1) petitioner may be indicted for falsification REP. JAVIER. Well, you have two kinds of natural-born citizens here. Natural-born citizens
for representing himself as a Filipino in his Public Land Application despite his subsequent re- who acquired foreign citizenship after the effectivity of this act are considered to have
acquisition of Philippine citizenship under the provisions of R.A. 9225; and (2) the MTC retained their citizenship. But natural-born citizens who lost their Filipino citizenship before
properly denied petitioner’s motion for re-determination of probable cause on the ground of the effectivity of this act are considered to have reacquired. May I know the distinction? Do
lack of jurisdiction over the person of the accused (petitioner). you mean to say that natural-born citizens who became, let’s say, American citizens after the
effectivity of this act are considered natural-born?
R.A. 9225, otherwise known as the “Citizenship Retention and Re-acquisition Act of 2003,”
was signed into law by President Gloria Macapagal-Arroyo on August 29, 2003. Sections 2 Now in the second paragraph are the natural-born citizens who lost their citizenship before
and 3 of said law read:chanRoblesvirtualLawlibrary the effectivity of this act are no longer natural born citizens because they have just
SEC. 2. Declaration of Policy.–It is hereby declared the policy of the State that all Philippine reacquired their citizenship. I just want to know this distinction, Mr. Chairman.
citizens who become citizens of another country shall be deemed not to have lost their
Philippine citizenship under the conditions of this Act. THE CHAIRMAN (SEN. DRILON). The title of the Senate version is precisely retention and
reacquisition. The reacquisition will apply to those who lost their Philippine citizenship by
SEC. 3. Retention of Philippine Citizenship.–Any provision of law to the contrary virtue of Commonwealth Act 63. Upon the effectivity -- assuming that we can agree on this,
notwithstanding, natural-born citizens of the Philippines who have lost their Philippine upon the effectivity of this new measure amending Commonwealth Act 63, the Filipinos who
citizenship by reason of their naturalization as citizens of a foreign country are hereby lost their citizenship is deemed to have reacquired their Philippine citizenship upon the
deemed to have reacquired Philippine citizenship upon taking the following oath of effectivity of the act.
allegiance to the Republic:chanRoblesvirtualLawlibrary
“I ______________________, solemnly swear (or affirm) that I will support and defend the The second aspect is the retention of Philippine citizenship applying to future instances. So
Constitution of the Republic of the Philippines and obey the laws and legal orders that’s the distinction.
promulgated by the duly constituted authorities of the Philippines; and I hereby declare that
I recognize and accept the supreme authority of the Philippines and will maintain true faith REP. JAVIER. Well, I’m just asking this question because we are here making distinctions
and allegiance thereto; and that I impose this obligation upon myself voluntarily without between natural-born citizens. Because this is very important for certain government
mental reservation or purpose of evasion.” positions, ‘no, because natural-born citizens are only qualified for a specific…
Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens
of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath. THE CHAIRMAN (SEN. DRILON). That is correct.
(Emphasis supplied)
While Section 2 declares the general policy that Filipinos who have become citizens of REP. JAVIER. ...positions under the Constitution and under the law.
another country shall be deemed “not to have lost their Philippine citizenship,” such is
qualified by the phrase “under the conditions of this Act.” Section 3 lays down such THE CHAIRMAN (SEN. DRILON). Yes. We can get to that later on. It’s one of the provisions,
conditions for two categories of natural-born Filipinos referred to in the first and second yes. But just for purposes of the explanation, Congressman Javier, that is our
paragraphs. Under the first paragraph are those natural-born Filipinos who have lost their conceptualization. Reacquired for those who previously lost [Filipino citizenship] by virtue
citizenship by naturalization in a foreign country who shall re-acquire their Philippine of Commonwealth Act 63, and retention for those in the future. (Emphasis supplied)
citizenship upon taking the oath of allegiance to the Republic of the Philippines. The second Considering that petitioner was naturalized as a Canadian citizen prior to the effectivity of
paragraph covers those natural-born Filipinos who became foreign citizens after R.A. 9225 R.A. 9225, he belongs to the first category of natural-born Filipinos under the first paragraph
took effect, who shall retain their Philippine citizenship upon taking the same oath. The of Section 3 who lost Philippine citizenship by naturalization in a foreign country. As the new
taking of oath of allegiance is required for both categories of natural-born Filipino citizens law allows dual citizenship, he was able to re-acquire his Philippine citizenship by taking the
who became citizens of a foreign country, but the terminology used is different, “re- required oath of allegiance.
acquired” for the first group, and “retain” for the second group.
For the purpose of determining the citizenship of petitioner at the time of filing his MLA, it is
The law thus makes a distinction between those natural-born Filipinos who became foreign not necessary to discuss the rulings in Frivaldo and Altarejos on the retroactivity of such
citizens before and after the effectivity of R.A. 9225. Although the heading of Section 3 is reacquisition because R.A. 9225 itself treats those of his category as having already lost
“Retention of Philippine Citizenship”, the authors of the law intentionally employed the Philippine citizenship, in contradistinction to those natural-born Filipinos who became
foreign citizens after R.A. 9225 came into force. In other words, Section 2 declaring the policy
that considers Filipinos who became foreign citizens as not to have lost their Philippine
citizenship, should be read together with Section 3, the second paragraph of which clarifies
that such policy governs all cases after the new law’s effectivity.
As to the letter-reply of BI, it simply quoted Section 2 of R.A. 9225 without any reference to
Section 3 on the particular application of reacquisition and retention to Filipinos who
became foreign citizens before and after the effectivity of R.A. 9225.
jurisdiction over the person nor custody of the law. However, if a person invoking the special
jurisdiction of the court applies for bail, he must first submit himself to the custody of the
law.29 (Emphasis supplied)
Considering that petitioner sought affirmative relief in filing his motion for re-determination
of probable cause, the MTC clearly erred in stating that it lacked jurisdiction over his person.
Notwithstanding such erroneous ground stated in the MTC’s order, the RTC correctly ruled
that no grave abuse of discretion was committed by the MTC in denying the said motion for
lack of merit.

Petitioner’s plea to adopt the interpretation most favorable to the accused is likewise WHEREFORE, the petition is DENIED. The Order dated October 8, 2011 of the Regional Trial
misplaced. Courts adopt an interpretation more favorable to the accused following the time- Court of Pinamalayan, Oriental Mindoro in Civil Case No. SCA-07-11 (Criminal Case No. 2012)
honored principle that penal statutes are construed strictly against the State and liberally in is hereby AFFIRMED and UPHELD.
favor of the accused.23 R.A. 9225, however, is not a penal law.
With costs against the petitioner.
Falsification of documents under paragraph 1, Article 172 24 in relation to Article 17125 of the
RPC refers to falsification by a private individual, or a public officer or employee who did not SO ORDERED.
take advantage of his official position, of public, private, or commercial documents. The
elements of falsification of documents under paragraph 1, Article 172 of the RPC Velasco, Jr., (Chairperson), Peralta, Reyes, and Perlas-Bernabe,*JJ., concur.cralawlawli
are:chanRoblesvirtualLawlibrary
(1) that the offender is a private individual or a public officer or employee who did not take
advantage of his official position;
(2) that he committed any of the acts of falsification enumerated in Article 171 of the RPC; Republic of the Philippines
and SUPREME COURT
(3) that the falsification was committed in a public, official or commercial document. 26 Manila
Petitioner made the untruthful statement in the MLA, a public document, that he is a Filipino
citizen at the time of the filing of said application, when in fact he was then still a Canadian
EN BANC
citizen. Under CA 63, the governing law at the time he was naturalized as Canadian citizen,
naturalization in a foreign country was among those ways by which a natural-born citizen
loses his Philippine citizenship. While he re-acquired Philippine citizenship under R.A. 9225 G.R. No. 179848 November 27, 2008
six months later, the falsification was already a consummated act, the said law having no
retroactive effect insofar as his dual citizenship status is concerned. The MTC therefore did
not err in finding probable cause for falsification of public document under Article 172, NESTOR A. JACOT, petitioner,
paragraph 1. vs.
ROGEN T. DAL and COMMISSION ON ELECTIONS, respondents.
The MTC further cited lack of jurisdiction over the person of petitioner accused as ground for
denying petitioner’s motion for re-determination of probable cause, as the motion was filed DECISION
prior to his arrest. However, custody of the law is not required for the adjudication of reliefs
other than an application for bail. 27 In Miranda v. Tuliao,28 which involved a motion to quash
warrant of arrest, this Court discussed the distinction between custody of the law and CHICO-NAZARIO, J.:
jurisdiction over the person, and held that jurisdiction over the person of the accused is
deemed waived when he files any pleading seeking an affirmative relief, except in cases
when he invokes the special jurisdiction of the court by impugning such jurisdiction over his Petitioner Nestor A. Jacot assails the Resolution1 dated 28 September 2007 of the
person. Thus:chanRoblesvirtualLawlibrary Commission on Elections (COMELEC) En Banc in SPA No. 07-361, affirming the Resolution
In arguing, on the other hand, that jurisdiction over their person was already acquired by dated 12 June 2007 of the COMELEC Second Division2 disqualifying him from running for the
their filing of the above Urgent Motion, petitioners invoke our pronouncement, through position of Vice-Mayor of Catarman, Camiguin, in the 14 May 2007 National and Local
Justice Florenz D. Regalado, in Santiago v. Vasquez:chanRoblesvirtualLawlibrary Elections, on the ground that he failed to make a personal renouncement of his United
States (US) citizenship.
The voluntary appearance of the accused, whereby the court acquires jurisdiction over his
person, is accomplished either by his pleading to the merits (such as by filing a motion to
quash or other pleadings requiring the exercise of the court’s jurisdiction thereover, Petitioner was a natural born citizen of the Philippines, who became a naturalized citizen of
appearing for arraignment, entering trial) or by filing bail. On the matter of bail, since the the US on 13 December 1989. 3
same is intended to obtain the provisional liberty of the accused, as a rule the same cannot
be posted before custody of the accused has been acquired by the judicial authorities either
by his arrest or voluntary surrender.cralawred Petitioner sought to reacquire his Philippine citizenship under Republic Act No. 9225,
Our pronouncement in Santiago shows a distinction between custody of the otherwise known as the Citizenship Retention and Re-Acquisition Act. He filed a request for
law and jurisdiction over the person. Custody of the law is required before the court can act the administration of his Oath of Allegiance to the Republic of the Philippines with the
upon the application for bail, but is not required for the adjudication of other reliefs sought Philippine Consulate General (PCG) of Los Angeles, California. The Los Angeles PCG issued on
by the defendant where the mere application therefor constitutes a waiver of the defense of 19 June 2006 an Order of Approval4 of petitioner’s request, and on the same day, petitioner
lack of jurisdiction over the person of the accused. Custody of the law is accomplished either took his Oath of Allegiance to the Republic of the Philippines before Vice Consul Edward C.
by arrest or voluntary surrender, while jurisdiction over the person of the accused is acquired Yulo. 5 On 27 September 2006, the Bureau of Immigration issued Identification Certificate
upon his arrest or voluntary appearance. One can be under the custody of the law but not No. 06-12019 recognizing petitioner as a citizen of the Philippines. 6
yet subject to the jurisdiction of the court over his person, such as when a person arrested by
virtue of a warrant files a motion before arraignment to quash the warrant. On the other
Six months after, on 26 March 2007, petitioner filed his Certificate of Candidacy for the
hand, one can be subject to the jurisdiction of the court over his person, and yet not be in
Position of Vice-Mayor of the Municipality of Catarman, Camiguin. 7
the custody of the law, such as when an accused escapes custody after his trial has
commenced. Being in the custody of the law signifies restraint on the person, who is thereby
deprived of his own will and liberty, binding him to become obedient to the will of the law. On 2 May 2007, respondent Rogen T. Dal filed a Petition for Disqualification 8 before the
Custody of the law is literally custody over the body of the accused. It includes, but is not COMELEC Provincial Office in Camiguin against petitioner, arguing that the latter failed to
limited to, detention. renounce his US citizenship, as required under Section 5(2) of Republic Act No. 9225, which
reads as follows:
x x x x

While we stand by our above pronouncement in Pico insofar as it concerns bail, we clarify
that, as a general rule, one who seeks an affirmative relief is deemed to have submitted to
the jurisdiction of the court. As we held in the aforecited case of Santiago, seeking an
affirmative relief in court, whether in civil or criminal proceedings, constitutes voluntary
appearance.
x x x x
Section 5. Civil and Political Rights and Liabilities.–Those who retain or reacquire
Philippine citizenship under this Act shall enjoy full civil and political rights and
be subject to all attendant liabilities and responsibilities under existing laws of
the Philippines and the following conditions:
xxxx

To recapitulate what we have discussed so far, in criminal cases, jurisdiction over the person
of the accused is deemed waived by the accused when he files any pleading seeking an
affirmative relief, except in cases when he invokes the special jurisdiction of the court by
impugning such jurisdiction over his person. Therefore, in narrow cases involving special
appearances, an accused can invoke the processes of the court even though there is neither
(2) Those seeking elective public office in the Philippines shall meet the
qualifications for holding such public office as required by the Constitution and
existing laws and, at the time of the filing of the certificate of candidacy, make a
personal and sworn renunciation of any and all foreign citizenship before any
public officer authorized to administer an oath.
In his Answer9 dated 6 May 2007 and Position Paper10 dated 8 May 2007, petitioner
countered that his Oath of Allegiance to the Republic of the Philippines made before the Los
Angeles PCG and the oath contained in his Certificate of Candidacy operated as an effective
renunciation of his foreign citizenship.
In the meantime, the 14 May 2007 National and Local Elections were held. Petitioner
garnered the highest number of votes for the position of Vice Mayor.
On 12 June 2007, the COMELEC Second Division finally issued its Resolution11 disqualifying
the petitioner from running for the position of Vice-Mayor of Catarman, Camiguin, for failure
to make the requisite renunciation of his US citizenship. The COMELEC Second Division
explained that the reacquisition of Philippine citizenship under Republic Act No. 9225 does
not automatically bestow upon any person the privilege to run for any elective public office.
It additionally ruled that the filing of a Certificate of Candidacy cannot be considered as a
renunciation of foreign citizenship. The COMELEC Second Division did not consider Valles v.
COMELEC12 and Mercado v. Manzano13 applicable to the instant case, since Valles and
Mercado were dual citizens since birth, unlike the petitioner who lost his Filipino citizenship
by means of naturalization. The COMELEC, thus, decreed in the aforementioned Resolution
that:
ACCORDINGLY, NESTOR ARES JACOT is DISQUALIFIED to run for the position of
Vice-Mayor of Catarman, Camiguin for the May 14, 2007 National and Local
Elections. If proclaimed, respondent cannot thus assume the Office of Vice-
Mayor of said municipality by virtue of such disqualification. 14
Petitioner filed a Motion for Reconsideration on 29 June 2007 reiterating his position that his
Oath of Allegiance to the Republic of the Philippines before the Los Angeles PCG and his oath
in his Certificate of Candidacy sufficed as an effective renunciation of his US citizenship.
Attached to the said Motion was an "Oath of Renunciation of Allegiance to the United States
and Renunciation of Any and All Foreign Citizenship" dated 27 June 2007, wherein petitioner
explicitly renounced his US citizenship.15 The COMELEC en banc dismissed petitioner’s
Motion in a Resolution16 dated 28 September 2007 for lack of merit.
Petitioner sought remedy from this Court via the present Special Civil Action for Certiorari
under Rule 65 of the Revised Rules of Court, where he presented for the first time an
"Affidavit of Renunciation of Allegiance to the United States and Any and All Foreign
Citizenship"17 dated 7 February 2007. He avers that he executed an act of renunciation of his
US citizenship, separate from the Oath of Allegiance to the Republic of the Philippines he
took before the Los Angeles PCG and his filing of his Certificate of Candidacy, thereby
changing his theory of the case during the appeal. He attributes the delay in the presentation
of the affidavit to his former counsel, Atty. Marciano Aparte, who allegedly advised him that
said piece of evidence was unnecessary but who, nevertheless, made him execute an
identical document entitled "Oath of Renunciation of Allegiance to the United States and
Renunciation of Any and All Foreign Citizenship" on 27 June 2007 after he had already filed
his Certificate of Candidacy.18
Petitioner raises the following issues for resolution of this Court:
I
WHETHER OR NOT PUBLIC RESPONDENT EXERCISED GRAVE ABUSE OF
DISCRETION WHEN IT HELD THAT PETITIONER FAILED TO COMPLY WITH THE
PROVISIONS OF R.A. 9225, OTHERWISE KNOWN AS THE "CITIZENSHIP
RETENTION AND RE-ACQUISITION ACT OF 2003," SPECIFICALLY SECTION 5(2) AS
TO THE REQUIREMENTS FOR THOSE SEEKING ELECTIVE PUBLIC OFFICE;
II
WHETHER OR NOT PUBLIC RESPONDENT EXERCISED GRAVE ABUSE OF
DISCRETION WHEN IT HELD THAT PETITIONER FAILED TO COMPLY WITH THE
PROVISIONS OF THE COMELEC RULES OF PROCEDURE AS REGARDS THE
PAYMENT OF THE NECESSARY MOTION FEES; AND
III
WHETHER OR NOT UPHOLDING THE DECISION OF PUBLIC RESPONDENT WOULD
RESULT IN THE FRUSTRATION OF THE WILL OF THE PEOPLE OF CATARMAN,
CAMIGUIN.19
The Court determines that the only fundamental issue in this case is whether petitioner is
disqualified from running as a candidate in the 14 May 2007 local elections for his failure to
make a personal and sworn renunciation of his US citizenship.
This Court finds that petitioner should indeed be disqualified.
Contrary to the assertions made by petitioner, his oath of allegiance to the Republic of the
Philippines made before the Los Angeles PCG and his Certificate of Candidacy do not
substantially comply with the requirement of a personal and sworn renunciation of foreign
citizenship because these are distinct requirements to be complied with for different
purposes.
Section 3 of Republic Act No. 9225 requires that natural-born citizens of the Philippines,
who are already naturalized citizens of a foreign country, must take the following oath of
allegiance to the Republic of the Philippines to reacquire or retain their Philippine
citizenship:
SEC. 3. Retention of Philippine Citizenship.–Any provision of law to the contrary
notwithstanding, natural-born citizens of the Philippines who have lost their
Philippine citizenship by reason of their naturalization as citizens of a foreign
country are hereby deemed to have reacquired Philippine citizenship upon
taking the following oath of allegiance to the Republic:
"I __________ solemnly swear (or affirm) that I will support and defend the
Constitution of the Republic of the Philippines and obey the laws and legal
orders promulgated by the duly constituted authorities of the Philippines; and I
hereby declare that I recognize and accept the supreme authority of the
Philippines and will maintain true faith and allegiance thereto; and that I impose
this obligation upon myself voluntarily, without mental reservation or purpose
of evasion."
Natural-born citizens of the Philippines who, after the effectivity of this Act,
become citizens of a foreign country shall retain their Philippine citizenship upon
taking the aforesaid oath.
By the oath dictated in the afore-quoted provision, the Filipino swears allegiance to the
Philippines, but there is nothing therein on his renunciation of foreign citizenship. Precisely, a
situation might arise under Republic Act No. 9225 wherein said Filipino has dual citizenship
by also reacquiring or retaining his Philippine citizenship, despite his foreign citizenship.
The afore-quoted oath of allegiance is substantially similar to the one contained in
the Certificate of Candidacy which must be executed by any person who wishes to run for
public office in Philippine elections. Such an oath reads:
I am eligible for the office I seek to be elected. I will support and defend the
Constitution of the Philippines and will maintain true faith and allegiance
thereto; that I will obey the laws, legal orders and decrees promulgated by the
duly constituted authorities of the Republic of the Philippines; and that I impose
this obligation upon myself voluntarily, without mental reservation or purpose
of evasion. I hereby certify that the facts stated herein are true and correct of
my own personal knowledge.
Now, Section 5(2) of Republic Act No. 9225 specifically provides that:
Section 5. Civil and Political Rights and Liabilities.–Those who retain or reacquire
Philippine citizenship under this Act shall enjoy full civil and political rights and
be subject to all attendant liabilities and responsibilities under existing laws of
the Philippines and the following conditions:
xxxx
(2) Those seeking elective public office in the Philippines shall meet the
qualifications for holding such public office as required by the Constitution and
existing laws and, at the time of the filing of the certificate of candidacy, make a
personal and sworn renunciation of any and all foreign citizenship before any
public officer authorized to administer an oath.
The law categorically requires persons seeking elective public office, who either retained
their Philippine citizenship or those who reacquired it, to make a personal and sworn
renunciation of any and all foreign citizenship before a public officer authorized to
administer an oath simultaneous with or before the filing of the certificate of candidacy. 20
Hence, Section 5(2) of Republic Act No. 9225 compels natural-born Filipinos, who have
been naturalized as citizens of a foreign country, but who reacquired or retained their
Philippine citizenship (1) to take the oath of allegiance under Section 3 of Republic Act No.
9225, and (2) for those seeking elective public offices in the Philippines, to additionally
execute a personal and sworn renunciation of any and all foreign citizenship before an
authorized public officer prior or simultaneous to the filing of their certificates of
candidacy, to qualify as candidates in Philippine elections.
Clearly Section 5(2) of Republic Act No. 9225 (on the making of a personal and sworn
renunciation of any and all foreign citizenship) requires of the Filipinos availing themselves of
the benefits under the said Act to accomplish an undertaking other than that which they
have presumably complied with under Section 3 thereof (oath of allegiance to the Republic
of the Philippines). This is made clear in the discussion of the Bicameral Conference
Committee on Disagreeing Provisions of House Bill No. 4720 and Senate Bill No. 2130 held on
18 August 2003 (precursors of Republic Act No. 9225), where the Hon. Chairman Franklin
Drilon and Hon. Representative Arthur Defensor explained to Hon. Representative Exequiel
Javier that the oath of allegiance is different from the renunciation of foreign citizenship:
CHAIRMAN DRILON. Okay. So, No. 2. "Those seeking elective public office in the
Philippines shall meet the qualifications for holding such public office as
required by the Constitution and existing laws and, at the time of the filing of
the certificate of candidacy, make a personal and sworn renunciation of any and
all foreign citizenship before any public officer authorized to administer an
oath." I think it’s very good, ha? No problem?
REP. JAVIER. … I think it’s already covered by the oath.
CHAIRMAN DRILON. Renouncing foreign citizenship.
REP. JAVIER. Ah… but he has taken his oath already.
CHAIRMAN DRILON. No…no, renouncing foreign citizenship.
xxxx
CHAIRMAN DRILON. Can I go back to No. 2. What’s your problem, Boy? Those
seeking elective office in the Philippines.
REP. JAVIER. They are trying to make him renounce his citizenship thinking that
ano…
CHAIRMAN DRILON. His American citizenship.
REP. JAVIER. To discourage him from running?
CHAIRMAN DRILON. No.
REP. A.D. DEFENSOR. No. When he runs he will only have one citizenship.
When he runs for office, he will have only one. (Emphasis ours.)
There is little doubt, therefore, that the intent of the legislators was not only for Filipinos
reacquiring or retaining their Philippine citizenship under Republic Act No. 9225 to take their
oath of allegiance to the Republic of the Philippines, but also to explicitly renounce their
foreign citizenship if they wish to run for elective posts in the Philippines. To qualify as a
candidate in Philippine elections, Filipinos must only have one citizenship, namely, Philippine
citizenship.
By the same token, the oath of allegiance contained in the Certificate of Candidacy, which is
substantially similar to the one contained in Section 3 of Republic Act No. 9225, does not
constitute the personal and sworn renunciation sought under Section 5(2) of Republic Act
No. 9225. It bears to emphasize that the said oath of allegiance is a general requirement for
all those who wish to run as candidates in Philippine elections; while the renunciation of
foreign citizenship is an additional requisite only for those who have retained or reacquired
Philippine citizenship under Republic Act No. 9225 and who seek elective public posts,
considering their special circumstance of having more than one citizenship.
Petitioner erroneously invokes the doctrine in Valles21 and Mercado,22 wherein the filing by a
person with dual citizenship of a certificate of candidacy, containing an oath of allegiance,
was already considered a renunciation of foreign citizenship. The ruling of this Court
in Valles and Mercado is not applicable to the present case, which is now specially governed
by Republic Act No. 9225, promulgated on 29 August 2003.
In Mercado, which was cited in Valles, the disqualification of therein private respondent
Manzano was sought under another law, Section 40(d) of the Local Government Code, which
reads:
SECTION 40. Disqualifications. The following persons are disqualified from
running for any elective local position:
xxxx
(d) Those with dual citizenship.
The Court in the aforesaid cases sought to define the term "dual citizenship" vis-à-vis the
concept of "dual allegiance." At the time this Court decided the cases
of Valles and Mercado on 26 May 1999 and 9 August 2000, respectively, the more explicitly
worded requirements of Section 5(2) of Republic Act No. 9225 were not yet enacted by our
legislature.23
Lopez v. Commission on Elections 24 is the more fitting precedent for this case since they both
share the same factual milieu. In Lopez, therein petitioner Lopez was a natural-born Filipino
who lost his Philippine citizenship after he became a naturalized US citizen. He later
reacquired his Philippine citizenship by virtue of Republic Act No. 9225. Thereafter, Lopez
filed his candidacy for a local elective position, but failed to make a personal and sworn
renunciation of his foreign citizenship. This Court unequivocally declared that despite having
garnered the highest number of votes in the election, Lopez is nonetheless disqualified as a
candidate for a local elective position due to his failure to comply with the requirements of
Section 5(2) of Republic Act No. 9225.
Petitioner presents before this Court for the first time, in the instant Petition for Certiorari,
an "Affidavit of Renunciation of Allegiance to the United States and Any and All Foreign
Citizenship,"25 which he supposedly executed on 7 February 2007, even before he filed his
Certificate of Candidacy on 26 March 2007. With the said Affidavit, petitioner puts forward in
the Petition at bar a new theory of his case–that he complied with the requirement of
making a personal and sworn renunciation of his foreign citizenship before filing his
Certificate of Candidacy. This new theory constitutes a radical change from the earlier
position he took before the COMELEC–that he complied with the requirement of
renunciation by his oaths of allegiance to the Republic of the Philippines made before the Los
Angeles PCG and in his Certificate of Candidacy, and that there was no more need for a
separate act of renunciation.
As a rule, no question will be entertained on appeal unless it has been raised in the
proceedings below. Points of law, theories, issues and arguments not brought to the
attention of the lower court, administrative agency or quasi-judicial body need not be
considered by a reviewing court, as they cannot be raised for the first time at that late stage.
Basic considerations of fairness and due process impel this rule. 26 Courts have neither the
time nor the resources to accommodate parties who chose to go to trial haphazardly. 27
Likewise, this Court does not countenance the late submission of evidence. 28 Petitioner
should have offered the Affidavit dated 7 February 2007 during the proceedings before the
COMELEC.
Section 1 of Rule 43 of the COMELEC Rules of Procedure provides that "In the absence of any
applicable provisions of these Rules, the pertinent provisions of the Rules of Court in the
Philippines shall be applicable by analogy or in suppletory character and effect." Section 34
of Rule 132 of the Revised Rules of Court categorically enjoins the admission of evidence not
formally presented:
SEC. 34. Offer of evidence. - The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified.
Since the said Affidavit was not formally offered before the COMELEC, respondent had no
opportunity to examine and controvert it. To admit this document would be contrary to due
process. 29 Additionally, the piecemeal presentation of evidence is not in accord with orderly
justice.30
The Court further notes that petitioner had already presented before the COMELEC an
identical document, "Oath of Renunciation of Allegiance to the United States and
Renunciation of Any and All Foreign Citizenship" executed on 27 June 2007, subsequent to
his filing of his Certificate of Candidacy on 26 March 2007. Petitioner attached the said Oath
of 27 June 2007 to his Motion for Reconsideration with the COMELEC en banc. The
COMELEC en banc eventually refused to reconsider said document for being belatedly
executed. What was extremely perplexing, not to mention suspect, was that petitioner did
not submit the Affidavit of 7 February 2007 or mention it at all in the proceedings before the
COMELEC, considering that it could have easily won his case if it was actually executed on
and in existence before the filing of his Certificate of Candidacy, in compliance with law.
The justification offered by petitioner, that his counsel had advised him against presenting
this crucial piece of evidence, is lame and unconvincing. If the Affidavit of 7 February 2007
was in existence all along, petitioner’s counsel, and even petitioner himself, could have easily
adduced it to be a crucial piece of evidence to prove compliance with the requirements of
Section 5(2) of Republic Act No. 9225. There was no apparent danger for petitioner to submit
as much evidence as possible in support of his case, than the risk of presenting too little for
which he could lose.
And even if it were true, petitioner’s excuse for the late presentation of the Affidavit of 7
February 2007 will not change the outcome of petitioner’s case.
It is a well-settled rule that a client is bound by his counsel’s conduct, negligence, and
mistakes in handling the case, and the client cannot be heard to complain that the result
might have been different had his lawyer proceeded differently.31 The only exceptions to the
general rule -- that a client is bound by the mistakes of his counsel -- which this Court finds
acceptable are when the reckless or gross negligence of counsel deprives the client of due
process of law, or when the application of the rule results in the outright deprivation of one’s
property through a technicality.32 These exceptions are not attendant in this case.
The Court cannot sustain petitioner’s averment that his counsel was grossly negligent in
deciding against the presentation of the Affidavit of 7 February 2007 during the proceedings
before the COMELEC. Mistakes of attorneys as to the competency of a witness; the
sufficiency, relevancy or irrelevancy of certain evidence; the proper defense or the burden of
proof, failure to introduce evidence, to summon witnesses and to argue the case -- unless
they prejudice the client and prevent him from properly presenting his case -- do not
constitute gross incompetence or negligence, such that clients may no longer be bound by
the acts of their counsel.33
Also belying petitioner’s claim that his former counsel was grossly negligent was the fact that
petitioner continuously used his former counsel’s theory of the case. Even when the
COMELEC already rendered an adverse decision, he persistently argues even to this Court
that his oaths of allegiance to the Republic of the Philippines before the Los Angeles PCG and
in his Certificate of Candidacy amount to the renunciation of foreign citizenship which the
law requires. Having asserted the same defense in the instant Petition, petitioner only
demonstrates his continued reliance on and complete belief in the position taken by his
former counsel, despite the former’s incongruous allegations that the latter has been grossly
negligent.
Petitioner himself is also guilty of negligence. If indeed he believed that his counsel was
inept, petitioner should have promptly taken action, such as discharging his counsel earlier
and/or insisting on the submission of his Affidavit of 7 February 2007 to the COMELEC,
instead of waiting until a decision was rendered disqualifying him and a resolution issued
dismissing his motion for reconsideration; and, thereupon, he could have heaped the blame
on his former counsel. Petitioner could not be so easily allowed to escape the consequences
of his former counsel’s acts, because, otherwise, it would render court proceedings
indefinite, tentative, and subject to reopening at any time by the mere subterfuge of
replacing counsel. 34
Petitioner cites De Guzman v. Sandiganbayan,35 where therein petitioner De Guzman was
unable to present a piece of evidence because his lawyer proceeded to file a demurrer to
evidence, despite the Sandiganbayan’s denial of his prior leave to do so. The wrongful
insistence of the lawyer in filing a demurrer to evidence had totally deprived De Guzman of
any chance to present documentary evidence in his defense. This was certainly not the case
in the Petition at bar.
Herein, petitioner was in no way deprived of due process. His counsel actively defended his
suit by attending the hearings, filing the pleadings, and presenting evidence on petitioner’s
behalf. Moreover, petitioner’s cause was not defeated by a mere technicality, but because of
a mistaken reliance on a doctrine which is not applicable to his case. A case lost due to an
untenable legal position does not justify a deviation from the rule that clients are bound by
the acts and mistakes of their counsel.36
Petitioner also makes much of the fact that he received the highest number of votes for the
position of Vice-Mayor of Catarman during the 2007 local elections. The fact that a
candidate, who must comply with the election requirements applicable to dual citizens and
failed to do so, received the highest number of votes for an elective position does not
dispense with, or amount to a waiver of, such requirement. 37 The will of the people as
expressed through the ballot cannot cure the vice of ineligibility, especially if they mistakenly
believed that the candidate was qualified. The rules on citizenship qualifications of a
candidate must be strictly applied. If a person seeks to serve the Republic of the Philippines,
he must owe his loyalty to this country only, abjuring and renouncing all fealty and fidelity to
any other state.38 The application of the constitutional and statutory provisions on
disqualification is not a matter of popularity. 39
WHEREFORE, the instant appeal is DISMISSED. The Resolution dated 28 September 2007 of
the COMELEC en banc in SPA No. 07-361, affirming the Resolution dated 12 June 2007 of the
COMELEC Second Division, is AFFIRMED. Petitioner is DISQUALIFIED to run for the position
of Vice-Mayor of Catarman, Camiguin in the 14 May 2007 National and Local Elections, and if
proclaimed, cannot assume the Office of Vice-Mayor of said municipality by virtue of such
disqualification. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 198742 August 10, 2012
TEODORA SOBEJANA-CONDON, Petitioner,
vs.
COMMISSION ON ELECTIONS, LUIS M. BAUTISTA, ROBELITO V. PICAR and WILMA P.
PAGADUAN, Respondents.
SERENO,*
PERLAS-BERNABE, JJ *
DECISION
REYES, J.:
Failure to renounce foreign citizenship in accordance with the exact tenor of Section 5(2) of
Republic Act (R.A.) No. 9225 renders a dual citizen ineligible to run for and thus hold any
elective public office.
The Case
At bar is a special civil action for certiorari1 under Rule 64 of the Rules of Court seeking to
nullify Resolution2 dated September 6, 2011 of the Commission on Elections (COMELEC) en
banc in EAC (AE) No. A-44-2010. The assailed resolution (a) reversed the Order3 dated
November 30, 2010 of COMELEC Second Division dismissing petitioner’s appeal; and (b)
affirmed the consolidated Decision4 dated October 22, 2010 of the Regional Trial Court (RTC),
Bauang, La Union, Branch 33, declaring petitioner Teodora Sobejana-Condon (petitioner)
disqualified and ineligible to her position as Vice-Mayor of Caba, La Union.
The Undisputed Facts
The petitioner is a natural-born Filipino citizen having been born of Filipino parents on
August 8, 1944. On December 13, 1984, she became a naturalized Australian citizen owing to
her marriage to a certain Kevin Thomas Condon.
On December 2, 2005, she filed an application to re-acquire Philippine citizenship before the
Philippine Embassy in Canberra, Australia pursuant to Section 3 of R.A. No. 9225 otherwise
known as the "Citizenship Retention and Re-Acquisition Act of 2003."5 The application was
approved and the petitioner took her oath of allegiance to the Republic of the Philippines on
December 5, 2005.
On September 18, 2006, the petitioner filed an unsworn Declaration of Renunciation of
Australian Citizenship before the Department of Immigration and Indigenous Affairs,
Canberra, Australia, which in turn issued the Order dated September 27, 2006 certifying that
she has ceased to be an Australian citizen.6
The petitioner ran for Mayor in her hometown of Caba, La Union in the 2007 elections. She
lost in her bid. She again sought elective office during the May 10, 2010 elections this time
for the position of Vice-Mayor. She obtained the highest numbers of votes and was
proclaimed as the winning candidate. She took her oath of office on May 13, 2010.
Soon thereafter, private respondents Robelito V. Picar, Wilma P. Pagaduan 7 and Luis M.
Bautista,8 (private respondents) all registered voters of Caba, La Union, filed separate
petitions for quo warranto questioning the petitioner’s eligibility before the RTC. The
petitions similarly sought the petitioner’s disqualification from holding her elective post on
the ground that she is a dual citizen and that she failed to execute a "personal and sworn
renunciation of any and all foreign citizenship before any public officer authorized to
administer an oath" as imposed by Section 5(2) of R.A. No. 9225.
The petitioner denied being a dual citizen and averred that since September 27, 2006, she
ceased to be an Australian citizen. She claimed that the Declaration of Renunciation of
Australian Citizenship she executed in Australia sufficiently complied with Section 5(2), R.A.
No. 9225 and that her act of running for public office is a clear abandonment of her
Australian citizenship.
Ruling of the RTC
In its consolidated Decision dated October 22, 2010, the trial court held that the petitioner’s
failure to comply with Section 5(2) of R.A. No. 9225 rendered her ineligible to run and hold
public office. As admitted by the petitioner herself during trial, the personal declaration of
renunciation she filed in Australia was not under oath. The law clearly mandates that the
document containing the renunciation of foreign citizenship must be sworn before any public
officer authorized to administer oath. Consequently, the RTC’s decision disposed as follows:
WHEREFORE, premises considered, the Court renders judgment in FAVOR of [private I. An appeal may be simultaneously
respondents] and AGAINST (petitioner): reinstated and definitively resolved
by the COMELEC en banc in a
resolution disposing of a motion for
1) DECLARING [petitioner] TEODORA SOBEJANA-CONDON, disqualified and ineligible to hold reconsideration.
the office of Vice-Mayor of Caba, La Union;

The power to decide motions for reconsideration in election cases is arrogated unto the
2) NULLIFYING her proclamation as the winning candidate for Vice-Mayor of said COMELEC en banc by Section 3, Article IX-C of the Constitution, viz:
municipality; and

Sec. 3. The Commission on Elections may sit en banc or in two divisions, and shall promulgate
3) DECLARING the position of Vice-Mayor in said municipality vacant. its rules of procedure in order to expedite disposition of election cases, including pre-
proclamation controversies. All such election cases shall be heard and decided in division,
SO ORDERED.9 provided that motions for reconsideration of decisions shall be decided by the Commission
en banc.

Ruling of the COMELEC

The petitioner appealed to the COMELEC but the appeal was dismissed by the Second
Division in its Order10 dated November 30, 2010 for failure to pay the docket fees within the
prescribed period. On motion for reconsideration, the appeal was reinstated by the
COMELEC en banc in its Resolution11 dated September 6, 2011. In the same issuance, the
substantive merits of the appeal were given due course. The COMELEC en banc concurred
with the findings and conclusions of the RTC; it also granted the Motion for Execution
Pending Appeal filed by the private respondents.
The decretal portion of the resolution reads:
A complementary provision is present in Section 5(c), Rule 3 of the COMELEC Rules of
Procedure, to wit:
Any motion to reconsider a decision, resolution, order or ruling of a Division shall be resolved
by the Commission en banc except motions on interlocutory orders of the division which
shall be resolved by the division which issued the order.
Considering that the above cited provisos do not set any limits to the COMELEC en banc’s
prerogative in resolving a motion for reconsideration, there is nothing to prevent the body
from directly adjudicating the substantive merits of an appeal after ruling for its
reinstatement instead of remanding the same to the division that initially dismissed it.

WHEREFORE, premises considered the Commission RESOLVED as it hereby RESOLVES as

follows: We thus see no impropriety much more grave abuse of discretion on the part of the
COMELEC en banc when it proceeded to decide the substantive merits of the petitioner’s
appeal after ruling for its reinstatement.
1. To DISMISS the instant appeal for lack of merit;

2. To AFFIRM the DECISION dated 22 October 2010 of the court a quo; and
3. To GRANT the Motion for Execution filed on November 12, 2010.
SO ORDERED.12 (Emphasis supplied)
Further, records show that, in her motion for reconsideration before the COMELEC en banc,
the petitioner not only proffered arguments on the issue on docket fees but also on the issue
of her eligibility. She even filed a supplemental motion for reconsideration attaching
therewith supporting documents13 to her contention that she is no longer an Australian
citizen. The petitioner, after obtaining an unfavorable decision, cannot be permitted to
disavow the en banc’s exercise of discretion on the substantial merits of her appeal when
she herself invoked the same in the first place.

Hence, the present petition ascribing grave abuse of discretion to the COMELEC en banc.
The Petitioner’s Arguments
The petitioner contends that since she ceased to be an Australian citizen on September 27,
2006, she no longer held dual citizenship and was only a Filipino citizen when she filed her
certificate of candidacy as early as the 2007 elections. Hence, the "personal and sworn
renunciation of foreign citizenship" imposed by Section 5(2) of R.A. No. 9225 to dual citizens
seeking elective office does not apply to her.
The fact that the COMELEC en banc had remanded similar appeals to the Division that
initially dismissed them cannot serve as a precedent to the disposition of the petitioner’s
appeal. A decision or resolution of any adjudicating body can be disposed in several ways. To
sustain petitioner’s argument would be virtually putting a straightjacket on the COMELEC en
banc’s adjudicatory powers.
More significantly, the remand of the appeal to the COMELEC Second Division would be
unnecessarily circuitous and repugnant to the rule on preferential disposition of quo
warranto cases espoused in Rule 36, Section 15 of the COMELEC Rules of Procedure. 14

II. The COMELEC en banc has the

She further argues that a sworn renunciation is a mere formal and not a mandatory power to order discretionary
requirement. In support thereof, she cites portions of the Journal of the House of execution of judgment.
Representatives dated June 2 to 5, 2003 containing the sponsorship speech for House Bill
(H.B.) No. 4720, the precursor of R.A. No. 9225.
We cannot subscribe to petitioner’s submission that the COMELEC en banc has no power to
order the issuance of a writ of execution and that such function belongs only to the court of
She claims that the private respondents are estopped from questioning her eligibility since origin.
they failed to do so when she filed certificates of candidacy for the 2007 and 2010 elections.

There is no reason to dispute the COMELEC’s authority to order discretionary execution of

Lastly, she disputes the power of the COMELEC en banc to: (a) take cognizance of the judgment in view of the fact that the suppletory application of the Rules of Court is expressly
substantive merits of her appeal instead of remanding the same to the COMELEC Second sanctioned by Section 1, Rule 41 of the COMELEC Rules of Procedure. 15
Division for the continuation of the appeal proceedings; and (b) allow the execution pending
appeal of the RTC’s judgment.
Under Section 2, Rule 39 of the Rules of Court, execution pending appeal may be issued by
an appellate court after the trial court has lost jurisdiction. In Batul v. Bayron, 16 we stressed
The Issues the import of the provision vis-à-vis election cases when we held that judgments in election
cases which may be executed pending appeal includes those decided by trial courts and
those rendered by the COMELEC whether in the exercise of its original or appellate
Posed for resolution are the following issues: I) Whether the COMELEC en banc may resolve
jurisdiction.
the merits of an appeal after ruling on its reinstatement; II) Whether the COMELEC en banc
may order the execution of a judgment rendered by a trial court in an election case; III)
Whether the private respondents are barred from questioning the qualifications of the III. Private respondents are not
petitioner; and IV) For purposes of determining the petitioner’s eligibility to run for public estopped from questioning
office, whether the "sworn renunciation of foreign citizenship" in Section 5(2) of R.A. No. petitioner’s eligibility to hold public
9225 is a mere pro-forma requirement. office.

The Court’s Ruling

The fact that the petitioner’s qualifications were not questioned when she filed certificates
of candidacy for 2007 and 2010 elections cannot operate as an estoppel to the petition for
quo warranto before the RTC.
Under the Batas Pambansa Bilang 881 (Omnibus Election Code), there are two instances
where a petition questioning the qualifications of a registered candidate to run for the office
for which his certificate of candidacy was filed can be raised, to wit:
(1) Before election, pursuant to Section 78 thereof which provides that:
Sec. 78. Petition to deny due course or to cancel a certificate of candidacy. – A verified
petition seeking to deny due course or to cancel a certificate of candidacy may be filed by
any person exclusively on the ground that any material representation contained therein as
required under Section 74 hereof is false. The petition may be filed at any time not later than
twenty-five days from the time of the filing of the certificate of candidacy and shall be
decided, after due notice and hearing, not later than fifteen days before the election; and
(2) After election, pursuant to Section 253 thereof, viz:
Sec. 253. Petition for quo warranto. – Any voter contesting the election of any Member of
the Batasang Pambansa, regional, provincial, or city officer on the ground of ineligibility or of
disloyalty to the Republic of the Philippines shall file a sworn petition for quo warranto with
the Commission within ten days after the proclamation of the results of the election.
(Emphasis ours)
Hence, if a person qualified to file a petition to disqualify a certain candidate fails to file the
petition within the twenty-five (25)-day period prescribed by Section 78 of the Omnibus
Election Code for whatever reasons, the elections laws do not leave him completely helpless
as he has another chance to raise the disqualification of the candidate by filing a petition for
quo warranto within ten (10) days from the proclamation of the results of the election, as
provided under Section 253 of the Omnibus Election Code. 17
The above remedies were both available to the private respondents and their failure to
utilize Section 78 of the Omnibus Election Code cannot serve to bar them should they opt to
file, as they did so file, a quo warranto petition under Section 253.
IV. Petitioner is disqualified from
running for elective office for
failure to renounce her Australian
citizenship in accordance with
Section 5(2) of R.A. No. 9225.
R.A. No. 9225 allows the retention and re-acquisition of Filipino citizenship for natural-born
citizens who have lost their Philippine citizenship18 by taking an oath of allegiance to the
Republic, thus:
Section 3. Retention of Philippine Citizenship. – Any provision of law to the contrary
notwithstanding, natural-born citizens of the Philippines who have lost their Philippine
citizenship by reason of their naturalization as citizens of a foreign country are hereby
deemed to have re-acquired Philippine citizenship upon taking the following oath of
allegiance to the Republic:
"I, _____________________, solemnly swear (or affirm) that I will support and
defend the Constitution of the Republic of the Philippines and obey the laws and
legal orders promulgated by the duly constituted authorities of the Philippines;
and I hereby declare that I recognize and accept the supreme authority of the
Philippines and will maintain true faith and allegiance thereto; and that I
imposed this obligation upon myself voluntarily without mental reservation or
purpose of evasion."
Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens
of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.
The oath is an abbreviated repatriation process that restores one’s Filipino citizenship and all
civil and political rights and obligations concomitant therewith, subject to certain conditions
imposed in Section 5, viz:
Sec. 5. Civil and Political Rights and Liabilities. – Those who retain or re-acquire Philippine
citizenship under this Act shall enjoy full civil and political rights and be subject to all
attendant liabilities and responsibilities under existing laws of the Philippines and the
following conditions:
(1) Those intending to exercise their right of suffrage must meet the requirements under
Section 1, Article V of the Constitution, Republic Act No. 9189, otherwise known as "The
Overseas Absentee Voting Act of 2003" and other existing laws;
(2) Those seeking elective public office in the Philippines shall meet the qualification for
holding such public office as required by the Constitution and existing laws and, at the time
of the filing of the certificate of candidacy, make a personal and sworn renunciation of any
and all foreign citizenship before any public officer authorized to administer an oath;
(3) Those appointed to any public office shall subscribe and swear to an oath of allegiance to
the Republic of the Philippines and its duly constituted authorities prior to their assumption
of office: Provided, That they renounce their oath of allegiance to the country where they
took that oath;
(4) Those intending to practice their profession in the Philippines shall apply with the proper
authority for a license or permit to engage in such practice; and
(5) That right to vote or be elected or appointed to any public office in the Philippines cannot
be exercised by, or extended to, those who:
(a) are candidates for or are occupying any public office in the country of which they are
naturalized citizens; and/or
(b) are in active service as commissioned or non-commissioned officers in the armed forces
of the country which they are naturalized citizens. (Emphasis ours)
Under the provisions of the aforementioned law, the petitioner has validly re-acquired her
Filipino citizenship when she took an Oath of Allegiance to the Republic of the Philippines on
December 5, 2005. At that point, she held dual citizenship, i.e., Australian and Philippine.
On September 18, 2006, or a year before she initially sought elective public office, she filed a
renunciation of Australian citizenship in Canberra, Australia. Admittedly, however, the same
was not under oath contrary to the exact mandate of Section 5(2) that the renunciation of
foreign citizenship must be sworn before an officer authorized to administer oath.
To obviate the fatal consequence of her inutile renunciation, the petitioner pleads the Court
to interpret the "sworn renunciation of any and all foreign citizenship" in Section 5(2) to be a
mere pro forma requirement in conformity with the intent of the Legislature. She anchors
her submission on the statement made by Representative Javier during the floor
deliberations on H.B. No. 4720, the precursor of R.A. No. 9225.
At the outset, it bears stressing that the Court’s duty to interpret the law according to its true
intent is exercised only when the law is ambiguous or of doubtful meaning. The first and
fundamental duty of the Court is to apply the law. As such, when the law is clear and free
from any doubt, there is no occasion for construction or interpretation; there is only room
for application.19 Section 5(2) of R.A. No. 9225 is one such instance.
Ambiguity is a condition of admitting two or more meanings, of being understood in more
than one way, or of referring to two or more things at the same time. For a statute to be
considered ambiguous, it must admit of two or more possible meanings. 20
The language of Section 5(2) is free from any ambiguity. In Lopez v. COMELEC, 21 we declared
its categorical and single meaning: a Filipino American or any dual citizen cannot run for any
elective public position in the Philippines unless he or she personally swears to a
renunciation of all foreign citizenship at the time of filing the certificate of candidacy. We
also expounded on the form of the renunciation and held that to be valid, the renunciation
must be contained in an affidavit duly executed before an officer of the law who is
authorized to administer an oath stating in clear and unequivocal terms that affiant is
renouncing all foreign citizenship.
The same meaning was emphasized in Jacot v. Dal,22 when we held that Filipinos re-acquiring
or retaining their Philippine citizenship under R.A. No. 9225 must explicitly renounce their
foreign citizenship if they wish to run for elective posts in the Philippines, thus:
The law categorically requires persons seeking elective public office, who either retained
their Philippine citizenship or those who reacquired it, to make a personal and sworn
renunciation of any and all foreign citizenship before a public officer authorized to
administer an oath simultaneous with or before the filing of the certificate of candidacy.
Hence, Section 5(2) of Republic Act No. 9225 compels natural-born Filipinos, who have been
naturalized as citizens of a foreign country, but who reacquired or retained their Philippine
citizenship (1) to take the oath of allegiance under Section 3 of Republic Act No. 9225, and
(2) for those seeking elective public offices in the Philippines, to additionally execute a
personal and sworn renunciation of any and all foreign citizenship before an authorized
public officer prior or simultaneous to the filing of their certificates of candidacy, to qualify as
candidates in Philippine elections.
Clearly Section 5(2) of Republic Act No. 9225 (on the making of a personal and sworn
renunciation of any and all foreign citizenship) requires of the Filipinos availing themselves of
the benefits under the said Act to accomplish an undertaking other than that which they
have presumably complied with under Section 3 thereof (oath of allegiance to the Republic
of the Philippines). This is made clear in the discussion of the Bicameral Conference
Committee on Disagreeing Provisions of House Bill No. 4720 and Senate Bill No. 2130 held on
18 August 2003 (precursors of Republic Act No. 9225), where the Hon. Chairman Franklin
Drilon and Hon. Representative Arthur Defensor explained to Hon. Representative Exequiel
Javier that the oath of allegiance is different from the renunciation of foreign citizenship;
xxxx
The intent of the legislators was not only for Filipinos reacquiring or retaining their Philippine
citizenship under Republic Act No. 9225 to take their oath of allegiance to the Republic of the
Philippines, but also to explicitly renounce their foreign citizenship if they wish to run for
elective posts in the Philippines. To qualify as a candidate in Philippine elections, Filipinos
must only have one citizenship, namely, Philippine citizenship. 23 (Citation omitted and italics
and underlining ours)
Hence, in De Guzman v. COMELEC,24 we declared petitioner therein to be disqualified from
running for the position of vice-mayor for his failure to make a personal and sworn
renunciation of his American citizenship.
We find no reason to depart from the mandatory nature infused by the above rulings to the
phrase "sworn renunciation". The language of the provision is plain and unambiguous. It
expresses a single, definite, and sensible meaning and must thus be read literally. 25 The
foreign citizenship must be formally rejected through an affidavit duly sworn before an
officer authorized to administer oath.
It is conclusively presumed to be the meaning that the Legislature has intended to
convey.26 Even a resort to the Journal of the House of Representatives invoked by the
petitioner leads to the same inference, viz:
INTERPELLATION OF REP. JAVIER
Rep. Javier initially inquired whether under the Bill, dual citizenship is only limited to natural-
born Filipinos and not to naturalized Filipinos.
Rep. Libanan replied in the affirmative.
Rep. Javier subsequently adverted to Section 5 of the Bill which provides that natural-born
Filipinos who have dual citizenship shall continue to enjoy full civil and political rights. This
being the case, he sought clarification as to whether they can indeed run for public office
provided that they renounce their foreign citizenship.
Rep. Libanan replied in the affirmative, citing that these citizens will only have to make a
personal and sworn renunciation of foreign citizenship before any authorized public officer.
Rep. Javier sought further clarification on this matter, citing that while the Bill provides them
with full civil and political rights as Filipino citizens, the measure also discriminates against
them since they are required to make a sworn renunciation of their other foreign citizenship
if and when they run for public office. He thereafter proposed to delete this particular
provision.
In his rejoinder, Rep. Libanan explained that this serves to erase all doubts regarding any
issues that might be raised pertaining to the citizenship of any candidate. He subsequently
cited the case of Afroyim vs. Rusk, wherein the United States considered a naturalized
American still as an American citizen even when he cast his vote in Israel during one of its
elections.
Rep. Javier however pointed out that the matter of voting is different because in voting, one
is not required to renounce his foreign citizenship. He pointed out that under the Bill,
Filipinos who run for public office must renounce their foreign citizenship. He pointed out
further that this is a contradiction in the Bill.
Thereafter, Rep. Javier inquired whether Filipino citizens who had acquired foreign
citizenship and are now entitled to reacquire their Filipino citizenship will be considered as
natural-born citizens. As such, he likewise inquired whether they will also be considered
qualified to run for the highest elective positions in the country.
Rep. Libanan replied in the affirmative, citing that the only requirement is that they make a
sworn renunciation of their foreign citizenship and that they comply with the residency and
registration requirements as provided for in the Constitution.
Whereupon, Rep. Javier noted that under the Constitution, natural-born citizens are those
who are citizens at the time of birth without having to perform an act to complete or perfect
his/her citizenship.
Rep. Libanan agreed therewith, citing that this is the reason why the Bill seeks the repeal of
CA No. 63. The repeal, he said, would help Filipino citizens who acquired foreign citizenship
to retain their citizenship. With regard then to Section 5 of the Bill, he explained that the
Committee had decided to include this provision because Section 18, Article XI of the
Constitution provides for the accountability of public officers.
In his rejoinder, Rep. Javier maintained that in this case, the sworn renunciation of a foreign
citizenship will only become a pro forma requirement.
On further queries of Rep. Javier, Rep. Libanan affirmed that natural-born Filipino citizens
who became foreign citizens and who have reacquired their Filipino citizenship under the Bill
will be considered as natural-born citizens, and therefore qualified to run for the presidency,
the vice-presidency or for a seat in Congress. He also agreed with the observation of Rep.
Javier that a natural-born citizen is one who is a citizen of the country at the time of birth. He
also explained that the Bill will, in effect, return to a Filipino citizen who has acquired foreign
citizenship, the status of being a natural-born citizen effective at the time he lost his Filipino
citizenship.
As a rejoinder, Rep. Javier opined that doing so would be discriminating against naturalized
Filipino citizens and Filipino citizens by election who are all disqualified to run for certain
public offices. He then suggested that the Bill be amended by not considering as natural-born
citizens those Filipinos who had renounced their Filipino citizenship and acquired foreign
citizenship. He said that they should be considered as repatriated citizens.
In reply, Rep. Libanan assured Rep. Javier that the Committee will take note of the latter’s
comments on the matter. He however stressed that after a lengthy deliberation on the
subject, the Committees on Justice, and Foreign Affairs had decided to revert back to the
status of being natural-born citizens those natural-born Filipino citizens who had acquired
foreign citizenship but now wished to reacquire their Filipino citizenship.
Rep. Javier then explained that a Filipina who loses her Filipino citizenship by virtue of her
marriage to a foreigner can regain her repatriated Filipino citizenship, upon the death of her
husband, by simply taking her oath before the Department of Justice (DOJ).
Rep. Javier said that he does not oppose the Bill but only wants to be fair to other Filipino
citizens who are not considered natural-born. He reiterated that natural-born Filipino citizens
who had renounced their citizenship by pledging allegiance to another sovereignty should
not be allowed to revert back to their status of being natural-born citizens once they decide
to regain their Filipino citizenship. He underscored that this will in a way allow such Filipinos
to enjoy dual citizenship.
On whether the Sponsors will agree to an amendment incorporating the position of Rep.
Javier, Rep. Libanan stated that this will defeat the purpose of the Bill.
Rep. Javier disagreed therewith, adding that natural-born Filipino citizens who acquired
foreign citizenships and later decided to regain their Filipino citizenship, will be considered as
repatriated citizens.
Rep. Libanan cited the case of Bengzon vs. HRET wherein the Supreme Court had ruled that
only naturalized Filipino citizens are not considered as natural-born citizens.
In reaction, Rep. Javier clarified that only citizens by election or those whose mothers are
Filipino citizens under the 1935 Constitution and who elected Filipino citizenship upon
reaching the age of maturity, are not deemed as natural-born citizens.
In response, Rep. Libanan maintained that in the Bengzon case, repatriation results in the
recovery of one’s original nationality and only naturalized citizens are not considered as
natural-born citizens.
On whether the Sponsors would agree to not giving back the status of being natural-born
citizens to natural-born Filipino citizens who acquired foreign citizenship, Rep. Libanan
remarked that the Body in plenary session will decide on the matter.27
The petitioner obviously espouses an isolated reading of Representative Javier’s statement;
she conveniently disregards the preceding and succeeding discussions in the records.
The above-quoted excerpts of the legislative record show that Representative Javier’s
statement ought to be understood within the context of the issue then being discussed, that
is – whether former natural-born citizens who re-acquire their Filipino citizenship under the
proposed law will revert to their original status as natural-born citizens and thus be qualified
to run for government positions reserved only to natural-born Filipinos, i.e. President, Vice-
President and Members of the Congress.
It was Representative Javier’s position that they should be considered as repatriated Filipinos
and not as natural-born citizens since they will have to execute a personal and sworn
renunciation of foreign citizenship. Natural-born citizens are those who need not perform an
act to perfect their citizenship. Representative Libanan, however, maintained that they will
revert to their original status as natural-born citizens. To reconcile the renunciation imposed
by Section 5(2) with the principle that natural-born citizens are those who need not perform
any act to perfect their citizenship, Representative Javier suggested that the sworn
renunciation of foreign citizenship be considered as a mere pro forma requirement.
Petitioner’s argument, therefore, loses its point. The "sworn renunciation of foreign
citizenship" must be deemed a formal requirement only with respect to the re-acquisition of
one’s status as a natural-born Filipino so as to override the effect of the principle that
natural-born citizens need not perform any act to perfect their citizenship. Never was it
mentioned or even alluded to that, as the petitioner wants this Court to believe, those who
re-acquire their Filipino citizenship and thereafter run for public office has the option of
executing an unsworn affidavit of renunciation.
It is also palpable in the above records that Section 5 was intended to complement Section
18, Article XI of the Constitution on public officers’ primary accountability of allegiance and
loyalty, which provides:
Sec. 18. – Public officers and employees owe the State and this Constitution allegiance at all
times and any public officer or employee who seeks to change his citizenship or acquire the
status of an immigrant of another country during his tenure shall be dealt with by law.
An oath is a solemn declaration, accompanied by a swearing to God or a revered person or
thing, that one’s statement is true or that one will be bound to a promise. The person making
the oath implicitly invites punishment if the statement is untrue or the promise is broken.
The legal effect of an oath is to subject the person to penalties for perjury if the testimony is
false.28
Indeed, the solemn promise, and the risk of punishment attached to an oath ensures
truthfulness to the prospective public officer’s abandonment of his adopted state and
promise of absolute allegiance and loyalty to the Republic of the Philippines.
To hold the oath to be a mere pro forma requirement is to say that it is only for ceremonial
purposes; it would also accommodate a mere qualified or temporary allegiance from
government officers when the Constitution and the legislature clearly demand otherwise.
Petitioner contends that the Australian Citizenship Act of 1948, under which she is already
deemed to have lost her citizenship, is entitled to judicial notice. We disagree.
Foreign laws are not a matter of judicial notice. Like any other fact, they must be alleged and
proven.29 To prove a foreign law, the party invoking it must present a copy thereof and
comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:
Sec. 24. Proof of official record. – The record of public documents referred to in paragraph (a)
of Section 19, when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that
such officer has the custody. If the office in which the record is kept is in a foreign country,
the certificate may be made by a secretary of the embassy or legation, consul general,
consul, vice- consul, or consular agent or by any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept, and authenticated by
the seal of his office. (Emphasis ours)
Sec. 25. What attestation of copy must state. – Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state, in substance, that the
copy is a correct copy of the original, or a specific part thereof, as the case may be. The
attestation must be under the official seal of the attesting officer, if there be any, or if he be
the clerk of a court having a seal, under the seal of such court.
The Court has admitted certain exceptions to the above rules and held that the existence of a
foreign law may also be established through: (1) a testimony under oath of an expert witness
such as an attorney-at-law in the country where the foreign law operates wherein he quotes
verbatim a section of the law and states that the same was in force at the time material to
the facts at hand; and (2) likewise, in several naturalization cases, it was held by the Court
that evidence of the law of a foreign country on reciprocity regarding the acquisition of
citizenship, although not meeting the prescribed rule of practice, may be allowed and used
as basis for favorable action, if, in the light of all the circumstances, the Court is "satisfied of
the authenticity of the written proof offered." Thus, in a number of decisions, mere
authentication of the Chinese Naturalization Law by the Chinese Consulate General of Manila
was held to be a competent proof of that law. 30
The petitioner failed to prove the Australian Citizenship Act of 1948 through any of the above
methods. As uniformly observed by the RTC and COMELEC, the petitioner failed to show
proof of the existence of the law during trial. Also, the letter issued by the Australian
government showing that petitioner already renounced her Australian citizenship was
unauthenticated hence, the courts a quo acted judiciously in disregarding the same.
We are bound to arrive at a similar conclusion even if we were to admit as competent
evidence the said letter in view of the photocopy of a Certificate of Authentication issued by
Consular Section of the Philippine Embassy in Canberra, Australia attached to the petitioner’s
motion for reconsideration.
We have stressed in Advocates and Adherents of Social Justice for School Teachers and Allied
Workers (AASJS) Member v. Datumanong31 that the framers of R.A. No. 9225 did not intend
the law to concern itself with the actual status of the other citizenship.
This Court as the government branch tasked to apply the enactments of the legislature must
do so conformably with the wisdom of the latter sans the interference of any foreign law. If
we were to read the Australian Citizen Act of 1948 into the application and operation of R.A.
No. 9225, we would be applying not what our legislative department has deemed wise to
require. To do so would be a brazen encroachment upon the sovereign will and power of the
people of this Republic.32
The petitioner’s act of running for public office does not suffice to serve as an effective
renunciation of her Australian citizenship. While this Court has previously declared that the
filing by a person with dual citizenship of a certificate of candidacy is already considered a
renunciation of foreign citizenship,33 such ruling was already adjudged superseded by the
enactment of R.A. No. 9225 on August 29, 2003 which provides for the additional condition
of a personal and sworn renunciation of foreign citizenship.34
The fact that petitioner won the elections can not cure the defect of her candidacy.
Garnering the most number of votes does not validate the election of a disqualified
candidate because the application of the constitutional and statutory provisions on
disqualification is not a matter of popularity. 35
In fine, R.A. No. 9225 categorically demands natural-born Filipinos who re-acquire their
citizenship and seek elective office, to execute a personal and sworn renunciation of any and
all foreign citizenships before an authorized public officer prior to or simultaneous to the
filing of their certificates of candidacy, to qualify as candidates in Philippine elections. 36 The
rule applies to all those who have re-acquired their Filipino citizenship, like petitioner,
without regard as to whether they are still dual citizens or not. It is a pre-requisite imposed
for the exercise of the right to run for public office.
Stated differently, it is an additional qualification for elective office specific only to Filipino
citizens who re-acquire their citizenship under Section 3 of R.A. No. 9225. It is the operative
act that restores their right to run for public office. The petitioner's failure to comply
therewith in accordance with the exact tenor of the law, rendered ineffectual the
Declaration of Renunciation of Australian Citizenship she executed on September 18, 2006.
As such, she is yet to regain her political right to seek elective office. Unless she executes a
sworn renunciation of her Australian citizenship, she is ineligible to run for and hold any
elective office in the Philippines.
WHEREFORE, in view of all the foregoing, the petition is hereby DISMISSED. The Resolution
dated September 6, 2011 of the Commission on Elections en bane in EAC (AE) No. A-44-2010
is AFFIRMED in toto.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 195649 April 16, 2013
CASAN MACODE MAQUILING, Petitioner,
vs.
COMMISSION ON ELECTIONS, ROMMEL ARNADO y CAGOCO, LINOG G.
BALUA, Respondents.
DECISION
SERENO, CJ.:
THE CASE
This is a Petition for Certiorari ender Rule 64 in conjunction with Rule 65 of the Rules of Court
to review the Resolutions of the Commission on Elections (COMELEC). The Resolution1 in SPA
No. 10-1 09(DC) of the COMELEC First Division dated 5 October 201 0 is being assailed for
applying Section 44 of the Local Government Code while the Resolution2 of the COMELEC En
Banc dated 2 February 2011 is being questioned for finding that respondent Rommel Arnado
y Cagoco (respondent Arnado/Arnado) is solely a Filipino citizen qualified to run for public
office despite his continued use of a U.S. passport.
FACTS
Respondent Arnado is a natural born Filipino citizen. 3 However, as a consequence of his
subsequent naturalization as a citizen of the United States of America, he lost his Filipino
citizenship. Arnado applied for repatriation under Republic Act (R.A.) No. 9225 before the
Consulate General of the Philippines in San Franciso, USA and took the Oath of Allegiance to
the Republic of the Philippines on 10 July 2008. 4 On the same day an Order of Approval of his
Citizenship Retention and Re-acquisition was issued in his favor. 5
The aforementioned Oath of Allegiance states:
I, Rommel Cagoco Arnado, solemnly swear that I will support and defend the Constitution of
the Republic of the Philippines and obey the laws and legal orders promulgated by the duly
constituted authorities of the Philippines and I hereby declare that I recognize and accept the
supreme authority of the Philippines and will maintain true faith and allegiance thereto; and
that I impose this obligation upon myself voluntarily without mental reservation or purpose
of evasion.6
On 3 April 2009 Arnado again took his Oath of Allegiance to the Republic and executed an
Affidavit of Renunciation of his foreign citizenship, which states:
I, Rommel Cagoco Arnado, do solemnly swear that I absolutely and perpetually renounce all
allegiance and fidelity to the UNITED STATES OF AMERICA of which I am a citizen, and I divest
myself of full employment of all civil and political rights and privileges of the United States of
America.
I solemnly swear that all the foregoing statement is true and correct to the best of my
knowledge and belief.7
On 30 November 2009, Arnado filed his Certificate of Candidacy for Mayor of Kauswagan,
Lanao del Norte, which contains, among others, the following statements:
I am a natural born Filipino citizen / naturalized Filipino citizen.
I am not a permanent resident of, or immigrant to, a foreign country.
I am eligible for the office I seek to be elected to.
I will support and defend the Constitution of the Republic of the Philippines and will maintain
true faith and allegiance thereto. I will obey the laws, legal orders and decrees promulgated
by the duly constituted authorities.
I impose this obligation upon myself voluntarily without mental reservation or purpose of
evasion.8
On 28 April 2010, respondent Linog C. Balua (Balua), another mayoralty candidate, filed a
petition to disqualify Arnado and/or to cancel his certificate of candidacy for municipal
mayor of Kauswagan, Lanao del Norte in connection with the 10 May 2010 local and national
elections.9
Respondent Balua contended that Arnado is not a resident of Kauswagan, Lanao del Norte
and that he is a foreigner, attaching thereto a certification issued by the Bureau of
Immigration dated 23 April 2010 indicating the nationality of Arnado as "USA-American."10To
further bolster his claim of Arnado’s US citizenship, Balua presented in his Memorandum a
computer-generated travel record11 dated 03 December 2009 indicating that Arnado has
been using his US Passport No. 057782700 in entering and departing the Philippines. The said
record shows that Arnado left the country on 14 April 2009 and returned on 25 June 2009,
and again departed on 29 July 2009, arriving back in the Philippines on 24 November 2009.
Balua likewise presented a certification from the Bureau of Immigration dated 23 April 2010,
certifying that the name "Arnado, Rommel Cagoco" appears in the available Computer
Database/Passenger manifest/IBM listing on file as of 21 April 2010, with the following
pertinent travel records:
DATE OF Arrival : 01/12/2010
NATIONALITY : USA-AMERICAN
PASSPORT : 057782700
DATE OF Arrival : 03/23/2010
NATIONALITY : USA-AMERICAN
PASSPORT : 05778270012
On 30 April 2010, the COMELEC (First Division) issued an Order 13 requiring the respondent to
personally file his answer and memorandum within three (3) days from receipt thereof.
After Arnado failed to answer the petition, Balua moved to declare him in default and to
present evidence ex-parte.
Neither motion was acted upon, having been overtaken by the 2010 elections where Arnado
garnered the highest number of votes and was subsequently proclaimed as the winning
candidate for Mayor of Kauswagan, Lanao del Norte.
It was only after his proclamation that Arnado filed his verified answer, submitting the
following documents as evidence: 14
1. Affidavit of Renunciation and Oath of Allegiance to the Republic of the
Philippines dated 03 April 2009;
2. Joint-Affidavit dated 31 May 2010 of Engr. Virgil Seno, Virginia Branzuela,
Leoncio Daligdig, and Jessy Corpin, all neighbors of Arnado, attesting that
Arnado is a long-time resident of Kauswagan and that he has been
conspicuously and continuously residing in his family’s ancestral house in
Kauswagan;
3. Certification from the Punong Barangay of Poblacion, Kauswagan, Lanao del
Norte dated 03 June 2010 stating that Arnado is a bona fide resident of his
barangay and that Arnado went to the United States in 1985 to work and
returned to the Philippines in 2009;
4. Certification dated 31 May 2010 from the Municipal Local Government
Operations Office of Kauswagan stating that Dr. Maximo P. Arnado, Sr. served as
Mayor of Kauswagan, from January 1964 to June 1974 and from 15 February
1979 to 15 April 1986; and
5. Voter Certification issued by the Election Officer of Kauswagan certifying that
Arnado has been a registered voter of Kauswagan since 03 April 2009.
THE RULING OF THE COMELEC FIRST DIVISION
Instead of treating the Petition as an action for the cancellation of a certificate of candidacy
based on misrepresentation,15 the COMELEC First Division considered it as one for
disqualification. Balua’s contention that Arnado is a resident of the United States was
dismissed upon the finding that "Balua failed to present any evidence to support his
contention,"16 whereas the First Division still could "not conclude that Arnado failed to meet
the one-year residency requirement under the Local Government Code." 17
In the matter of the issue of citizenship, however, the First Division disagreed with Arnado’s
claim that he is a Filipino citizen.18
We find that although Arnado appears to have substantially complied with the requirements
of R.A. No. 9225, Arnado’s act of consistently using his US passport after renouncing his US
citizenship on 03 April 2009 effectively negated his Affidavit of Renunciation.
xxxx
Arnado’s continued use of his US passport is a strong indication that Arnado had no real
intention to renounce his US citizenship and that he only executed an Affidavit of
Renunciation to enable him to run for office. We cannot turn a blind eye to the glaring
inconsistency between Arnado’s unexplained use of a US passport six times and his claim
that he re-acquired his Philippine citizenship and renounced his US citizenship. As noted by
the Supreme Court in the Yu case, "a passport is defined as an official document of identity
and nationality issued to a person intending to travel or sojourn in foreign countries." Surely,
one who truly divested himself of US citizenship would not continue to avail of privileges
reserved solely for US nationals.19
The dispositive portion of the Resolution rendered by the COMELEC
First Division reads:
WHEREFORE, in view of the foregoing, the petition for disqualification and/or to cancel the
certificate of candidacy of Rommel C. Arnado is hereby GRANTED. Rommel C. Arnado’s
proclamation as the winning candidate for Municipal Mayor of Kauswagan, Lanao del Nore is
hereby ANNULLED. Let the order of succession under Section 44 of the Local Government
Code of 1991 take effect.20
The Motion for Reconsideration and
the Motion for Intervention
Arnado sought reconsideration of the resolution before the COMELEC En Banc on the ground
that "the evidence is insufficient to justify the Resolution and that the said Resolution is
contrary to law."21 He raised the following contentions:22
1. The finding that he is not a Filipino citizen is not supported by the evidence
consisting of his Oath of Allegiance and the Affidavit of Renunciation, which
show that he has substantially complied with the requirements of R.A. No. 9225;
2. The use of his US passport subsequent to his renunciation of his American
citizenship is not tantamount to a repudiation of his Filipino citizenship, as he
did not perform any act to swear allegiance to a country other than the
Philippines;
3. He used his US passport only because he was not informed of the issuance of
his Philippine passport, and that he used his Philippine passport after he
obtained it;
4. Balua’s petition to cancel the certificate of candidacy of Arnado was filed out
of time, and the First Division’s treatment of the petition as one for
disqualification constitutes grave abuse of discretion amounting to excess of
jurisdiction;23
5. He is undoubtedly the people’s choice as indicated by his winning the
elections;
6. His proclamation as the winning candidate ousted the COMELEC from
jurisdiction over the case; and
7. The proper remedy to question his citizenship is through a petition for quo
warranto, which should have been filed within ten days from his proclamation.
Petitioner Casan Macode Maquiling (Maquiling), another candidate for mayor of Kauswagan,
and who garnered the second highest number of votes in the 2010 elections, intervened in
the case and filed before the COMELEC En Banc a Motion for Reconsideration together with
an Opposition to Arnado’s Amended Motion for Reconsideration. Maquiling argued that
while the First Division correctly disqualified Arnado, the order of succession under Section
44 of the Local Government Code is not applicable in this case. Consequently, he claimed
that the cancellation of Arnado’s candidacy and the nullification of his proclamation,
Maquiling, as the legitimate candidate who obtained the highest number of lawful votes,
should be proclaimed as the winner.
Maquiling simultaneously filed his Memorandum with his Motion for Intervention and his
Motion for Reconsideration. Arnado opposed all motions filed by Maquiling, claiming that
intervention is prohibited after a decision has already been rendered, and that as a second-
placer, Maquiling undoubtedly lost the elections and thus does not stand to be prejudiced or
benefitted by the final adjudication of the case.
RULING OF THE COMELEC EN BANC
In its Resolution of 02 February 2011, the COMELEC En Banc held that under Section 6 of
Republic Act No. 6646, the Commission "shall continue with the trial and hearing of the
action, inquiry or protest even after the proclamation of the candidate whose qualifications
for office is questioned."
As to Maquiling’s intervention, the COMELEC En Banc also cited Section 6 of R.A. No. 6646
which allows intervention in proceedings for disqualification even after elections if no final
judgment has been rendered, but went on further to say that Maquiling, as the second
placer, would not be prejudiced by the outcome of the case as it agrees with the dispositive
portion of the Resolution of the First Division allowing the order of succession under Section
44 of the Local Government Code to take effect.
The COMELEC En Banc agreed with the treatment by the First Division of the petition as one
for disqualification, and ruled that the petition was filed well within the period prescribed by
law,24 having been filed on 28 April 2010, which is not later than 11 May 2010, the date of
proclamation.
However, the COMELEC En Banc reversed and set aside the ruling of the First Division and
granted Arnado’s Motion for Reconsideration, on the following premises:
First:
By renouncing his US citizenship as imposed by R.A. No. 9225, the respondent embraced his
Philippine citizenship as though he never became a citizen of another country. It was at that
time, April 3, 2009, that the respondent became a pure Philippine Citizen again.
xxxx
The use of a US passport … does not operate to revert back his status as a dual citizen prior
to his renunciation as there is no law saying such. More succinctly, the use of a US passport
does not operate to "un-renounce" what he has earlier on renounced. The First Division’s
reliance in the case of In Re: Petition for Habeas Corpus of Willy Yu v. Defensor-Santiago, et
al. is misplaced. The petitioner in the said case is a naturalized citizen who, after taking his
oath as a naturalized Filipino, applied for the renewal of his Portuguese passport. Strict policy
is maintained in the conduct of citizens who are not natural born, who acquire their
citizenship by choice, thus discarding their original citizenship. The Philippine State expects
strict conduct of allegiance to those who choose to be its citizens. In the present case,
respondent is not a naturalized citizen but a natural born citizen who chose greener pastures
by working abroad and then decided to repatriate to supposedly help in the progress of
Kauswagan. He did not apply for a US passport after his renunciation. Thus the mentioned
case is not on all fours with the case at bar.
xxxx
The respondent presented a plausible explanation as to the use of his US passport. Although
he applied for a Philippine passport, the passport was only issued on June 18, 2009.
However, he was not notified of the issuance of his Philippine passport so that he was
actually able to get it about three (3) months later. Yet as soon as he was in possession of his
Philippine passport, the respondent already used the same in his subsequent travels abroad.
This fact is proven by the respondent’s submission of a certified true copy of his passport
showing that he used the same for his travels on the following dates: January 31, 2010, April
16, 2010, May 20, 2010, January 12, 2010, March 31, 2010 and June 4, 2010. This then shows
that the use of the US passport was because to his knowledge, his Philippine passport was
not yet issued to him for his use. As probably pressing needs might be undertaken, the
respondent used whatever is within his control during that time. 25
In his Separate Concurring Opinion, COMELEC Chairman Sixto Brillantes cited that the use of
foreign passport is not one of the grounds provided for under Section 1 of Commonwealth
Act No. 63 through which Philippine citizenship may be lost.
"The application of the more assimilative principle of continuity of citizenship is more
appropriate in this case. Under said principle, once a person becomes a citizen, either by
birth or naturalization, it is assumed that he desires to continue to be a citizen, and this
assumption stands until he voluntarily denationalizes or expatriates himself. Thus, in the
instant case respondent after reacquiring his Philippine citizenship should be presumed to
have remained a Filipino despite his use of his American passport in the absence of clear,
unequivocal and competent proof of expatriation. Accordingly, all doubts should be resolved
in favor of retention of citizenship."26
On the other hand, Commissioner Rene V. Sarmiento dissented, thus:
Respondent evidently failed to prove that he truly and wholeheartedly abandoned his
allegiance to the United States. The latter’s continued use of his US passport and enjoyment
of all the privileges of a US citizen despite his previous renunciation of the afore-mentioned
citizenship runs contrary to his declaration that he chose to retain only his Philippine
citizenship. Respondent’s submission with the twin requirements was obviously only for the
purpose of complying with the requirements for running for the mayoralty post in
connection with the May 10, 2010 Automated National and Local Elections.
Qualifications for elective office, such as citizenship, are continuing requirements; once any
of them is lost during his incumbency, title to the office itself is deemed forfeited. If a
candidate is not a citizen at the time he ran for office or if he lost his citizenship after his
election to office, he is disqualified to serve as such. Neither does the fact that respondent
obtained the plurality of votes for the mayoralty post cure the latter’s failure to comply with
the qualification requirements regarding his citizenship.
Since a disqualified candidate is no candidate at all in the eyes of the law, his having received
the highest number of votes does not validate his election. It has been held that where a
petition for disqualification was filed before election against a candidate but was adversely
resolved against him after election, his having obtained the highest number of votes did not
make his election valid. His ouster from office does not violate the principle of vox populi
suprema est lex because the application of the constitutional and statutory provisions on
disqualification is not a matter of popularity. To apply it is to breath[e] life to the sovereign
will of the people who expressed it when they ratified the Constitution and when they
elected their representatives who enacted the law.27
THE PETITION BEFORE THE COURT
Maquiling filed the instant petition questioning the propriety of declaring Arnado qualified to
run for public office despite his continued use of a US passport, and praying that Maquiling
be proclaimed as the winner in the 2010 mayoralty race in Kauswagan, Lanao del Norte.
Ascribing both grave abuse of discretion and reversible error on the part of the COMELEC En
Banc for ruling that Arnado is a Filipino citizen despite his continued use of a US passport,
Maquiling now seeks to reverse the finding of the COMELEC En Banc that Arnado is qualified
to run for public office.
Corollary to his plea to reverse the ruling of the COMELEC En Banc or to affirm the First
Division’s disqualification of Arnado, Maquiling also seeks the review of the applicability of
Section 44 of the Local Government Code, claiming that the COMELEC committed reversible
error in ruling that "the succession of the vice mayor in case the respondent is disqualified is
in order."
There are three questions posed by the parties before this Court which will be addressed
seriatim as the subsequent questions hinge on the result of the first.
The first question is whether or not intervention is allowed in a disqualification case.
The second question is whether or not the use of a foreign passport after renouncing foreign
citizenship amounts to undoing a renunciation earlier made.
A better framing of the question though should be whether or not the use of a foreign
passport after renouncing foreign citizenship affects one’s qualifications to run for public
office.
The third question is whether or not the rule on succession in the Local Government Code is
applicable to this case.
OUR RULING
Intervention of a rival candidate in a
disqualification case is proper when
there has not yet been any
proclamation of the winner.
Petitioner Casan Macode Maquiling intervened at the stage when respondent Arnado filed a
Motion for Reconsideration of the First Division Resolution before the COMELEC En Banc. As
the candidate who garnered the second highest number of votes, Maquiling contends that
he has an interest in the disqualification case filed against Arnado, considering that in the
event the latter is disqualified, the votes cast for him should be considered stray and the
second-placer should be proclaimed as the winner in the elections.
It must be emphasized that while the original petition before the COMELEC is one for
cancellation of the certificate of candidacy and / or disqualification, the COMELEC First
Division and the COMELEC En Banc correctly treated the petition as one for disqualification.
The effect of a disqualification case is enunciated in Section 6 of R.A. No. 6646:
Sec. 6. Effect of Disqualification Case. - Any candidate who has been declared by final
judgment to be disqualified shall not be voted for, and the votes cast for him shall not be
counted. If for any reason a candidate is not declared by final judgment before an election to
be disqualified and he is voted for and receives the winning number of votes in such election,
the Court or Commission shall continue with the trial and hearing of the action, inquiry, or
protest and, upon motion of the complainant or any intervenor, may during the pendency
thereof order the suspension of the proclamation of such candidate whenever the evidence
of his guilt is strong.
Mercado v. Manzano28
clarified the right of intervention in a disqualification case. In that case, the Court said:
That petitioner had a right to intervene at that stage of the proceedings for the
disqualification against private respondent is clear from Section 6 of R.A. No. 6646, otherwise
known as the Electoral Reforms Law of 1987, which provides: Any candidate who has been
declared by final judgment to be disqualified shall not be voted for, and the votes cast for
him shall not be counted. If for any reason a candidate is not declared by final judgment
before an election to be disqualified and he is voted for and receives the winning number of
votes in such election, the Court or Commission shall continue with the trial and hearing of
the action, inquiry, or protest and, upon motion of the complainant or any intervenor, may
during the pendency thereof order the suspension of the proclamation of such candidate
whenever the evidence of guilt is strong. Under this provision, intervention may be allowed
in proceedings for disqualification even after election if there has yet been no final judgment
rendered.29
Clearly then, Maquiling has the right to intervene in the case. The fact that the COMELEC En
Banc has already ruled that Maquiling has not shown that the requisites for the exemption to
the second-placer rule set forth in Sinsuat v. COMELEC30 are present and therefore would not
be prejudiced by the outcome of the case, does not deprive Maquiling of the right to elevate
the matter before this Court.
Arnado’s claim that the main case has attained finality as the original petitioner and
respondents therein have not appealed the decision of the COMELEC En Banc, cannot be
sustained. The elevation of the case by the intervenor prevents it from attaining finality. It is
only after this Court has ruled upon the issues raised in this instant petition that the
disqualification case originally filed by Balua against Arnado will attain finality.
The use of foreign passport after renouncing one’s foreign citizenship is a positive and
voluntary act of representation as to one’s nationality and citizenship; it does not divest
Filipino citizenship regained by repatriation but it recants the Oath of Renunciation
required to qualify one to run for an elective position.
Section 5(2) of The Citizenship Retention and Re-acquisition Act of 2003 provides:
Those who retain or re-acquire Philippine citizenship under this Act shall enjoy full civil and
political rights and be subject to all attendant liabilities and responsibilities under existing
laws of the Philippines and the following conditions:
xxxx
(2)Those seeking elective public in the Philippines shall meet the qualification for holding
such public office as required by the Constitution and existing laws and, at the time of the
filing of the certificate of candidacy, make a personal and sworn renunciation of any and all
foreign before any public officer authorized to administer an oath.
x x x31
Rommel Arnado took all the necessary steps to qualify to run for a public office. He took the
Oath of Allegiance and renounced his foreign citizenship. There is no question that after
performing these twin requirements required under Section 5(2) of R.A. No. 9225 or the
Citizenship Retention and Re-acquisition Act of 2003, he became eligible to run for public
office.
Indeed, Arnado took the Oath of Allegiance not just only once but twice: first, on 10 July
2008 when he applied for repatriation before the Consulate General of the Philippines in San
Francisco, USA, and again on 03 April 2009 simultaneous with the execution of his Affidavit
of Renunciation. By taking the Oath of Allegiance to the Republic, Arnado re-acquired his
Philippine citizenship. At the time, however, he likewise possessed American citizenship.
Arnado had therefore become a dual citizen.
After reacquiring his Philippine citizenship, Arnado renounced his American citizenship by
executing an Affidavit of Renunciation, thus completing the requirements for eligibility to run
for public office.
By renouncing his foreign citizenship, he was deemed to be solely a Filipino citizen,
regardless of the effect of such renunciation under the laws of the foreign country. 32
However, this legal presumption does not operate permanently and is open to attack when,
after renouncing the foreign citizenship, the citizen performs positive acts showing his
continued possession of a foreign citizenship. 33
Arnado himself subjected the issue of his citizenship to attack when, after renouncing his
foreign citizenship, he continued to use his US passport to travel in and out of the country
before filing his certificate of candidacy on 30 November 2009. The pivotal question to
determine is whether he was solely and exclusively a Filipino citizen at the time he filed his
certificate of candidacy, thereby rendering him eligible to run for public office.
Between 03 April 2009, the date he renounced his foreign citizenship, and 30 November
2009, the date he filed his COC, he used his US passport four times, actions that run counter
to the affidavit of renunciation he had earlier executed. By using his foreign passport, Arnado
positively and voluntarily represented himself as an American, in effect declaring before
immigration authorities of both countries that he is an American citizen, with all attendant
rights and privileges granted by the United States of America.
The renunciation of foreign citizenship is not a hollow oath that can simply be professed at
any time, only to be violated the next day. It requires an absolute and perpetual renunciation
of the foreign citizenship and a full divestment of all civil and political rights granted by the
foreign country which granted the citizenship.
Mercado v. Manzano34 already hinted at this situation when the Court declared:
His declarations will be taken upon the faith that he will fulfill his undertaking made under
oath. Should he betray that trust, there are enough sanctions for declaring the loss of his
Philippine citizenship through expatriation in appropriate proceedings. In Yu v. Defensor-
Santiago, we sustained the denial of entry into the country of petitioner on the ground that,
after taking his oath as a naturalized citizen, he applied for the renewal of his Portuguese
passport and declared in commercial documents executed abroad that he was a Portuguese
national. A similar sanction can be taken against anyone who, in electing Philippine
citizenship, renounces his foreign nationality, but subsequently does some act constituting
renunciation of his Philippine citizenship.
While the act of using a foreign passport is not one of the acts enumerated in
Commonwealth Act No. 63 constituting renunciation and loss of Philippine citizenship, 35 it is
nevertheless an act which repudiates the very oath of renunciation required for a former
Filipino citizen who is also a citizen of another country to be qualified to run for a local
elective position.
When Arnado used his US passport on 14 April 2009, or just eleven days after he renounced
his American citizenship, he recanted his Oath of Renunciation 36 that he "absolutely and
perpetually renounce(s) all allegiance and fidelity to the UNITED STATES OF AMERICA"37 and
that he "divest(s) himself of full employment of all civil and political rights and privileges of
the United States of America."38
We agree with the COMELEC En Banc that such act of using a foreign passport does not
divest Arnado of his Filipino citizenship, which he acquired by repatriation. However, by
representing himself as an American citizen, Arnado voluntarily and effectively reverted to
his earlier status as a dual citizen. Such reversion was not retroactive; it took place the
instant Arnado represented himself as an American citizen by using his US passport.
This act of using a foreign passport after renouncing one’s foreign citizenship is fatal to
Arnado’s bid for public office, as it effectively imposed on him a disqualification to run for an
elective local position.
Arnado’s category of dual citizenship is that by which foreign citizenship is acquired through
a positive act of applying for naturalization. This is distinct from those considered dual
citizens by virtue of birth, who are not required by law to take the oath of renunciation as
the mere filing of the certificate of candidacy already carries with it an implied renunciation
of foreign citizenship.39 Dual citizens by naturalization, on the other hand, are required to
take not only the Oath of Allegiance to the Republic of the Philippines but also to personally
renounce foreign citizenship in order to qualify as a candidate for public office.
By the time he filed his certificate of candidacy on 30 November 2009, Arnado was a dual
citizen enjoying the rights and privileges of Filipino and American citizenship. He was
qualified to vote, but by the express disqualification under Section 40(d) of the Local
Government Code,40 he was not qualified to run for a local elective position.
In effect, Arnado was solely and exclusively a Filipino citizen only for a period of eleven days,
or from 3 April 2009 until 14 April 2009, on which date he first used his American passport
after renouncing his American citizenship.
This Court has previously ruled that:
Qualifications for public office are continuing requirements and must be possessed not only
at the time of appointment or election or assumption of office but during the officer's entire
tenure. Once any of the required qualifications is lost, his title may be seasonably challenged.
x x x.41
The citizenship requirement for elective public office is a continuing one. It must be
possessed not just at the time of the renunciation of the foreign citizenship but continuously.
Any act which violates the oath of renunciation opens the citizenship issue to attack.
We agree with the pronouncement of the COMELEC First Division that "Arnado’s act of
consistently using his US passport effectively negated his "Affidavit of Renunciation." 42 This
does not mean, that he failed to comply with the twin requirements under R.A. No. 9225, for
he in fact did.
It was after complying with the requirements that he performed positive acts which
effectively disqualified him from running for an elective public office pursuant to Section
40(d) of the Local Government Code of 1991.
The purpose of the Local Government Code in disqualifying dual citizens from running for
any elective public office would be thwarted if we were to allow a person who has earlier
renounced his foreign citizenship, but who subsequently represents himself as a foreign
citizen, to hold any public office.
Arnado justifies the continued use of his US passport with the explanation that he was not
notified of the issuance of his Philippine passport on 18 June 2009, as a result of which he
was only able to obtain his Philippine passport three (3) months later. 43
The COMELEC En Banc differentiated Arnado from Willy Yu, the Portuguese national who
sought naturalization as a Filipino citizen and later applied for the renewal of his Portuguese
passport. That Arnado did not apply for a US passport after his renunciation does not make
his use of a US passport less of an act that violated the Oath of Renunciation he took. It was
still a positive act of representation as a US citizen before the immigration officials of this
country.
The COMELEC, in ruling favorably for Arnado, stated "Yet, as soon as he was in possession of
his Philippine passport, the respondent already used the same in his subsequent travels
abroad."44 We cannot agree with the COMELEC. Three months from June is September. If
indeed, Arnado used his Philippine passport as soon as he was in possession of it, he would
not have used his US passport on 24 November 2009.
Besides, Arnado’s subsequent use of his Philippine passport does not correct the fact that
after he renounced his foreign citizenship and prior to filing his certificate of candidacy, he
used his US passport. In the same way that the use of his foreign passport does not undo his
Oath of Renunciation, his subsequent use of his Philippine passport does not undo his earlier
use of his US passport.
Citizenship is not a matter of convenience. It is a badge of identity that comes with attendant
civil and political rights accorded by the state to its citizens. It likewise demands the
concomitant duty to maintain allegiance to one’s flag and country. While those who acquire
dual citizenship by choice are afforded the right of suffrage, those who seek election or
appointment to public office are required to renounce their foreign citizenship to be
deserving of the public trust. Holding public office demands full and undivided allegiance to
the Republic and to no other.
We therefore hold that Arnado, by using his US passport after renouncing his American
citizenship, has recanted the same Oath of Renunciation he took. Section 40(d) of the Local
Government Code applies to his situation. He is disqualified not only from holding the public
office but even from becoming a candidate in the May 2010 elections.
We now resolve the next issue.
Resolving the third issue necessitates revisiting Topacio v. Paredes 45 which is the
jurisprudential spring of the principle that a second-placer cannot be proclaimed as the
winner in an election contest. This doctrine must be re-examined and its soundness once
again put to the test to address the ever-recurring issue that a second-placer who loses to an
ineligible candidate cannot be proclaimed as the winner in the elections.
The Facts of the case are as follows:
On June 4, 1912, a general election was held in the town of Imus, Province of Cavite, to fill
the office of municipal president. The petitioner, Felipe Topacio, and the respondent,
Maximo Abad, were opposing candidates for that office. Topacio received 430 votes, and
Abad 281. Abad contested the election upon the sole ground that Topacio was ineligible in
that he was reelected the second time to the office of the municipal president on June 4,
1912, without the four years required by Act No. 2045 having intervened. 46
Abad thus questioned the eligibility of To p a c i o on the basis of a statutory prohibition for
seeking a second re-election absent the four year interruption.
The often-quoted phrase in Topacio v. Paredes is that "the wreath of victory cannot be
transferred from an ineligible candidate to any other candidate when the sole question is the
eligibility of the one receiving a plurality of the legally cast ballots." 47
This phrase is not even the ratio decidendi; it is a mere obiter dictum. The Court was
comparing "the effect of a decision that a candidate is not entitled to the office because of
fraud or irregularities in the elections x x x with that produced by declaring a person
ineligible to hold such an office."
The complete sentence where the phrase is found is part of a comparison and contrast
between the two situations, thus:
Again, the effect of a decision that a candidate is not entitled to the office because of fraud
or irregularities in the elections is quite different from that produced by declaring a person
ineligible to hold such an office. In the former case the court, after an examination of the
ballots may find that some other person than the candidate declared to have received a
plurality by the board of canvassers actually received the greater number of votes, in which
case the court issues its mandamus to the board of canvassers to correct the returns
accordingly; or it may find that the manner of holding the election and the returns are so
tainted with fraud or illegality that it cannot be determined who received a plurality of the
legally cast ballots. In the latter case, no question as to the correctness of the returns or the
manner of casting and counting the ballots is before the deciding power, and generally the
only result can be that the election fails entirely. In the former, we have a contest in the
strict sense of the word, because of the opposing parties are striving for supremacy. If it be
found that the successful candidate (according to the board of canvassers) obtained a
plurality in an illegal manner, and that another candidate was the real victor, the former
must retire in favor of the latter. In the other case, there is not, strictly speaking, a contest,
as the wreath of victory cannot be transferred from an ineligible candidate to any other
candidate when the sole question is the eligibility of the one receiving a plurality of the
legally cast ballots. In the one case the question is as to who received a plurality of the legally
cast ballots; in the other, the question is confined to the personal character and
circumstances of a single individual.48 (Emphasis supplied)
Note that the sentence where the phrase is found starts with "In the other case, there is not,
strictly speaking, a contest" in contrast to the earlier statement, "In the former, we have a
contest in the strict sense of the word, because of the opposing parties are striving for
supremacy."
The Court in Topacio v. Paredes cannot be said to have held that "the wreath of victory
cannot be transferred from an ineligible candidate to any other candidate when the sole
question is the eligibility of the one receiving a plurality of the legally cast ballots."
A proper reading of the case reveals that the ruling therein is that since the Court of First
Instance is without jurisdiction to try a disqualification case based on the eligibility of the
person who obtained the highest number of votes in the election, its jurisdiction being
confined "to determine which of the contestants has been duly elected" the judge exceeded
his jurisdiction when he "declared that no one had been legally elected president of the
municipality of Imus at the general election held in that town on 4 June 1912" where "the
only question raised was whether or not Topacio was eligible to be elected and to hold the
office of municipal president."
The Court did not rule that Topacio was disqualified and that Abad as the second placer
cannot be proclaimed in his stead. The Court therein ruled:
For the foregoing reasons, we are of the opinion and so hold that the respondent judge
exceeded his jurisdiction in declaring in those proceedings that no one was elected municipal
president of the municipality of Imus at the last general election; and that said order and all
subsequent proceedings based thereon are null and void and of no effect; and, although this
decision is rendered on respondents' answer to the order to show cause, unless respondents
raised some new and additional issues, let judgment be entered accordingly in 5 days,
without costs. So ordered.49
On closer scrutiny, the phrase relied upon by a host of decisions does not even have a legal
basis to stand on. It was a mere pronouncement of the Court comparing one process with
another and explaining the effects thereof. As an independent statement, it is even illogical.
Let us examine the statement:
"x x x the wreath of victory cannot be transferred from an ineligible candidate to any other
candidate when the sole question is the eligibility of the one receiving a plurality of the
legally cast ballots."
What prevents the transfer of the wreath of victory from the ineligible candidate to another
candidate?
When the issue being decided upon by the Court is the eligibility of the one receiving a
plurality of the legally cast ballots and ineligibility is thereafter established, what stops the
Court from adjudging another eligible candidate who received the next highest number of
votes as the winner and bestowing upon him that "wreath?"
An ineligible candidate who receives the highest number of votes is a wrongful winner. By
express legal mandate, he could not even have been a candidate in the first place, but by
virtue of the lack of material time or any other intervening circumstances, his ineligibility
might not have been passed upon prior to election date. Consequently, he may have had the
opportunity to hold himself out to the electorate as a legitimate and duly qualified
candidate. However, notwithstanding the outcome of the elections, his ineligibility as a
candidate remains unchanged. Ineligibility does not only pertain to his qualifications as a
candidate but necessarily affects his right to hold public office. The number of ballots cast in
his favor cannot cure the defect of failure to qualify with the substantive legal requirements
of eligibility to run for public office.
The popular vote does not cure the
ineligibility of a candidate.
The ballot cannot override the constitutional and statutory requirements for qualifications
and disqualifications of candidates. When the law requires certain qualifications to be
possessed or that certain disqualifications be not possessed by persons desiring to serve as
elective public officials, those qualifications must be met before one even becomes a
candidate. When a person who is not qualified is voted for and eventually garners the
highest number of votes, even the will of the electorate expressed through the ballot cannot
cure the defect in the qualifications of the candidate. To rule otherwise is to trample upon
and rent asunder the very law that sets forth the qualifications and disqualifications of
candidates. We might as well write off our election laws if the voice of the electorate is the
sole determinant of who should be proclaimed worthy to occupy elective positions in our
republic.
This has been, in fact, already laid down by the Court in Frivaldo v. COMELEC 50 when we
pronounced:
x x x. The fact that he was elected by the people of Sorsogon does not excuse this patent
violation of the salutary rule limiting public office and employment only to the citizens of this
country. The qualifications prescribed for elective office cannot be erased by the electorate
alone.
The will of the people as expressed through the ballot cannot cure the vice of ineligibility,
especially if they mistakenly believed, as in this case, that the candidate was qualified.
Obviously, this rule requires strict application when the deficiency is lack of citizenship. If a
person seeks to serve in the Republic of the Philippines, he must owe his total loyalty to this
country only, abjuring and renouncing all fealty and fidelity to any other state. 51 (Emphasis
supplied)
This issue has also been jurisprudentially clarified in Velasco v. COMELEC52 where the Court
ruled that the ruling in Quizon and Saya-ang cannot be interpreted without qualifications lest
"Election victory x x x becomes a magic formula to bypass election eligibility requirements." 53
We have ruled in the past that a candidate’s victory in the election may be considered a
sufficient basis to rule in favor of the candidate sought to be disqualified if the main issue
involves defects in the candidate’s certificate of candidacy. We said that while provisions
relating to certificates of candidacy are mandatory in terms, it is an established rule of
interpretation as regards election laws, that mandatory provisions requiring certain steps
before elections will be construed as directory after the elections, to give effect to the will of
the people. We so ruled in Quizon v. COMELEC and Saya-ang v. COMELEC:
The present case perhaps presents the proper time and opportunity to fine-tune our above
ruling. We say this with the realization that a blanket and unqualified reading and application
of this ruling can be fraught with dangerous significance for the rule of law and the integrity
of our elections. For one, such blanket/unqualified reading may provide a way around the
law that effectively negates election requirements aimed at providing the electorate with the
basic information to make an informed choice about a candidate’s eligibility and fitness for
office.
The first requirement that may fall when an unqualified reading is made is Section 39 of the
LGC which specifies the basic qualifications of local government officials. Equally susceptive
of being rendered toothless is Section 74 of the OEC that sets out what should be stated in a
COC. Section 78 may likewise be emasculated as mere delay in the resolution of the petition
to cancel or deny due course to a COC can render a Section 78 petition useless if a candidate
with false COC data wins. To state the obvious, candidates may risk falsifying their COC
qualifications if they know that an election victory will cure any defect that their COCs may
have. Election victory then becomes a magic formula to bypass election eligibility
requirements. (Citations omitted)
What will stop an otherwise disqualified individual from filing a seemingly valid COC,
concealing any disqualification, and employing every strategy to delay any disqualification
case filed against him so he can submit himself to the electorate and win, if winning the
election will guarantee a disregard of constitutional and statutory provisions on
qualifications and disqualifications of candidates?
It is imperative to safeguard the expression of the sovereign voice through the ballot by
ensuring that its exercise respects the rule of law. To allow the sovereign voice spoken
through the ballot to trump constitutional and statutory provisions on qualifications and
disqualifications of candidates is not democracy or republicanism. It is electoral anarchy.
When set rules are disregarded and only the electorate’s voice spoken through the ballot is
made to matter in the end, it precisely serves as an open invitation for electoral anarchy to
set in.1âwphi1
Maquiling is not a second-placer as
he obtained the highest number of
votes from among the qualified
candidates.
With Arnado’s disqualification, Maquiling then becomes the winner in the election as he
obtained the highest number of votes from among the qualified candidates.
We have ruled in the recent cases of Aratea v. COMELEC 54 and Jalosjos v. COMELEC 55 that a
void COC cannot produce any legal effect.
Thus, the votes cast in favor of the ineligible candidate are not considered at all in
determining the winner of an election.
Even when the votes for the ineligible candidate are disregarded, the will of the electorate is
still respected, and even more so. The votes cast in favor of an ineligible candidate do not
constitute the sole and total expression of the sovereign voice. The votes cast in favor of
eligible and legitimate candidates form part of that voice and must also be respected.
As in any contest, elections are governed by rules that determine the qualifications and
disqualifications of those who are allowed to participate as players. When there are
participants who turn out to be ineligible, their victory is voided and the laurel is awarded to
the next in rank who does not possess any of the disqualifications nor lacks any of the
qualifications set in the rules to be eligible as candidates.
There is no need to apply the rule cited in Labo v. COMELEC 56 that when the voters are well
aware within the realm of notoriety of a candidate’s disqualification and still cast their votes
in favor said candidate, then the eligible candidate obtaining the next higher number of
votes may be deemed elected. That rule is also a mere obiter that further complicated the
rules affecting qualified candidates who placed second to ineligible ones.
The electorate’s awareness of the candidate’s disqualification is not a prerequisite for the
disqualification to attach to the candidate. The very existence of a disqualifying circumstance
makes the candidate ineligible. Knowledge by the electorate of a candidate’s disqualification
is not necessary before a qualified candidate who placed second to a disqualified one can be
proclaimed as the winner. The second-placer in the vote count is actually the first-placer
among the qualified candidates.
That the disqualified candidate has already been proclaimed and has assumed office is of no
moment. The subsequent disqualification based on a substantive ground that existed prior to
the filing of the certificate of candidacy voids not only the COC but also the proclamation.
Section 6 of R.A. No. 6646 provides:
Section 6. Effect of Disqualification Case. - Any candidate who has been declared by final
judgment to be disqualified shall not be voted for, and the votes cast for him shall not be
counted. If for any reason a candidate is not declared by final judgment before an election to
be disqualified and he is voted for and receives the winning number of votes in such election,
the Court or Commission shall continue with the trial and hearing of the action, inquiry, or
protest and, upon motion of the complainant or any intervenor, may during the pendency
thereof order the suspension of the proclamation of such candidate whenever the evidence
of his guilt is strong.
There was no chance for Arnado’s proclamation to be suspended under this rule because
Arnado failed to file his answer to the petition seeking his disqualification. Arnado only filed
his Answer on 15 June 2010, long after the elections and after he was already proclaimed as
the winner.
The disqualifying circumstance surrounding Arnado’s candidacy involves his citizenship. It
does not involve the commission of election offenses as provided for in the first sentence of
Section 68 of the Omnibus Election Code, the effect of which is to disqualify the individual
from continuing as a candidate, or if he has already been elected, from holding the office.
The disqualifying circumstance affecting Arnado is his citizenship. As earlier discussed,
Arnado was both a Filipino and an American citizen when he filed his certificate of candidacy.
He was a dual citizen disqualified to run for public office based on Section 40(d) of the Local
Government Code.
Section 40 starts with the statement "The following persons are disqualified from running for
any elective local position." The prohibition serves as a bar against the individuals who fall
under any of the enumeration from participating as candidates in the election.
With Arnado being barred from even becoming a candidate, his certificate of candidacy is
thus rendered void from the beginning. It could not have produced any other legal effect
except that Arnado rendered it impossible to effect his disqualification prior to the elections
because he filed his answer to the petition when the elections were conducted already and
he was already proclaimed the winner.
To hold that such proclamation is valid is to negate the prohibitory character of the
disqualification which Arnado possessed even prior to the filing of the certificate of
candidacy. The affirmation of Arnado's disqualification, although made long after the
elections, reaches back to the filing of the certificate of candidacy. Arnado is declared to be
not a candidate at all in the May 201 0 elections.
Arnado being a non-candidate, the votes cast in his favor should not have been counted. This
leaves Maquiling as the qualified candidate who obtained the highest number of votes.
Therefore, the rule on succession under the Local Government Code will not apply.
WHEREFORE, premises considered, the Petition is GRANTED. The Resolution of the COMELEC
En Bane dated 2 February 2011 is hereby ANNULLED and SET ASIDE. Respondent ROMMEL
ARNADO y CAGOCO is disqualified from running for any local elective position. CASAN
MACODE MAQUILING is hereby DECLARED the duly elected Mayor of Kauswagan, Lanao del
Norte in the 10 May 2010 elections.
This Decision is immediately executory.
Let a copy of this Decision be served personally upon the parties and the Commission on
Elections.
No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
B.M. No. 1678 December 17, 2007
PETITION FOR LEAVE TO RESUME PRACTICE OF LAW,
BENJAMIN M. DACANAY, petitioner.
RESOLUTION
CORONA, J.:
This bar matter concerns the petition of petitioner Benjamin M. Dacanay for leave to resume
the practice of law.
Petitioner was admitted to the Philippine bar in March 1960. He practiced law until he
migrated to Canada in December 1998 to seek medical attention for his ailments. He
subsequently applied for Canadian citizenship to avail of Canada’s free medical aid program.
His application was approved and he became a Canadian citizen in May 2004.
On July 14, 2006, pursuant to Republic Act (RA) 9225 (Citizenship Retention and Re-
Acquisition Act of 2003), petitioner reacquired his Philippine citizenship. 1 On that day, he
took his oath of allegiance as a Filipino citizen before the Philippine Consulate General in
Toronto, Canada. Thereafter, he returned to the Philippines and now intends to resume his
law practice. There is a question, however, whether petitioner Benjamin M. Dacanay lost his
membership in the Philippine bar when he gave up his Philippine citizenship in May 2004.
Thus, this petition.
In a report dated October 16, 2007, the Office of the Bar Confidant cites Section 2, Rule 138
(Attorneys and Admission to Bar) of the Rules of Court:
SECTION 2. Requirements for all applicants for admission to the bar. – Every
applicant for admission as a member of the bar must be a citizen of the
Philippines, at least twenty-one years of age, of good moral character, and a
resident of the Philippines; and must produce before the Supreme Court
satisfactory evidence of good moral character, and that no charges against him,
involving moral turpitude, have been filed or are pending in any court in the
Philippines.
Applying the provision, the Office of the Bar Confidant opines that, by virtue of his
reacquisition of Philippine citizenship, in 2006, petitioner has again met all the qualifications
and has none of the disqualifications for membership in the bar. It recommends that he be
allowed to resume the practice of law in the Philippines, conditioned on his retaking the
lawyer’s oath to remind him of his duties and responsibilities as a member of the Philippine
bar.
We approve the recommendation of the Office of the Bar Confidant with certain
modifications.
The practice of law is a privilege burdened with conditions. 2 It is so delicately affected with
public interest that it is both a power and a duty of the State (through this Court) to control
and regulate it in order to protect and promote the public welfare.3
Adherence to rigid standards of mental fitness, maintenance of the highest degree of
morality, faithful observance of the rules of the legal profession, compliance with the
mandatory continuing legal education requirement and payment of membership fees to the
Integrated Bar of the Philippines (IBP) are the conditions required for membership in good
standing in the bar and for enjoying the privilege to practice law. Any breach by a lawyer of
any of these conditions makes him unworthy of the trust and confidence which the courts
and clients repose in him for the continued exercise of his professional privilege. 4
Section 1, Rule 138 of the Rules of Court provides:
SECTION 1. Who may practice law. – Any person heretofore duly admitted as a
member of the bar, or thereafter admitted as such in accordance with the
provisions of this Rule, and who is in good and regular standing, is entitled to
practice law.
Pursuant thereto, any person admitted as a member of the Philippine bar in accordance with
the statutory requirements and who is in good and regular standing is entitled to practice
law.
Admission to the bar requires certain qualifications. The Rules of Court mandates that an
applicant for admission to the bar be a citizen of the Philippines, at least twenty-one years of
age, of good moral character and a resident of the Philippines.5 He must also produce before
this Court satisfactory evidence of good moral character and that no charges against him,
involving moral turpitude, have been filed or are pending in any court in the Philippines. 6
Moreover, admission to the bar involves various phases such as furnishing satisfactory proof
of educational, moral and other qualifications;7 passing the bar examinations;8 taking the
lawyer’s oath9 and signing the roll of attorneys and receiving from the clerk of court of this
Court a certificate of the license to practice. 10
The second requisite for the practice of law ― membership in good standing ― is a
continuing requirement. This means continued membership and, concomitantly, payment of
annual membership dues in the IBP; 11 payment of the annual professional tax; 12 compliance
with the mandatory continuing legal education requirement; 13 faithful observance of the
rules and ethics of the legal profession and being continually subject to judicial disciplinary
control.14
Given the foregoing, may a lawyer who has lost his Filipino citizenship still practice law in the
Philippines? No.
The Constitution provides that the practice of all professions in the Philippines shall be
limited to Filipino citizens save in cases prescribed by law. 15 Since Filipino citizenship is a
requirement for admission to the bar, loss thereof terminates membership in the Philippine
bar and, consequently, the privilege to engage in the practice of law. In other words, the loss
of Filipino citizenship ipso jure terminates the privilege to practice law in the Philippines. The
practice of law is a privilege denied to foreigners. 16
The exception is when Filipino citizenship is lost by reason of naturalization as a citizen of
another country but subsequently reacquired pursuant to RA 9225. This is because "all
Philippine citizens who become citizens of another country shall be deemed not to have lost
their Philippine citizenship under the conditions of [RA 9225]."17 Therefore, a Filipino lawyer
who becomes a citizen of another country is deemed never to have lost his Philippine
citizenship if he reacquires it in accordance with RA 9225. Although he is also deemed never
to have terminated his membership in the Philippine bar, no automatic right to resume law
practice accrues.
Under RA 9225, if a person intends to practice the legal profession in the Philippines and he
reacquires his Filipino citizenship pursuant to its provisions "(he) shall apply with the proper
authority for a license or permit to engage in such practice." 18 Stated otherwise, before a
lawyer who reacquires Filipino citizenship pursuant to RA 9225 can resume his law practice,
he must first secure from this Court the authority to do so, conditioned on:
(a) the updating and payment in full of the annual membership dues in the IBP;
(b) the payment of professional tax;
(c) the completion of at least 36 credit hours of mandatory continuing legal
education; this is specially significant to refresh the applicant/petitioner’s
knowledge of Philippine laws and update him of legal developments and
(d) the retaking of the lawyer’s oath which will not only remind him of his
duties and responsibilities as a lawyer and as an officer of the Court, but also
renew his pledge to maintain allegiance to the Republic of the Philippines.
Compliance with these conditions will restore his good standing as a member of the
Philippine bar.
WHEREFORE, the petition of Attorney Benjamin M. Dacanay is hereby GRANTED, subject to
compliance with the conditions stated above and submission of proof of such compliance to
the Bar Confidant, after which he may retake his oath as a member of the Philippine bar.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 119976 September 18, 1995
IMELDA ROMUALDEZ-MARCOS, petitioner,
vs.
COMMISSION ON ELECTIONS and CIRILO ROY MONTEJO, respondents.
KAPUNAN, J.:
A constitutional provision should be construed as to give it effective operation and suppress
the mischief at which it is aimed. 1 The 1987 Constitution mandates that an aspirant for
election to the House of Representatives be "a registered voter in the district in which he
shall be elected, and a resident thereof for a period of not less than one year immediately
preceding the election."2 The mischief which this provision — reproduced verbatim from the
1973 Constitution — seeks to prevent is the possibility of a "stranger or newcomer
unacquainted with the conditions and needs of a community and not identified with the
latter, from an elective office to serve that community."3
Petitioner Imelda Romualdez-Marcos filed her Certificate of Candidacy for the position of
Representative of the First District of Leyte with the Provincial Election Supervisor on March
8, 1995, providing the following information in item no. 8: 4
 RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO BE ELECTED
IMMEDIATELY PRECEDING THE ELECTION: __________ Years
and seven Months.
On March 23, 1995, private respondent Cirilo Roy Montejo, the incumbent Representative of
the First District of Leyte and a candidate for the same position, filed a "Petition for
Cancellation and Disqualification"5 with the Commission on Elections alleging that petitioner
did not meet the constitutional requirement for residency. In his petition, private respondent
contended that Mrs. Marcos lacked the Constitution's one year residency requirement for
candidates for the House of Representatives on the evidence of declarations made by her in
Voter Registration Record 94-No. 33497726 and in her Certificate of Candidacy. He prayed
that "an order be issued declaring (petitioner) disqualified and canceling the certificate of
candidacy."7
On March 29, 1995, petitioner filed an Amended/Corrected Certificate of Candidacy,
changing the entry "seven" months to "since childhood" in item no. 8 of the amended
certificate.8 On the same day, the Provincial Election Supervisor of Leyte informed petitioner
that:
[T]his office cannot receive or accept the aforementioned
Certificate of Candidacy on the ground that it is filed out of time,
the deadline for the filing of the same having already lapsed on
March 20, 1995. The Corrected/Amended Certificate of Candidacy
should have been filed on or before the March 20, 1995 deadline. 9
Consequently, petitioner filed the Amended/Corrected Certificate of Candidacy with the
COMELEC's Head Office in Intramuros, Manila on
March 31, 1995. Her Answer to private respondent's petition in SPA No. 95-009 was likewise
filed with the head office on the same day. In said Answer, petitioner averred that the entry
of the word "seven" in her original Certificate of Candidacy was the result of an "honest
misinterpretation" 10 which she sought to rectify by adding the words "since childhood" in
her Amended/Corrected Certificate of Candidacy and that "she has always maintained
Tacloban City as her domicile or residence. 11 Impugning respondent's motive in filing the
petition seeking her disqualification, she noted that:
When respondent (petitioner herein) announced that she was
intending to register as a voter in Tacloban City and run for
Congress in the First District of Leyte, petitioner immediately
opposed her intended registration by writing a letter stating that
"she is not a resident of said city but of Barangay Olot, Tolosa,
Leyte. After respondent had registered as a voter in Tolosa
following completion of her six month actual residence therein,
petitioner filed a petition with the COMELEC to transfer the town of
Tolosa from the First District to the Second District and pursued
such a move up to the Supreme Court, his purpose being to remove
respondent as petitioner's opponent in the congressional election
in the First District. He also filed a bill, along with other Leyte
Congressmen, seeking the creation of another legislative district to
remove the town of Tolosa out of the First District, to achieve his
purpose. However, such bill did not pass the Senate. Having failed
on such moves, petitioner now filed the instant petition for the
same objective, as it is obvious that he is afraid to submit along
with respondent for the judgment and verdict of the electorate of
the First District of Leyte in an honest, orderly, peaceful, free and
clean elections on May 8, 1995. 12
On April 24, 1995, the Second Division of the Commission on Elections (COMELEC), by a vote
of 2 to 1, 13 came up with a Resolution 1) finding private respondent's Petition for
Disqualification in SPA 95-009 meritorious; 2) striking off petitioner's Corrected/Amended
Certificate of Candidacy of March 31, 1995; and 3) canceling her original Certificate of
Candidacy. 14 Dealing with two primary issues, namely, the validity of amending the original
Certificate of Candidacy after the lapse of the deadline for filing certificates of candidacy, and
petitioner's compliance with the one year residency requirement, the Second Division held:
Respondent raised the affirmative defense in her Answer that the
printed word "Seven" (months) was a result of an "honest
misinterpretation or honest mistake" on her part and, therefore, an
amendment should subsequently be allowed. She averred that she
thought that what was asked was her "actual and physical"
presence in Tolosa and not residence of origin or domicile in the
First Legislative District, to which she could have responded "since
childhood." In an accompanying affidavit, she stated that her
domicile is Tacloban City, a component of the First District, to which
she always intended to return whenever absent and which she has
never abandoned. Furthermore, in her memorandum, she tried to
discredit petitioner's theory of disqualification by alleging that she
has been a resident of the First Legislative District of Leyte since
childhood, although she only became a resident of the Municipality
of Tolosa for seven months. She asserts that she has always been a
resident of Tacloban City, a component of the First District, before
coming to the Municipality of Tolosa.
Along this point, it is interesting to note that prior to her
registration in Tolosa, respondent announced that she would be
registering in Tacloban City so that she can be a candidate for the
District. However, this intention was rebuffed when petitioner
wrote the Election Officer of Tacloban not to allow respondent
since she is a resident of Tolosa and not Tacloban. She never
disputed this claim and instead implicitly acceded to it by
registering in Tolosa.
This incident belies respondent's claim of "honest misinterpretation
or honest mistake." Besides, the Certificate of Candidacy only asks
for RESIDENCE. Since on the basis of her Answer, she was quite
aware of "residence of origin" which she interprets to be Tacloban
City, it is curious why she did not cite Tacloban City in her
Certificate of Candidacy. Her explanation that she thought what
was asked was her actual and physical presence in Tolosa is not
easy to believe because there is none in the question that
insinuates about Tolosa. In fact, item no. 8 in the Certificate of
Candidacy speaks clearly of "Residency in the CONSTITUENCY where
I seek to be elected immediately preceding the election." Thus, the
explanation of respondent fails to be persuasive.
From the foregoing, respondent's defense of an honest mistake or
misinterpretation, therefore, is devoid of merit.
To further buttress respondent's contention that an amendment
may be made, she cited the case of Alialy v. COMELEC (2 SCRA 957).
The reliance of respondent on the case of Alialy is misplaced. The
case only applies to the "inconsequential deviations which cannot
affect the result of the election, or deviations from provisions
intended primarily to secure timely and orderly conduct of
elections." The Supreme Court in that case considered the
amendment only as a matter of form. But in the instant case, the
amendment cannot be considered as a matter of form or an
inconsequential deviation. The change in the number of years of
residence in the place where respondent seeks to be elected is a
substantial matter which determines her qualification as a
candidacy, specially those intended to suppress, accurate material
representation in the original certificate which adversely affects the
filer. To admit the amended certificate is to condone the evils
brought by the shifting minds of manipulating candidate, of the
detriment of the integrity of the election.
Moreover, to allow respondent to change the seven (7) month
period of her residency in order to prolong it by claiming it was
"since childhood" is to allow an untruthfulness to be committed
before this Commission. The arithmetical accuracy of the 7 months
residency the respondent indicated in her certificate of candidacy
can be gleaned from her entry in her Voter's Registration Record
accomplished on January 28, 1995 which reflects that she is a
resident of Brgy. Olot, Tolosa, Leyte for 6 months at the time of the
said registration (Annex A, Petition). Said accuracy is further
buttressed by her letter to the election officer of San Juan, Metro
Manila, dated August 24, 1994, requesting for the cancellation of
her registration in the Permanent List of Voters thereat so that she
can be re-registered or transferred to Brgy. Olot, Tolosa, Leyte. The
dates of these three (3) different documents show the respondent's
consistent conviction that she has transferred her residence to
Olot, Tolosa, Leyte from Metro Manila only for such limited period
of time, starting in the last week of August 1994 which on March 8,
1995 will only sum up to 7 months. The Commission, therefore,
cannot be persuaded to believe in the respondent's contention that
it was an error.
xxx xxx xxx
Based on these reasons the Amended/Corrected Certificate of
Candidacy cannot be admitted by this Commission.
xxx xxx xxx
Anent the second issue, and based on the foregoing discussion, it is
clear that respondent has not complied with the one year residency
requirement of the Constitution.
In election cases, the term "residence" has always been considered
as synonymous with "domicile" which imports not only the
intention to reside in a fixed place but also personal presence in-
that place, coupled with conduct indicative of such intention.
Domicile denotes a fixed permanent residence to which when
absent for business or pleasure, or for like reasons, one intends to
return. (Perfecto Faypon vs. Eliseo Quirino, 96 Phil 294; Romualdez
vs. RTC-Tacloban, 226 SCRA 408). In respondent's case, when she
returned to the Philippines in 1991, the residence she chose was
not Tacloban but San Juan, Metro Manila. Thus, her animus
revertendi is pointed to Metro Manila and not Tacloban.
This Division is aware that her claim that she has been a resident of
the First District since childhood is nothing more than to give her a
color of qualification where she is otherwise constitutionally
disqualified. It cannot hold ground in the face of the facts admitted
by the respondent in her affidavit. Except for the time that she
studied and worked for some years after graduation in Tacloban
City, she continuously lived in Manila. In 1959, after her husband
was elected Senator, she lived and resided in San Juan, Metro
Manila where she was a registered voter. In 1965, she lived in San
Miguel, Manila where she was again a registered voter. In 1978, she
served as member of the Batasang Pambansa as the representative
of the City of Manila and later on served as the Governor of Metro
Manila. She could not have served these positions if she had not
been a resident of the City of Manila. Furthermore, when she filed
her certificate of candidacy for the office of the President in 1992,
she claimed to be a resident of San Juan, Metro Manila. As a matter
of fact on August 24, 1994, respondent wrote a letter with the
election officer of San Juan, Metro Manila requesting for the
cancellation of her registration in the permanent list of voters that
she may be re-registered or transferred to Barangay Olot, Tolosa,
Leyte. These facts manifest that she could not have been a resident
of Tacloban City since childhood up to the time she filed her
certificate of candidacy because she became a resident of many
places, including Metro Manila. This debunks her claim that prior to
her residence in Tolosa, Leyte, she was a resident of the First
Legislative District of Leyte since childhood.
In this case, respondent's conduct reveals her lack of intention to
make Tacloban her domicile. She registered as a voter in different
places and on several occasions declared that she was a resident of
Manila. Although she spent her school days in Tacloban, she is
considered to have abandoned such place when she chose to stay
and reside in other different places. In the case of Romualdez
vs. RTC (226 SCRA 408) the Court explained how one acquires a new
domicile by choice. There must concur: (1) residence or bodily
presence in the new locality; (2) intention to remain there; and (3)
intention to abandon the old domicile. In other words there must
basically be animus manendi with animus non revertendi. When
respondent chose to stay in Ilocos and later on in Manila, coupled
with her intention to stay there by registering as a voter there and
expressly declaring that she is a resident of that place, she is
deemed to have abandoned Tacloban City, where she spent her
childhood and school days, as her place of domicile.
Pure intention to reside in that place is not sufficient, there must
likewise be conduct indicative of such intention. Respondent's
statements to the effect that she has always intended to return to
Tacloban, without the accompanying conduct to prove that
intention, is not conclusive of her choice of residence. Respondent
has not presented any evidence to show that her conduct, one year
prior the election, showed intention to reside in Tacloban. Worse,
what was evident was that prior to her residence in Tolosa, she had
been a resident of Manila.
It is evident from these circumstances that she was not a resident
of the First District of Leyte "since childhood."
To further support the assertion that she could have not been a
resident of the First District of Leyte for more than one year,
petitioner correctly pointed out that on January 28, 1995
respondent registered as a voter at precinct No. 18-A of Olot,
Tolosa, Leyte. In doing so, she placed in her Voter Registration
Record that she resided in the municipality of Tolosa for a period of
six months. This may be inconsequential as argued by the
respondent since it refers only to her residence in Tolosa, Leyte. But
her failure to prove that she was a resident of the First District of
Leyte prior to her residence in Tolosa leaves nothing but a
convincing proof that she had been a resident of the district for six
months only. 15
In a Resolution promulgated a day before the May 8, 1995 elections, the COMELEC en
banc denied petitioner's Motion for Reconsideration 16 of the April 24, 1995 Resolution
declaring her not qualified to run for the position of Member of the House of
Representatives for the First Legislative District of Leyte. 17 The Resolution tersely stated:
After deliberating on the Motion for Reconsideration, the
Commission RESOLVED to DENY it, no new substantial matters
having been raised therein to warrant re-examination of the
resolution granting the petition for disqualification. 18
On May 11, 1995, the COMELEC issued a Resolution allowing petitioner's proclamation
should the results of the canvass show that she obtained the highest number of votes in the
congressional elections in the First District of Leyte. On the same day, however, the
COMELEC reversed itself and issued a second Resolution directing that the proclamation of
petitioner be suspended in the event that she obtains the highest number of votes. 19
In a Supplemental Petition dated 25 May 1995, petitioner averred that she was the
overwhelming winner of the elections for the congressional seat in the First District of Leyte
held May 8, 1995 based on the canvass completed by the Provincial Board of Canvassers on
May 14, 1995. Petitioner alleged that the canvass showed that she obtained a total of 70,471
votes compared to the 36,833 votes received by Respondent Montejo. A copy of said
Certificate of Canvass was annexed to the Supplemental Petition.
On account of the Resolutions disqualifying petitioner from running for the congressional
seat of the First District of Leyte and the public respondent's Resolution suspending her
proclamation, petitioner comes to this court for relief.
Petitioner raises several issues in her Original and Supplemental Petitions. The principal
issues may be classified into two general areas:
I. The issue of Petitioner's qualifications
Whether or not petitioner was a resident, for election purposes, of
the First District of Leyte for a period of one year at the time of the
May 9, 1995 elections.
II. The Jurisdictional Issue
a) Prior to the elections
Whether or not the COMELEC properly exercised its jurisdiction in
disqualifying petitioner outside the period mandated by the
Omnibus Election Code for disqualification cases under Article 78 of
the said Code.
b) After the Elections
Whether or not the House of Representatives Electoral Tribunal
assumed exclusive jurisdiction over the question of petitioner's
qualifications after the May 8, 1995 elections.
I. Petitioner's qualification
A perusal of the Resolution of the COMELEC's Second Division reveals a startling confusion in
the application of settled concepts of "Domicile" and "Residence" in election law. While the
COMELEC seems to be in agreement with the general proposition that for the purposes of
election law, residence is synonymous with domicile, the Resolution reveals a tendency to
substitute or mistake the concept of domicile for actual residence, a conception not intended
for the purpose of determining a candidate's qualifications for election to the House of
Representatives as required by the 1987 Constitution. As it were, residence, for the purpose
of meeting the qualification for an elective position, has a settled meaning in our jurisdiction.
Article 50 of the Civil Code decrees that "[f]or the exercise of civil rights and the fulfillment of
civil obligations, the domicile of natural persons is their place of habitual residence." In Ong
vs. Republic 20 this court took the concept of domicile to mean an individual's "permanent
home", "a place to which, whenever absent for business or for pleasure, one intends to
return, and depends on facts and circumstances in the sense that they disclose
intent." 21 Based on the foregoing, domicile includes the twin elements of "the fact of
residing or physical presence in a fixed place" and animus manendi, or the intention of
returning there permanently.
Residence, in its ordinary conception, implies the factual relationship of an individual to a
certain place. It is the physical presence of a person in a given area, community or country.
The essential distinction between residence and domicile in law is that residence involves the
intent to leave when the purpose for which the resident has taken up his abode ends. One
may seek a place for purposes such as pleasure, business, or health. If a person's intent be to
remain, it becomes his domicile; if his intent is to leave as soon as his purpose is established
it is residence. 22 It is thus, quite perfectly normal for an individual to have different
residences in various places. However, a person can only have a single domicile, unless, for
various reasons, he successfully abandons his domicile in favor of another domicile of choice.
In Uytengsu vs. Republic, 23 we laid this distinction quite clearly:
There is a difference between domicile and residence. "Residence"
is used to indicate a place of abode, whether permanent or
temporary; "domicile" denotes a fixed permanent residence to
which, when absent, one has the intention of returning. A man may
have a residence in one place and a domicile in another. Residence
is not domicile, but domicile is residence coupled with the intention
to remain for an unlimited time. A man can have but one domicile
for the same purpose at any time, but he may have numerous
places of residence. His place of residence is generally his place of
domicile, but it is not by any means necessarily so since no length
of residence without intention of remaining will constitute
domicile.
For political purposes the concepts of residence and domicile are dictated by the peculiar
criteria of political laws. As these concepts have evolved in our election law, what has clearly
and unequivocally emerged is the fact that residence for election purposes is used
synonymously with domicile.
In Nuval vs. Guray, 24 the Court held that "the term residence. . . is synonymous with domicile
which imports not only intention to reside in a fixed place, but also personal presence in that
place, coupled with conduct indicative of such intention." 25 Larena vs. Teves 26 reiterated the
same doctrine in a case involving the qualifications of the respondent therein to the post of
Municipal President of Dumaguete, Negros Oriental. Faypon vs. Quirino, 27 held that the
absence from residence to pursue studies or practice a profession or registration as a voter
other than in the place where one is elected does not constitute loss of residence. 28 So
settled is the concept (of domicile) in our election law that in these and other election law
cases, this Court has stated that the mere absence of an individual from his permanent
residence without the intention to abandon it does not result in a loss or change of domicile.
The deliberations of the 1987 Constitution on the residence qualification for certain elective
positions have placed beyond doubt the principle that when the Constitution speaks of
"residence" in election law, it actually means only "domicile" to wit:
Mr. Nolledo: With respect to Section 5, I remember that in the 1971
Constitutional Convention, there was an attempt to require
residence in the place not less than one year immediately
preceding the day of the elections. So my question is: What is the
Committee's concept of residence of a candidate for the
legislature? Is it actual residence or is it the concept of domicile or
constructive residence?
Mr. Davide: Madame President, insofar as the regular members of
the National Assembly are concerned, the proposed section merely
provides, among others, "and a resident thereof", that is, in the
district for a period of not less than one year preceding the day of
the election. This was in effect lifted from the 1973 Constitution,
the interpretation given to it was domicile. 29
xxx xxx xxx
Mrs. Rosario Braid: The next question is on Section 7, page 2. I think
Commissioner Nolledo has raised the same point that "resident"
has been interpreted at times as a matter of intention rather than
actual residence.
Mr. De los Reyes: Domicile.
Ms. Rosario Braid: Yes, So, would the gentleman consider at the
proper time to go back to actual residence rather than mere
intention to reside?
Mr. De los Reyes: But we might encounter some difficulty especially
considering that a provision in the Constitution in the Article on
Suffrage says that Filipinos living abroad may vote as enacted by
law. So, we have to stick to the original concept that it should be by
domicile and not physical residence. 30
In Co vs. Electoral Tribunal of the House of Representatives, 31 this Court concluded that the
framers of the 1987 Constitution obviously adhered to the definition given to the term
residence in election law, regarding it as having the same meaning as domicile. 32
In the light of the principles just discussed, has petitioner Imelda Romualdez Marcos satisfied
the residency requirement mandated by Article VI, Sec. 6 of the 1987 Constitution? Of what
significance is the questioned entry in petitioner's Certificate of Candidacy stating her
residence in the First Legislative District of Leyte as seven (7) months?
It is the fact of residence, not a statement in a certificate of candidacy which ought to be
decisive in determining whether or not and individual has satisfied the constitution's
residency qualification requirement. The said statement becomes material only when there
is or appears to be a deliberate attempt to mislead, misinform, or hide a fact which would
otherwise render a candidate ineligible. It would be plainly ridiculous for a candidate to
deliberately and knowingly make a statement in a certificate of candidacy which would lead
to his or her disqualification.
It stands to reason therefore, that petitioner merely committed an honest mistake in jotting
the word "seven" in the space provided for the residency qualification requirement. The
circumstances leading to her filing the questioned entry obviously resulted in the subsequent
confusion which prompted petitioner to write down the period of her actual stay in Tolosa,
Leyte instead of her period of residence in the First district, which was "since childhood" in
the space provided. These circumstances and events are amply detailed in the COMELEC's
Second Division's questioned resolution, albeit with a different interpretation. For instance,
when herein petitioner announced that she would be registering in Tacloban City to make
her eligible to run in the First District, private respondent Montejo opposed the same,
claiming that petitioner was a resident of Tolosa, not Tacloban City. Petitioner then
registered in her place of actual residence in the First District, which is Tolosa, Leyte, a fact
which she subsequently noted down in her Certificate of Candidacy. A close look at said
certificate would reveal the possible source of the confusion: the entry for residence (Item
No. 7) is followed immediately by the entry for residence in the constituency where a
candidate seeks election thus:
7. RESIDENCE (complete Address): Brgy. Olot, Tolosa, Leyte
POST OFFICE ADDRESS FOR ELECTION PURPOSES: Brgy. Olot,
Tolosa, Leyte
8. RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO
BE ELECTED IMMEDIATELY PRECEDING THE ELECTION:_________
Years and Seven Months.
Having been forced by private respondent to register in her place of actual residence in Leyte
instead of petitioner's claimed domicile, it appears that petitioner had jotted down her
period of stay in her legal residence or domicile. The juxtaposition of entries in Item 7 and
Item 8 — the first requiring actual residence and the second requiring domicile — coupled
with the circumstances surrounding petitioner's registration as a voter in Tolosa obviously
led to her writing down an unintended entry for which she could be disqualified. This honest
mistake should not, however, be allowed to negate the fact of residence in the First District if
such fact were established by means more convincing than a mere entry on a piece of paper.
We now proceed to the matter of petitioner's domicile.
In support of its asseveration that petitioner's domicile could not possibly be in the First
District of Leyte, the Second Division of the COMELEC, in its assailed Resolution of April
24,1995 maintains that "except for the time when (petitioner) studied and worked for some
years after graduation in Tacloban City, she continuously lived in Manila." The Resolution
additionally cites certain facts as indicative of the fact that petitioner's domicile ought to be
any place where she lived in the last few decades except Tacloban, Leyte. First, according to
the Resolution, petitioner, in 1959, resided in San Juan, Metro Manila where she was also
registered voter. Then, in 1965, following the election of her husband to the Philippine
presidency, she lived in San Miguel, Manila where she as a voter. In 1978 and thereafter, she
served as a member of the Batasang Pambansa and Governor of Metro Manila. "She could
not, have served these positions if she had not been a resident of Metro Manila," the
COMELEC stressed. Here is where the confusion lies.
We have stated, many times in the past, that an individual does not lose his domicile even if
he has lived and maintained residences in different places. Residence, it bears repeating,
implies a factual relationship to a given place for various purposes. The absence from legal
residence or domicile to pursue a profession, to study or to do other things of a temporary or
semi-permanent nature does not constitute loss of residence. Thus, the assertion by the
COMELEC that "she could not have been a resident of Tacloban City since childhood up to
the time she filed her certificate of candidacy because she became a resident of many
places" flies in the face of settled jurisprudence in which this Court carefully made
distinctions between (actual) residence and domicile for election law purposes. In Larena
vs. Teves, 33 supra, we stressed:
 [T]his court is of the opinion and so holds that a person who has his
own house wherein he lives with his family in a municipality
without having ever had the intention of abandoning it, and
without having lived either alone or with his family in another
municipality, has his residence in the former municipality,
notwithstanding his having registered as an elector in the other
municipality in question and having been a candidate for various
insular and provincial positions, stating every time that he is a
resident of the latter municipality.
More significantly, in Faypon vs. Quirino, 34 We explained that:
consent. These well-publicized ties to her domicile of origin are part of the history and lore of
the quarter century of Marcos power in our country. Either they were entirely ignored in the
COMELEC'S Resolutions, or the majority of the COMELEC did not know what the rest of the
country always knew: the fact of petitioner's domicile in Tacloban, Leyte.
Private respondent in his Comment, contends that Tacloban was not petitioner's domicile of
origin because she did not live there until she was eight years old. He avers that after leaving
the place in 1952, she "abandoned her residency (sic) therein for many years and . . . (could
not) re-establish her domicile in said place by merely expressing her intention to live there
again." We do not agree.

First, minor follows the domicile of his parents. As domicile, once acquired is retained until a
A citizen may leave the place of his birth to look for "greener new one is gained, it follows that in spite of the fact of petitioner's being born in Manila,
pastures," as the saying goes, to improve his lot, and that, of course Tacloban, Leyte was her domicile of origin by operation of law. This domicile was not
includes study in other places, practice of his avocation, or engaging established only when her father brought his family back to Leyte contrary to private
in business. When an election is to be held, the citizen who left his respondent's averments.
birthplace to improve his lot may desire to return to his native town
to cast his ballot but for professional or business reasons, or for any
other reason, he may not absent himself from his professional or Second, domicile of origin is not easily lost. To successfully effect a change of domicile, one
business activities; so there he registers himself as voter as he has must demonstrate: 37
the qualifications to be one and is not willing to give up or lose the
opportunity to choose the officials who are to run the government 1. An actual removal or an actual change of domicile;
especially in national elections. Despite such registration,
the animus revertendi to his home, to his domicile or residence of
origin has not forsaken him. This may be the explanation why the 2. A bona fide intention of abandoning the former place of
registration of a voter in a place other than his residence of origin residence and establishing a new one; and
has not been deemed sufficient to constitute abandonment or loss
of such residence. It finds justification in the natural desire and
3. Acts which correspond with the purpose.
longing of every person to return to his place of birth. This strong
feeling of attachment to the place of one's birth must be overcome
by positive proof of abandonment for another. In the absence of clear and positive proof based on these criteria, the residence of origin
should be deemed to continue. Only with evidence showing concurrence of all three
requirements can the presumption of continuity or residence be rebutted, for a change of
From the foregoing, it can be concluded that in its above-cited statements supporting its
residence requires an actual and deliberate abandonment, and one cannot have two legal
proposition that petitioner was ineligible to run for the position of Representative of the First
residences at the same time. 38 In the case at bench, the evidence adduced by private
District of Leyte, the COMELEC was obviously referring to petitioner's various places of
respondent plainly lacks the degree of persuasiveness required to convince this court that an
(actual) residence, not her domicile. In doing so, it not only ignored settled jurisprudence on
abandonment of domicile of origin in favor of a domicile of choice indeed occurred. To effect
residence in election law and the deliberations of the constitutional commission but also the
an abandonment requires the voluntary act of relinquishing petitioner's former domicile with
provisions of the Omnibus Election Code (B.P. 881). 35
an intent to supplant the former domicile with one of her own choosing (domicilium
voluntarium).
What is undeniable, however, are the following set of facts which establish the fact of
petitioner's domicile, which we lift verbatim from the COMELEC's Second Division's assailed
In this connection, it cannot be correctly argued that petitioner lost her domicile of origin by
Resolution: 36
operation of law as a result of her marriage to the late President Ferdinand E. Marcos in
1952. For there is a clearly established distinction between the Civil Code concepts of
In or about 1938 when respondent was a little over 8 years old, she "domicile" and "residence." 39 The presumption that the wife automatically gains the
established her domicile in Tacloban, Leyte (Tacloban City). She husband's domicile by operation of law upon marriage cannot be inferred from the use of
studied in the Holy Infant Academy in Tacloban from 1938 to 1949 the term "residence" in Article 110 of the Civil Code because the Civil Code is one area where
when she graduated from high school. She pursued her college the two concepts are well delineated. Dr. Arturo Tolentino, writing on this specific area
studies in St. Paul's College, now Divine Word University in explains:
Tacloban, where she earned her degree in Education. Thereafter,
she taught in the Leyte Chinese School, still in Tacloban City. In
In the Civil Code, there is an obvious difference between domicile
1952 she went to Manila to work with her cousin, the late speaker
and residence. Both terms imply relations between a person and a
Daniel Z. Romualdez in his office in the House of Representatives. In
place; but in residence, the relation is one of fact while in domicile
1954, she married ex-President Ferdinand E. Marcos when he was
it is legal or juridical, independent of the necessity of physical
still a congressman of Ilocos Norte and registered there as a voter.
presence. 40
When her husband was elected Senator of the Republic in 1959,
she and her husband lived together in San Juan, Rizal where she
registered as a voter. In 1965, when her husband was elected Article 110 of the Civil Code provides:
President of the Republic of the Philippines, she lived with him in
Malacanang Palace and registered as a voter in San Miguel, Manila.
Art. 110. — The husband shall fix the residence of the family. But
the court may exempt the wife from living with the husband if he
[I]n February 1986 (she claimed that) she and her family were should live abroad unless in the service of the Republic.
abducted and kidnapped to Honolulu, Hawaii. In November 1991,
she came home to Manila. In 1992, respondent ran for election as
President of the Philippines and filed her Certificate of Candidacy A survey of jurisprudence relating to Article 110 or to the concepts of domicile or residence
wherein she indicated that she is a resident and registered voter of as they affect the female spouse upon marriage yields nothing which would suggest that the
San Juan, Metro Manila. female spouse automatically loses her domicile of origin in favor of the husband's choice of
residence upon marriage.

Applying the principles discussed to the facts found by COMELEC, what is inescapable is that
petitioner held various residences for different purposes during the last four decades. None Article 110 is a virtual restatement of Article 58 of the Spanish Civil Code of 1889 which
of these purposes unequivocally point to an intention to abandon her domicile of origin in states:
Tacloban, Leyte. Moreover, while petitioner was born in Manila, as a minor she naturally
followed the domicile of her parents. She grew up in Tacloban, reached her adulthood there
La mujer esta obligada a seguir a su marido donde quiera que fije su
and eventually established residence in different parts of the country for various reasons.
residencia. Los Tribunales, sin embargo, podran con justa causa
Even during her husband's presidency, at the height of the Marcos Regime's powers,
eximirla de esta obligacion cuando el marido transende su
petitioner kept her close ties to her domicile of origin by establishing residences in Tacloban,
residencia a ultramar o' a pais extranjero.
celebrating her birthdays and other important personal milestones in her home province,
instituting well-publicized projects for the benefit of her province and hometown, and
establishing a political power base where her siblings and close relatives held positions of Note the use of the phrase "donde quiera su fije de residencia" in the aforequoted article,
power either through the ballot or by appointment, always with either her influence or which means wherever (the husband) wishes to establish residence. This part of the article
clearly contemplates only actual residence because it refers to a positive act of fixing a family
home or residence. Moreover, this interpretation is further strengthened by the phrase
"cuando el marido translade su residencia" in the same provision which means, "when the
husband shall transfer his residence," referring to another positive act of relocating the
family to another home or place of actual residence. The article obviously cannot be
understood to refer to domicile which is a fixed,
fairly-permanent concept when it plainly connotes the possibility of transferring from one
place to another not only once, but as often as the husband may deem fit to move his family,
a circumstance more consistent with the concept of actual residence.
The right of the husband to fix the actual residence is in harmony with the intention of the
law to strengthen and unify the family, recognizing the fact that the husband and the wife
bring into the marriage different domiciles (of origin). This difference could, for the sake of
family unity, be reconciled only by allowing the husband to fix a single place of actual
residence.
Very significantly, Article 110 of the Civil Code is found under Title V under the heading:
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE. Immediately preceding Article
110 is Article 109 which obliges the husband and wife to live together, thus:
Art. 109. — The husband and wife are obligated to live together,
observe mutual respect and fidelity and render mutual help and
support.
The duty to live together can only be fulfilled if the husband and wife are physically together.
This takes into account the situations where the couple has many residences (as in the case
of the petitioner). If the husband has to stay in or transfer to any one of their residences, the
wife should necessarily be with him in order that they may "live together." Hence, it is
illogical to conclude that Art. 110 refers to "domicile" and not to "residence." Otherwise, we
shall be faced with a situation where the wife is left in the domicile while the husband, for
professional or other reasons, stays in one of their (various) residences. As Dr. Tolentino
further explains:
Residence and Domicile — Whether the word "residence" as used
with reference to particular matters is synonymous with "domicile"
is a question of some difficulty, and the ultimate decision must be
made from a consideration of the purpose and intent with which
the word is used. Sometimes they are used synonymously, at other
times they are distinguished from one another.
xxx xxx xxx
Residence in the civil law is a material fact, referring to the physical
presence of a person in a place. A person can have two or more
residences, such as a country residence and a city residence.
Residence is acquired by living in place; on the other hand, domicile
can exist without actually living in the place. The important thing
for domicile is that, once residence has been established in one
place, there be an intention to stay there permanently, even if
residence is also established in some other
place. 41
In fact, even the matter of a common residence between the husband and the wife during
the marriage is not an iron-clad principle; In cases applying the Civil Code on the question of
a common matrimonial residence, our jurisprudence has recognized certain
situations 42 where the spouses could not be compelled to live with each other such that the
wife is either allowed to maintain a residence different from that of her husband or, for
obviously practical reasons, revert to her original domicile (apart from being allowed to opt
for a new one). In De la Vina vs. Villareal 43 this Court held that "[a] married woman may
acquire a residence or domicile separate from that of her husband during the existence of
the marriage where the husband has given cause for divorce." 44 Note that the Court allowed
the wife either to obtain new residence or to choose a new domicile in such an event. In
instances where the wife actually opts, .under the Civil Code, to live separately from her
husband either by taking new residence or reverting to her domicile of origin, the Court has
held that the wife could not be compelled to live with her husband on pain of contempt.
In Arroyo vs. Vasques de Arroyo 45 the Court held that:
Upon examination of the authorities, we are convinced that it is not
within the province of the courts of this country to attempt to
compel one of the spouses to cohabit with, and render conjugal
rights to, the other. Of course where the property rights of one of
the pair are invaded, an action for restitution of such rights can be
maintained. But we are disinclined to sanction the doctrine that an
order, enforcible (sic) by process of contempt, may be entered to
compel the restitution of the purely personal right of consortium.
At best such an order can be effective for no other purpose than to
compel the spouses to live under the same roof; and he experience
of those countries where the courts of justice have assumed to
compel the cohabitation of married people shows that the policy of
the practice is extremely questionable. Thus in England, formerly
the Ecclesiastical Court entertained suits for the restitution of
conjugal rights at the instance of either husband or wife; and if the
facts were found to warrant it, that court would make a mandatory
decree, enforceable by process of contempt in case of
disobedience, requiring the delinquent party to live with the other
and render conjugal rights. Yet this practice was sometimes
criticized even by the judges who felt bound to enforce such orders,
and in Weldon v. Weldon (9 P.D. 52), decided in 1883, Sir James
Hannen, President in the Probate, Divorce and Admiralty Division of
the High Court of Justice, expressed his regret that the English law
on the subject was not the same as that which prevailed in
Scotland, where a decree of adherence, equivalent to the decree
for the restitution of conjugal rights in England, could be obtained
by the injured spouse, but could not be enforced by imprisonment.
Accordingly, in obedience to the growing sentiment against the
practice, the Matrimonial Causes Act (1884) abolished the remedy
of imprisonment; though a decree for the restitution of conjugal
rights can still be procured, and in case of disobedience may serve
in appropriate cases as the basis of an order for the periodical
payment of a stipend in the character of alimony.
In the voluminous jurisprudence of the United States, only one
court, so far as we can discover, has ever attempted to make a
preemptory order requiring one of the spouses to live with the
other; and that was in a case where a wife was ordered to follow
and live with her husband, who had changed his domicile to the
City of New Orleans. The decision referred to (Bahn v. Darby, 36 La.
Ann., 70) was based on a provision of the Civil Code of Louisiana
similar to article 56 of the Spanish Civil Code. It was decided many
years ago, and the doctrine evidently has not been fruitful even in
the State of Louisiana. In other states of the American Union the
idea of enforcing cohabitation by process of contempt is rejected.
(21 Cyc., 1148).
In a decision of January 2, 1909, the Supreme Court of Spain
appears to have affirmed an order of the Audiencia Territorial de
Valladolid requiring a wife to return to the marital domicile, and in
the alternative, upon her failure to do so, to make a particular
disposition of certain money and effects then in her possession and
to deliver to her husband, as administrator of the ganancial
property, all income, rents, and interest which might accrue to her
from the property which she had brought to the marriage. (113 Jur.
Civ., pp. 1, 11) But it does not appear that this order for the return
of the wife to the marital domicile was sanctioned by any other
penalty than the consequences that would be visited upon her in
respect to the use and control of her property; and it does not
appear that her disobedience to that order would necessarily have
been followed by imprisonment for contempt.
Parenthetically when Petitioner was married to then Congressman Marcos, in 1954,
petitioner was obliged — by virtue of Article 110 of the Civil Code — to follow her husband's
actual place of residence fixed by him. The problem here is that at that time, Mr. Marcos had
several places of residence, among which were San Juan, Rizal and Batac, Ilocos Norte. There
is no showing which of these places Mr. Marcos did fix as his family's residence. But
assuming that Mr. Marcos had fixed any of these places as the conjugal residence, what
petitioner gained upon marriage was actual residence. She did not lose her domicile of
origin.
On the other hand, the common law concept of "matrimonial domicile" appears to have
been incorporated, as a result of our jurisprudential experiences after the drafting of the Civil
Code of 1950, into the New Family Code. To underscore the difference between the
intentions of the Civil Code and the Family Code drafters, the term residence has been
supplanted by the term domicile in an entirely new provision (Art. 69) distinctly different in
meaning and spirit from that found in Article 110. The provision recognizes revolutionary
changes in the concept of women's rights in the intervening years by making the choice of
domicile a product of mutual agreement between the spouses. 46
Without as much belaboring the point, the term residence may mean one thing in civil law
(or under the Civil Code) and quite another thing in political law. What stands clear is that
insofar as the Civil Code is concerned-affecting the rights and obligations of husband and
wife — the term residence should only be interpreted to mean "actual residence." The
inescapable conclusion derived from this unambiguous civil law delineation therefore, is that
when petitioner married the former President in 1954, she kept her domicile of origin and
merely gained a new home, not a domicilium necessarium.
Even assuming for the sake of argument that petitioner gained a new "domicile" after her
marriage and only acquired a right to choose a new one after her husband died, petitioner's
acts following her return to the country clearly indicate that she not only impliedly but
expressly chose her domicile of origin (assuming this was lost by operation of law) as her
domicile. This "choice" was unequivocally expressed in her letters to the Chairman of the
PCGG when petitioner sought the PCGG's permission to "rehabilitate (our) ancestral house in
Tacloban and Farm in Olot, Leyte. . . to make them livable for the Marcos family to have a
home in our homeland." 47 Furthermore, petitioner obtained her residence certificate in
1992 in Tacloban, Leyte, while living in her brother's house, an act which supports the
domiciliary intention clearly manifested in her letters to the PCGG Chairman. She could not
have gone straight to her home in San Juan, as it was in a state of disrepair, having been
previously looted by vandals. Her "homes" and "residences" following her arrival in various
parts of Metro Manila merely qualified as temporary or "actual residences," not domicile.
Moreover, and proceeding from our discussion pointing out specific situations where the
female spouse either reverts to her domicile of origin or chooses a new one during the
subsistence of the marriage, it would be highly illogical for us to assume that she cannot
regain her original domicile upon the death of her husband absent a positive act of selecting
a new one where situations exist within the subsistence of the marriage itself where the wife
gains a domicile different from her husband.
In the light of all the principles relating to residence and domicile enunciated by this court up
to this point, we are persuaded that the facts established by the parties weigh heavily in
favor of a conclusion supporting petitioner's claim of legal residence or domicile in the First
District of Leyte.
II. The jurisdictional issue
Petitioner alleges that the jurisdiction of the COMELEC had already lapsed considering that
the assailed resolutions were rendered on April 24, 1995, fourteen (14) days before the
election in violation of Section 78 of the Omnibus Election Code. 48 Moreover, petitioner
contends that it is the House of Representatives Electoral Tribunal and not the COMELEC
which has jurisdiction over the election of members of the House of Representatives in
accordance with Article VI Sec. 17 of the Constitution. This is untenable.
It is a settled doctrine that a statute requiring rendition of judgment within a specified time is
generally construed to be merely directory, 49 "so that non-compliance with them does not
invalidate the judgment on the theory that if the statute had intended such result it would
have clearly indicated it." 50 The difference between a mandatory and a directory provision is
often made on grounds of necessity. Adopting the same view held by several American
authorities, this court in Marcelino vs. Cruz held that: 51
The difference between a mandatory and directory provision is
often determined on grounds of expediency, the reason being that
less injury results to the general public by disregarding than
enforcing the letter of the law.
In Trapp v. Mc Cormick, a case calling for the interpretation of a
statute containing a limitation of thirty (30) days within which a
decree may be entered without the consent of counsel, it was held
that "the statutory provisions which may be thus departed from
with impunity, without affecting the validity of statutory
proceedings, are usually those which relate to the mode or time of
doing that which is essential to effect the aim and purpose of the
Legislature or some incident of the essential act." Thus, in said case,
the statute under examination was construed merely to be
directory.
The mischief in petitioner's contending that the COMELEC should have abstained from
rendering a decision after the period stated in the Omnibus Election Code because it lacked
jurisdiction, lies in the fact that our courts and other quasi-judicial bodies would then refuse
to render judgments merely on the ground of having failed to reach a decision within a given
or prescribed period.
In any event, with the enactment of Sections 6 and 7 of R.A. 6646 in relation to Section 78 of
B.P. 881, 52 it is evident that the respondent Commission does not lose jurisdiction to hear
and decide a pending disqualification case under Section 78 of B.P. 881 even after the
elections.
As to the House of Representatives Electoral Tribunal's supposed assumption of jurisdiction
over the issue of petitioner's qualifications after the May 8, 1995 elections, suffice it to say
that HRET's jurisdiction as the sole judge of all contests relating to the elections, returns and
qualifications of members of Congress begins only after a candidate has become a member
of the House of Representatives. 53 Petitioner not being a member of the House of
Representatives, it is obvious that the HRET at this point has no jurisdiction over the
question.
It would be an abdication of many of the ideals enshrined in the 1987 Constitution for us to
either to ignore or deliberately make distinctions in law solely on the basis of the personality
of a petitioner in a case. Obviously a distinction was made on such a ground here. Surely,
many established principles of law, even of election laws were flouted for the sake
perpetuating power during the pre-EDSA regime. We renege on these sacred ideals,
including the meaning and spirit of EDSA ourselves bending established principles of
principles of law to deny an individual what he or she justly deserves in law. Moreover, in
doing so, we condemn ourselves to repeat the mistakes of the past.
WHEREFORE, having determined that petitioner possesses the necessary residence
qualifications to run for a seat in the House of Representatives in the First District of Leyte,
the COMELEC's questioned Resolutions dated April 24, May 7, May 11, and May 25, 1995 are
hereby SET ASIDE. Respondent COMELEC is hereby directed to order the Provincial Board of
Canvassers to proclaim petitioner as the duly elected Representative of the First District of
Leyte.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio
EN BANC
G.R. No. 191970 April 24, 2012
ROMMEL APOLINARIO JALOSJOS, Petitioner,
vs.
THE COMMISSION ON ELECTIONS and DAN ERASMO, SR.,
DECISION
ABAD, J.:
This case is about the proof required to establish the domicile of a reinstated Filipino citizen
who seeks election as governor of a province.
The Facts and the Case
Petitioner Rommel Jalosjos was born in Quezon City on October 26, 1973. He migrated to
Australia in 1981 when he was eight years old and there acquired Australian citizenship. On
November 22, 2008, at age 35, he decided to return to the Philippines and lived with his
brother, Romeo, Jr., in Barangay Veteran’s Village, Ipil, Zamboanga Sibugay. Four days upon
his return, he took an oath of allegiance to the Republic of the Philippines, resulting in his
being issued a Certificate of Reacquisition of Philippine Citizenship by the Bureau of
Immigration.1 On September 1, 2009 he renounced his Australian citizenship, executing a
sworn renunciation of the same2 in compliance with Republic Act (R.A.) 9225.3
From the time of his return, Jalosjos acquired a residential property in the same village
where he lived and a fishpond in San Isidro, Naga, Zamboanga Sibugay. He applied for
registration as a voter in the Municipality of Ipil but respondent Dan Erasmo, Sr., the
Barangay Captain of Barangay Veteran’s Village, opposed the same. Acting on the
application, the Election Registration Board approved it and included Jalosjos’ name in the
Commission on Elections’ (COMELEC’s) voters list for Precinct 0051F of Barangay Veterans
Village, Ipil, Zamboanga Sibugay.4
Undaunted, Erasmo filed before the 1st Municipal Circuit Trial Court (MCTC) of Ipil-
Tungawan-R.T. Lim in Ipil a petition for the exclusion of Jalosjos’ name from the official
voters list. After hearing, the MCTC rendered a decision, denying the petition.5 On
appeal,6 the Regional Trial Court (RTC) affirmed the MCTC decision. The RTC decision became
final and executory.
On November 28, 2009 Jalosjos filed his Certificate of Candidacy (COC) for Governor of
Zamboanga Sibugay Province for the May 10, 2010 elections. Erasmo promptly filed a
petition to deny due course or to cancel Jalosjos’ COC7 on the ground that the latter made
material misrepresentation in the same since he failed to comply with (1) the requirements
of R.A. 9225 and (2) the one-year residency requirement of the Local Government Code.
After hearing, the Second Division of the COMELEC ruled that, while Jalosjos had regained
Philippine citizenship by complying with the requirements of R.A. 9225, he failed to prove
the residency requirement for a gubernatorial candidate. He failed to present ample proof of
a bona fide intention to establish his domicile in Ipil, Zamboanga Sibugay. On motion for
reconsideration, the COMELEC En Banc affirmed the Second Division’s decision, ruling that
Jalosjos had been a mere guest or transient visitor in his brother’s house and, for this reason,
he cannot claim Ipil as his domicile.
Acting on Jalosjos’ prayer for the issuance of a temporary restraining order, the Court
resolved on May 7, 2010 to issue a status quo ante order, enjoining the COMELEC from
enforcing its February 11, 2010 decision pending further orders. Meanwhile, Jolosjos won
the election and was proclaimed winner of the 2010 gubernatorial race in the Province of
Zamboanga Sibugay.8
The Issue Presented
The sole issue presented in this case is whether or not the COMELEC acted with grave abuse
of discretion amounting to lack or excess of jurisdiction in ruling that Jalosjos failed to
present ample proof of a bona fide intention to establish his domicile in Ipil, Zamboanga
Sibugay.
The Court’s Ruling
The Local Government Code requires a candidate seeking the position of provincial governor
to be a resident of the province for at least one year before the election. 9 For purposes of the
election laws, the requirement of residence is synonymous with domicile,10 meaning that a
person must not only intend to reside in a particular place but must also have personal
presence in such place coupled with conduct indicative of such intention. 11
There is no hard and fast rule to determine a candidate’s compliance with residency
requirement since the question of residence is a question of intention. 12 Still, jurisprudence
has laid down the following guidelines: (a) every person has a domicile or residence
somewhere; (b) where once established, that domicile remains until he acquires a new one;
and (c) a person can have but one domicile at a time. 13
It is inevitable under these guidelines and the precedents applying them that Jalosjos has
met the residency requirement for provincial governor of Zamboanga Sibugay.
One. The COMELEC appears hasty in concluding that Jalosjos failed to prove that he
successfully changed his domicile to Zamboanga Sibugay. The COMELEC points out that,
since he was unable to discharge the burden of proving Zamboanga Sibugay to be his rightful
domicile, it must be assumed that his domicile is either Quezon City or Australia.
But it is clear from the facts that Quezon City was Jalosjos’ domicile of origin, the place of his
birth. It may be taken for granted that he effectively changed his domicile from Quezon City
to Australia when he migrated there at the age of eight, acquired Australian citizenship, and
lived in that country for 26 years. Australia became his domicile by operation of law and by
choice.14
On the other hand, when he came to the Philippines in November 2008 to live with his
brother in Zamboanga Sibugay, it is evident that Jalosjos did so with intent to change his
domicile for good. He left Australia, gave up his Australian citizenship, and renounced his
allegiance to that country. In addition, he reacquired his old citizenship by taking an oath of
allegiance to the Republic of the Philippines, resulting in his being issued a Certificate of
Reacquisition of Philippine Citizenship by the Bureau of Immigration. By his acts, Jalosjos
forfeited his legal right to live in Australia, clearly proving that he gave up his domicile there.
And he has since lived nowhere else except in Ipil, Zamboanga Sibugay.
To hold that Jalosjos has not establish a new domicile in Zamboanga Sibugay despite the loss
of his domicile of origin (Quezon City) and his domicile of choice and by operation of law
(Australia) would violate the settled maxim that a man must have a domicile or residence
somewhere.
Two. The COMELEC concluded that Jalosjos has not come to settle his domicile in Ipil since
he has merely been staying at his brother’s house. But this circumstance alone cannot
support such conclusion. Indeed, the Court has repeatedly held that a candidate is not
required to have a house in a community to establish his residence or domicile in a particular
place. It is sufficient that he should live there even if it be in a rented house or in the house
of a friend or relative.15 To insist that the candidate own the house where he lives would
make property a qualification for public office. What matters is that Jalosjos has proved two
things: actual physical presence in Ipil and an intention of making it his domicile.
Jalosjos presented the affidavits of next-door neighbors, attesting to his physical presence at
his residence in Ipil. These adjoining neighbors are no doubt more credible since they have a
better chance of noting his presence or absence than his other neighbors, whose affidavits
Erasmo presented, who just sporadically passed by the subject residence. Further, it is not
disputed that Jalosjos bought a residential lot in the same village where he lived and a fish
pond in San Isidro, Naga, Zamboanga Sibugay. He showed correspondences with political
leaders, including local and national party-mates, from where he lived. Moreover, Jalosjos is
a registered voter of Ipil by final judgment of the Regional Trial Court of Zamboanga
Sibugay.1âwphi1
Three. While the Court ordinarily respects the factual findings of administrative bodies like
the COMELEC, this does not prevent it from exercising its review powers to correct palpable
misappreciation of evidence or wrong or irrelevant considerations. 16 The evidence Jalosjos
presented is sufficient to establish Ipil, Zamboanga Sibugay, as his domicile. The COMELEC
gravely abused its discretion in holding otherwise.
Four. Jalosjos won and was proclaimed winner in the 2010 gubernatorial race for Zamboanga
Sibugay. The Court will respect the decision of the people of that province and resolve all
doubts regarding his qualification in his favor to breathe life to their manifest will.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Resolution of the COMELEC
Second Division dated February 11, 2010 and the Resolution of the COMELEC En Banc dated
May 4, 2010 that disqualified petitioner Rommel Jalosjos from seeking election as Governor
of Zamboanga Sibugay.
SO ORDERED.
EN BANC
G.R. No. 209835, September 22, 2015
ROGELIO BATIN CABALLERO, Petitioner, v. COMMISSION ON ELECTIONS AND JONATHAN
ENRIQUE V. NANUD, JR., Respondents.
DECISION
PERALTA, J.:
Before us is a petition for certiorari with prayer for issuance of a temporary restraining order
seeking to set aside the Resolution1 dated November 6, 2013 of the Commission on Elections
(COMELEC) En Banc which affirmed in toto the Resolution2 dated May 3, 2013 of the
COMELEC First Division canceling the Certificate of Candidacy (COC) of petitioner Rogelio
Batin Caballero.
Petitioner3 and private respondent Jonathan Enrique V. Nanud, Jr. 4 were both candidates for
the mayoralty position of the Municipality of Uyugan, Province of Batanes in the May 13,
2013 elections. Private respondent filed a Petition5 to deny due course to or cancellation of
petitioner's certificate of candidacy alleging that the latter made a false representation when
he declared in his COC that he was eligible to run for Mayor of Uyugan, Batanes despite
being a Canadian citizen and a nonresident thereof.
During the December 10, 2012 conference, petitioner, through counsel, manifested that he
was not properly served with a copy of the petition and the petition was served by registered
mail not in his address in Barangay Imnajbu, Uyugan, Batanes. He, however, received a copy
of the petition during the conference. Petitioner did not file an Answer but filed a
Memorandum controverting private respondent's substantial allegations in his petition.
Petitioner argued that prior to the filing of his COC on October 3, 2012, he took an Oath of
Allegiance to the Republic of the Philippines before the Philippine Consul General in Toronto,
Canada on September 13, 2012 and became a dual Filipino and Canadian citizen pursuant to
Republic Act (RA) No. 9225, otherwise known as the Citizenship Retention and Reacquisition
Act of 2003. Thereafter, he renounced his Canadian citizenship and executed an Affidavit of
Renunciation before a Notary Public in Batanes on October 1, 2012 to conform with Section
5(2) of RA No. 9225.6 He claimed that he did not lose his domicile of origin in Uyugan,
Batanes despite becoming a Canadian citizen as he merely left Uyugan temporarily to pursue
a brighter future for him and his family; and that he went back to Uyugan during his vacation
while working in Nigeria, California, and finally in Canada.
On May 3, 2013, the COMELEC First Division issued a Resolution finding that petitioner made
a material misrepresentation in his COC when he declared that he is a resident of Barangay
Imnajbu, Uyugan, Batanes within one year prior to the election. The decretal portion of the
resolution reads:cralawlawlibrary
WHEREFORE, premises considered, this Commission RESOLVED, as it hereby RESOLVES to
GRANT the instant Petition. The Certificate of Candidacy of respondent Caballero is hereby
CANCELLED.7chanrobleslaw
The COMELEC First Division did not discuss the procedural deficiency raised by petitioner as
he was already given a copy of the petition and also in consonance with the Commission's
constitutional duty of determining the qualifications of petitioner to run for elective office. It
found that while petitioner complied with the requirements of RA No. 9225 since he had
taken his Oath of Allegiance to the Philippines and had validly renounced his Canadian
citizenship, he failed to comply with the other requirements provided under RA No. 9225 for
those seeking elective office, i.e., persons who renounced their foreign citizenship must still
comply with the one year residency requirement provided for under Section 39 of the Local
Government Code. Petitioner's naturalization as a Canadian citizen resulted in the
abandonment of his domicile of origin in Uyugan, Batanes; thus, having abandoned his
domicile of origin, it is incumbent upon him to prove that he was able to reestablish his
domicile in Uyugan for him to be eligible to run for elective office in said locality which he
failed to do.

Elections were subsequently held on May 13, 2013 and the election returns showed that
petitioner won over private respondent. 8 Private respondent filed an Urgent Ex-parte Motion
to Defer Proclamation.9
On May 14, 2013, petitioner was proclaimed Mayor of Uyugan, Batanes.
On May 16, 2013, petitioner filed a Motion for Reconsideration with the COMELEC En Banc
assailing the May 3, 2013 Resolution issued by the COMELEC's First Division canceling his
COC.
On May 17, 2013, private respondent filed a Petition to Annul Proclamation.10
On November 6, 2013, the COMELEC En Banc issued its assailed Resolution denying
petitioner's motion for reconsideration.
Petitioner filed with us the instant petition for certiorari with prayer for the issuance of a
temporary restraining order.
In the meantime, private respondent filed a Motion for Execution 11 of the May 3, 2013
Resolution of the COMELEC First Division as affirmed by the En Banc and prayed for the
cancellation of petitioner's COC, the appropriate correction of the certificate of canvas to
reflect that all votes in favor of petitioner are stray votes, declaration of nullity of petitioner's
proclamation and proclamation of private respondent as the duly-elected Mayor of Uyugan,
Batanes in the May 13, 2013 elections.
On December 12, 2013, COMELEC Chairman Sixto S. Brillantes, Jr. issued a Writ of
Execution.12 Private respondent took his Oath of Office 13 on December 20, 2013.
In the instant petition for certiorari, petitioner raises the following assignment of errors, to
wit:cralawlawlibrary
THE COMELEC EN BANC GRAVELY ERRED IN DISREGARDING THE CLEAR IMPORT OF
PROCEDURAL RULES PROVIDED FOR UNDER COMELEC RESOLUTION NO. 9523
PROMULGATED ON 25 SEPTEMBER 2012.
THE COMELEC EN BANC GRAVELY ERRED IN FINDING THAT PETITIONER ABANDONED HIS
PHILIPPINE DOMICILE WHEN HE WORKED IN SEVERAL FOREIGN COUNTRIES FOR "GREENER
PASTURE."
EVEN ASSUMING THAT PETITIONER HAS ABANDONED HIS PHILIPPINE DOMICILE WHEN HE
BECAME A CANADIAN CITIZEN, HIS REACQUISITION OF HIS FILIPINO CITIZENSHIP, TAKING
OATH OF ALLEGIANCE TO THE PHILIPPINE GOVERNMENT NINE (9) MONTHS PRIOR TO HIS
ELECTION ON 13 MAY 2013, IS A SUBSTANTIAL COMPLIANCE WITH THE LAW ON
RESIDENCY.14chanrobleslaw
Petitioner contends that when private respondent filed a petition to deny due course or to
cancel his COC with the Office of the Municipal Election Officer of Uyugan, Batanes, a copy
thereof was not personally served on him; that private respondent later sent a copy of the
petition to him by registered mail without an attached affidavit stating the reason on why
registered mail as a mode of service was resorted to. Petitioner argues that private
respondent violated Section 4, paragraphs (1) 15 and (4),16 Rule 23 of the COMELEC Rules of
Procedure, as amended by COMELEC Resolution No. 9523, thus, his petition to deny due
course or cancel petitioner's certificate of candidacy should have been denied outright.
We are not convinced.
While private respondent failed to comply with the above-mentioned requirements, the
settled rule, however, is that the COMELEC Rules of Procedure are subject to liberal
construction. Moreover, the COMELEC may exercise its power to suspend its own rules as
provided under Section 4, Rule 1 of their Rules of Procedure.cralawlawlibrary
Sec. 4. Suspension of the Rules. - In the interest of justice and in order to obtain speedy
disposition of all matters pending before the Commission, these rules or any portion thereof
may be suspended by the Commission.chanrobleslaw
Under this authority, the Commission is similarly enabled to cope with all situations without
concerning itself about procedural niceties that do not square with the need to do justice, in
any case without further loss of time, provided that the right of the parties to a full day in
court is not substantially impaired.17
In Hayudini v. COMELEC,18 we sustained the COMELEC's liberal treatment of respondent's
petition to deny due course or cancel petitioner's COC despite its failure to comply with
Sections 2 and 4 of Rule 23 of the COMELEC Rules of Procedure, as amended by Resolution
No. 9523, i.e., pertaining to the period to file petition and to provide sufficient explanation as
to why his petition was not served personally on petitioner, respectively, and held
that:cralawlawlibrary
As a general rule, statutes providing for election contests are to be liberally construed in
order that the will of the people in the choice of public officers may not be defeated by mere
technical objections. Moreover, it is neither fair nor just to keep in office, for an indefinite
period, one whose right to it is uncertain and under suspicion. It is imperative that his claim
be immediately cleared, not only for the benefit of the winner but for the sake of public
interest, which can only be achieved by brushing aside technicalities of procedure that
protract and delay the trial of an ordinary action. This principle was reiterated in the cases
of Tolentino v. Commission on Elections and De Castro v. Commission on Elections, where the
Court held that "in exercising its powers and jurisdiction, as defined by its mandate to
protect the integrity of elections, the COMELEC must not be straitjacketed by procedural
rules in resolving election disputes."
Settled is the rule that the COMELEC Rules of Procedure are subject to liberal construction.
The COMELEC has the power to liberally interpret or even suspend its rules of procedure in
the interest of justice, including obtaining a speedy disposition of all matters pending before
it. This liberality is for the purpose of promoting the effective and efficient implementation
of its objectives - ensuring the holding of free, orderly, honest, peaceful, and credible
elections, as well as achieving just, expeditious, and inexpensive determination and
disposition of every action and proceeding brought before the COMELEC. Unlike an ordinary
civil action, an election contest is imbued with public interest. It involves not only the
adjudication of private and pecuniary interests of rival candidates, but also the paramount
need of dispelling the uncertainty which beclouds the real choice of the electorate. And the
tribunal has the corresponding duty to ascertain, by all means within its command, whom
the people truly chose as their rightful leader.19chanrobleslaw
Here, we find that the issue raised, i.e., whether petitioner had been a resident of Uyugan,
Batanes at least one (1) year before the elections held on May 13, 2013 as he represented in
his COC, pertains to his qualification and eligibility to run for public office, therefore imbued
with public interest, which justified the COMELEC's suspension of its own rules. We adopt
the COMELEC's s ratiocination in accepting the petition, to wit:cralawlawlibrary
This Commission recognizes the failure of petitioner to comply strictly with the procedure for
filing a petition to deny due course to or cancel certificate of candidacy set forth in Section 4,
Rule 23 of the COMELEC Rules of Procedure as amended by COMELEC Resolution No. 9523,
which requires service of a copy of the petition to respondent prior to its filing. But then, we
should also consider the efforts exerted by petitioner in serving a copy of his petition to
respondent after being made aware that such service is necessary. We should also take note
of the impossibility for petitioner to personally serve a copy of the petition to respondent
since he was in Canada at the time of its filing as shown in respondent's travel records.
The very purpose of prior service of the petition to respondent is to afford the latter an
opportunity to answer the allegations contained in the petition even prior to the service of
summons by the Commission to him. In this case, respondent was given a copy of the
petition during the conference held on 10 December 2012 and was ultimately accorded the
occasion to rebut all the allegations against him. He even filed a Memorandum containing his
defenses to petitioner's allegations. For all intents and purposes, therefore, respondent was
never deprived of due process which is the very essence of this Commission's Rules of
Procedure.
Even the Supreme Court acknowledges the need for procedural rules to bow to substantive
considerations "through a liberal construction aimed at promoting their objective of securing
a just, speedy and inexpensive disposition of every action and proceeding, x x x
x x x x
When a case is impressed with public interest, a relaxation of the application of the rules is in
order, x x x.
Unquestionably, the instant case is impressed with public interest which warrants the
relaxation of the application of the [R]ules of [P]rocedure, consistent with the ruling of the
Supreme Court in several cases.20chanrobleslaw
Petitioner next claims that he did not abandon his Philippine domicile. He argues that he was
born and baptized in Uyugan, Batanes; studied and had worked therein for a couple of years,
and had paid his community tax certificate; and, that he was a registered voter and had
exercised his right of suffrage and even built his house therein. He also contends that he
usually comes back to Uyugan, Batanes during his vacations from work abroad, thus, his
domicile had not been lost. Petitioner avers that the requirement of the law in fixing the
residence qualification of a candidate running for public office is not strictly on the period of
residence in the place where he seeks to be elected but on the acquaintance by the
candidate on his constituents' vital needs for their common welfare; and that his nine
months of actual stay in Uyugan, Batanes prior to his election is a substantial compliance
with the law. Petitioner insists that the COMELEC gravely abused its discretion in canceling
his COC.
We are not persuaded.
RA No. 9225, which is known as the Citizenship Retention and Reacquisition Act of
2003, declares that natural-born citizens of the Philippines, who have lost their Philippine
citizenship by reason of their naturalization as citizens of a foreign country, can re-acquire or
retain his Philippine citizenship under the conditions of the law. 21 The law does not provide
for residency requirement for the reacquisition or retention of Philippine citizenship; nor
does it mention any effect of such reacquisition or retention of Philippine citizenship on the
current residence of the concerned natural-born Filipino.22
RA No. 9225 treats citizenship independently of residence.23 This is only logical and
consistent with the general intent of the law to allow for dual citizenship. Since a natural-
born Filipino may hold, at the same time, both Philippine and foreign citizenships, he may
establish residence either in the Philippines or in the foreign country of which he is also a
citizen.24 However, when a natural-born Filipino with dual citizenship seeks for an elective
public office, residency in the Philippines becomes material. Section 5(2) of FLA No. 9225
provides:cralawlawlibrary
SEC. 5. Civil and Political Rights and Liabilities. - Those who retain or reacquire Philippine
citizenship under this Act shall enjoy full civil and political rights and be subject to all
attendant liabilities and responsibilities under existing laws of the Philippines and the
following conditions:
x x x x
(2) Those seeking elective public office in the Philippines shall meet the qualifications for
holding such public office as required by the Constitution and existing laws and, at the time
of the filing of the certificate of candidacy, make a personal and sworn renunciation of any
and all foreign citizenship before any public officer authorized to administer an oath.
chanrobleslaw
Republic Act No. 7160, which is known as the Local Government Code of 1991, provides,
among others, for the qualifications of an elective local official. Section 39 thereof
states:cralawlawlibrary
SEC. 39. Qualifications. - (a) An elective local official must be a citizen of the Philippines; a
registered voter in the barangay, municipality, city or province or, in the case of a member of
the sangguniang panlalawigan, sangguniang panlungsod, or sanggunian bayan, the district
where he intends to be elected; a resident therein for at least one (1) year immediately
preceding the day of the election; and able to read and write Filipino or any other local
language or dialect.chanrobleslaw
Clearly, the Local Government Code requires that the candidate must be a resident of the
place where he seeks to be elected at least one year immediately preceding the election day.
Respondent filed the petition for cancellation of petitioner's COC on the ground that the
latter made material misrepresentation when he declared therein that he is a resident of
Uyugan, Batanes for at least one year immediately preceeding the day of elections.
The term "residence" is to be understood not in its common acceptation as referring to
"dwelling" or "habitation," but rather to "domicile" or legal residence, 25 that is, "the place
where a party actually or constructively has his permanent home, where he, no matter
where he may be found at any given time, eventually intends to return and remain (animus
manendi)."26 A domicile of origin is acquired by every person at birth. It is usually the place
where the child's parents reside and continues until the same is abandoned by acquisition of
new domicile (domicile of choice). It consists not only in the intention to reside in a fixed
place but also personal presence in that place, coupled with conduct indicative of such
intention.27
Petitioner was a natural born Filipino who was born and raised in Uyugan, Batanes. Thus, it
could be said that he had his domicile of origin in Uyugan, Batanes. However, he later
worked in Canada and became a Canadian citizen. In Coquilla v. COMELEC28 we ruled that
naturalization in a foreign country may result in an abandonment of domicile in the
Philippines. This holds true in petitioner's case as permanent resident status in Canada is
required for the acquisition of Canadian citizenship.29 Hence, petitioner had effectively
abandoned his domicile in the Philippines and transferred his domicile of choice in Canada.
His frequent visits to Uyugan, Batanes during his vacation from work in Canada cannot be
considered as waiver of such abandonment.
The next question is what is the effect of petitioner's retention of his Philippine citizenship
under RA No. 9225 on his residence or domicile?
In Japzon v. COMELEC,30 wherein respondent Ty reacquired his Philippine citizenship under
RA No. 9225 and run for Mayor of General Macarthur, Eastern Samar and whose residency in
the said place was put in issue, we had the occasion to state, thus:cralawlawlibrary
[Petitioner's] reacquisition of his Philippine citizenship under Republic Act No. 9225 had no
automatic impact or effect on his residence/domicile. He could still retain his domicile in
the USA, and he did not necessarily regain his domicile in the Municipality of General
Macarthur, Eastern Samar, Philippines. Ty merely had the option to again establish his
domicile in the Municipality of General Macarthur, Eastern Samar, Philippines, said place
becoming his new domicile of choice. The length of his residence therein shall be determined
from the time he made it his domicile of choice, and it shall not retroact to the time of his
birth.31chanrobleslaw
Hence, petitioner's retention of his Philippine citizenship under RA No. 9225 did not
automatically make him regain his residence in Uyugan, Batanes. He must still prove that
after becoming a Philippine citizen on September 13, 2012, he had reestablished Uyugan,
Batanes as his new domicile of choice which is reckoned from the time he made it as such.
The COMELEC found that petitioner failed to present competent evidence to prove that he
was able to reestablish his residence in Uyugan within a period of one year immediately
preceding the May 13, 2013 elections. It found that it was only after reacquiring his Filipino
citizenship by virtue of RA No. 9225 on September 13, 2012 that petitioner can rightfully
claim that he re-established his domicile in Uyugan, Batanes, if such was accompanied by
physical presence thereat, coupled with an actual intent to reestablish his domicile there.
However, the period from September 13, 2012 to May 12, 2013 was even less than the one
year residency required by law.
Doctrinally entrenched is the rule that in a petition for certiorari, findings of fact of
administrative bodies, such as respondent COMELEC in the instant case, are final unless
grave abuse of discretion has marred such factual determinations/~ Clearly, where there is
no proof of grave abuse of discretion, arbitrariness, fraud or error of law in the questioned
Resolutions, we may not review the factual findings of COMELEC, nor substitute its own
findings on the sufficiency of evidence.33
Records indeed showed that petitioner failed to prove that he had been a resident of
Uyugan, Batanes for at least one year immediately preceding the day of elections as required
under Section 39 of the Local Government Code.
Petitioner's argument that his nine (9) months of actual stay in Uyugan, Batanes, prior to the
May 13, 2013 local elections is a substantial compliance with the law, is not persuasive.
In Aquino v. Commission on Elections,34 we held:cralawlawlibrary
x x x A democratic government is necessarily a government of laws. In a republican
government those laws are themselves ordained by the people. Through their
representatives, they dictate the qualifications necessary for service in government
positions. And as petitioner clearly lacks one of the essential qualifications for running for
membership in the House of Representatives, not even the will of a majority or plurality of
the voters of the Second District of Makati City would substitute for a requirement mandated
by the fundamental law itself.35chanrobleslaw
Petitioner had made a material misrepresentation by stating in his COC that he is a resident
of Uyugan, Batanes for at least one (1) year immediately proceeding the day of the election,
thus, a ground for a petition under Section 78 of the Omnibus Election Code. Section 74, in
relation to Section 78, of the OEC governs the cancellation of, and grant or denial of due
course to COCs, to wit:cralawlawlibrary
SEC. 74. Contents of certificate of candidacy. - The certificate of candidacy shall state that the
person filing it is announcing his candidacy for the office stated therein and that he is eligible
for said office; if for Member of the Batasang Pambansa, the province, including its
component cities, highly urbanized city or district or sector which he seeks to represent; the
political party to which he belongs; civil status; his date of birth; residence; his post office
address for all election purposes; his profession or occupation; that he will support and
defend the Constitution of the Philippines and will maintain true faith and allegiance thereto;
that he will obey the laws, legal orders, and decrees promulgated by the duly constituted
authorities; that he is not a permanent resident or immigrant to a foreign country; that the
obligation imposed by his oath is assumed voluntarily, without mental reservation or
purpose of evasion; and that the facts stated in the certificate of candidacy are true to the
best of his knowledge.
x x x x
SEC. 78. Petition to deny due course to or cancel a certificate of candidacy. - A verified
petition seeking to deny due course or to cancel a certificate of candidacy may be filed by
any person exclusively on the ground that any material representation contained therein as
required under Section 74 hereof is false. The petition may be filed at any time not later than
twenty-five days from the time of the filing of the certificate of candidacy and shall be
decided, after due notice and hearing, not later than fifteen days before the
election.chanrobleslaw
We have held that in order to justify the cancellation of COC under Section 78, it is essential
that the false representation mentioned therein pertains to a material matter for the
sanction imposed by this provision would affect the substantive rights of a candidate - the
right to run for the elective post for which he filed the certificate of candidacy. 36 We
concluded that material representation contemplated by Section 78 refers to qualifications
for elective office, such as the requisite residency, age, citizenship or any other legal
qualification necessary to run for a local elective office as provided for in the Local
Government Code.37 Furthermore, aside from the requirement of materiality, the
misrepresentation must consist of a deliberate attempt to mislead, misinform, or hide a fact
which would otherwise render a candidate ineligible. 38 We, therefore, find no grave abuse of
discretion committed by the COMELEC in canceling petitioner's COC for material
misrepresentation.
WHEREFORE, the petition for certiorari is DISMISSED. The Resolution dated May 3, 2013 of
the COMELEC First Division and the Resolution dated November 6, 2013 of the COMELEC En
Banc and are hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 88831 November 8, 1990
MATEO CAASI, petitioner,
vs.
THE HON. COURT OF APPEALS and MERITO C. MIGUEL, respondents.
G.R. No. 84508 November 13, 1990
ANECITO CASCANTE petitioner,
vs.
THE COMMISSION ON ELECTIONS and MERITO C. MIGUEL, respondents.
Ireneo B. Orlino for petitioner in G.R. Nos. 88831 & 84508.
Montemayor & Montemayor Law Office for private respondent.
GRIÑO-AQUINO, J.:
These two cases were consolidated because they have the same objective; the
disqualification under Section 68 of the Omnibus Election Code of the private respondent,
Merito Miguel for the position of municipal mayor of Bolinao, Pangasinan, to which he was
elected in the local elections of January 18, 1988, on the ground that he is a green card
holder, hence, a permanent resident of the United States of America, not of Bolinao.
G.R. No. 84508 is a petition for review on certiorari of the decision dated January 13, 1988 of
the COMELEC First Division, dismissing the three (3) petitions of Anecito Cascante (SPC No.
87-551), Cederico Catabay (SPC No. 87-595) and Josefino C. Celeste (SPC No. 87-604), for the
disqualification of Merito C. Miguel filed prior to the local elections on January 18, 1988.
G.R. No. 88831, Mateo Caasi vs. Court of Appeals, et al., is a petition for review of the
decision dated June 21, 1989, of the Court of Appeals in CA-G.R. SP No. 14531 dismissing the
petition for quo warranto filed by Mateo Caasi, a rival candidate for the position of municipal
mayor of Bolinao, Pangasinan, also to disqualify Merito Miguel on account of his being a
green card holder.
In his answer to both petitions, Miguel admitted that he holds a green card issued to him by
the US Immigration Service, but he denied that he is a permanent resident of the United
States. He allegedly obtained the green card for convenience in order that he may freely
enter the United States for his periodic medical examination and to visit his children there.
He alleged that he is a permanent resident of Bolinao, Pangasinan, that he voted in all
previous elections, including the plebiscite on February 2,1987 for the ratification of the
1987 Constitution, and the congressional elections on May 18,1987.
After hearing the consolidated petitions before it, the COMELEC with the exception of
Commissioner Anacleto Badoy, Jr., dismissed the petitions on the ground that:
The possession of a green card by the respondent (Miguel) does not
sufficiently establish that he has abandoned his residence in the
Philippines. On the contrary, inspite (sic) of his green card,
Respondent has sufficiently indicated his intention to continuously
reside in Bolinao as shown by his having voted in successive
elections in said municipality. As the respondent meets the basic
requirements of citizenship and residence for candidates to elective
local officials (sic) as provided for in Section 42 of the Local
Government Code, there is no legal obstacle to his candidacy for
mayor of Bolinao, Pangasinan. (p. 12, Rollo, G.R. No. 84508).
In his dissenting opinion, Commissioner Badoy, Jr. opined that:
A green card holder being a permanent resident of or an immigrant
of a foreign country and respondent having admitted that he is a
green card holder, it is incumbent upon him, under Section 68 of
the Omnibus Election Code, to prove that he "has waived his status
as a permanent resident or immigrant" to be qualified to run for
elected office. This respondent has not done. (p. 13, Rollo, G.R. No.
84508.)
In G.R. No. 88831, "Mateo Caasi, petitioner vs. Court of Appeals and Merito Miguel,
respondents," the petitioner prays for a review of the decision dated June 21, 1989 of the
Court of Appeals in CA-G.R. SP No. 14531 "Merito C. Miguel, petitioner vs. Hon. Artemio R.
Corpus, etc., respondents," reversing the decision of the Regional Trial Court which denied
Miguel's motion to dismiss the petition for quo warranto filed by Caasi. The Court of Appeals
ordered the regional trial court to dismiss and desist from further proceeding in the quo
warranto case. The Court of Appeals held:
... it is pointless for the Regional Trial Court to hear the case
questioning the qualification of the petitioner as resident of the
Philippines, after the COMELEC has ruled that the petitioner meets
the very basic requirements of citizenship and residence for
candidates to elective local officials (sic) and that there is no legal
obstacles (sic) for the candidacy of the petitioner, considering that
decisions of the Regional Trial Courts on quo warranto cases under
the Election Code are appealable to the COMELEC. (p. 22, Rollo,
G.R. No. 88831.)
These two cases pose the twin issues of: (1) whether or not a green card is proof that the
holder is a permanent resident of the United States, and (2) whether respondent Miguel had
waived his status as a permanent resident of or immigrant to the U.S.A. prior to the local
elections on January 18, 1988.
Section 18, Article XI of the 1987 Constitution provides:
Sec. 18. Public officers and employees owe the State and this
Constitution allegiance at all times, and any public officer or
employee who seeks to change his citizenship or acquire the status
of an immigrant of another country during his tenure shall be dealt
with by law.
In the same vein, but not quite, Section 68 of the Omnibus Election Code of the Philippines
(B.P. Blg. 881) provides:
SEC. 68. Disqualifications ... Any person who is a permanent
resident of or an immigrant to a foreign country shall not be
qualified to run for any elective office under this Code, unless said
person has waived his status as permanent resident or immigrant
of a foreign country in accordance with the residence requirement
provided for in the election laws. (Sec. 25, 1971, EC).
In view of current rumor that a good number of elective and appointive public officials in the
present administration of President Corazon C. Aquino are holders of green cards in foreign
countries, their effect on the holders' right to hold elective public office in the Philippines is a
question that excites much interest in the outcome of this case.
In the case of Merito Miguel, the Court deems it significant that in the "Application
for Immigrant Visa and Alien Registration" (Optional Form No. 230, Department of State)
which Miguel filled up in his own handwriting and submitted to the US Embassy in Manila
before his departure for the United States in 1984, Miguel's answer to Question No. 21
therein regarding his "Length of intended stay (if permanently, so state)," Miguel's answer
was, "Permanently."
On its face, the green card that was subsequently issued by the United States Department of
Justice and Immigration and Registration Service to the respondent Merito C. Miguel
identifies him in clear bold letters as a RESIDENT ALIEN. On the back of the card, the upper
portion, the following information is printed:
Alien Registration Receipt Card.
Person identified by this card is entitled
to reside permanently and work in the
United States." (Annex A pp. 189-190,
Rollo of G.R. No. 84508.)
Despite his vigorous disclaimer, Miguel's immigration to the United States in 1984
constituted an abandonment of his domicile and residence in the Philippines. For he did not
go to the United States merely to visit his children or his doctor there; he entered the limited
States with the intention to have there permanently as evidenced by his application for an
immigrant's (not a visitor's or tourist's) visa. Based on that application of his, he was issued
by the U.S. Government the requisite green card or authority to reside there permanently.
Immigration is the removing into one place from another; the act of
immigrating the entering into a country with the intention of
residing in it.
An immigrant is a person who removes into a country for the
purpose of permanent residence. As shown infra 84, however,
statutes sometimes give a broader meaning to the term
"immigrant." (3 CJS 674.)
As a resident alien in the U.S., Miguel owes temporary and local allegiance to the U.S., the
country in which he resides (3 CJS 527). This is in return for the protection given to him
during the period of his residence therein.
Aliens reading in the limited States, while they are permitted to
remain, are in general entitled to the protection of the laws with
regard to their rights of person and property and to their civil and
criminal responsibility.
In general, aliens residing in the United States, while they are
permitted to remain are entitled to the safeguards of the
constitution with regard to their rights of person and property and
to their civil and criminal responsibility. Thus resident alien friends
are entitled to the benefit of the provision of the Fourteenth
Amendment to the federal constitution that no state shall deprive
"any person" of life liberty, or property without due process of law,
or deny to any person the equal protection of the law, and the
protection of this amendment extends to the right to earn a
livelihood by following the ordinary occupations of life. So an alien
is entitled to the protection of the provision of the Fifth
Amendment to the federal constitution that no person shall be
deprived of life, liberty, or property without due process of law. (3
CJS 529-530.)
Section 18, Article XI of the 1987 Constitution which provides that "any public officer or
employee who seeks to change his citizenship or acquire the status of an immigrant of
another country during his tenure shall be dealt with by law" is not applicable to Merito
Miguel for he acquired the status of an immigrant of the United States before he was elected
to public office, not "during his tenure" as mayor of Bolinao, Pangasinan.
The law applicable to him is Section 68 of the Omnibus Election Code (B.P. Blg. 881), which
provides:
xxx xxx xxx
Any person who is a permanent resident of or an immigrant to a
foreign country shall not be qualified to run for any elective office
under this Code, unless such person has waived his status as
permanent resident or immigrant of a foreign country in
accordance with the residence requirement provided for in the
election laws.'
Did Miguel, by returning to the Philippines in November 1987 and presenting himself as a
candidate for mayor of Bolinao in the January 18,1988 local elections, waive his status as a
permanent resident or immigrant of the United States?
To be "qualified to run for elective office" in the Philippines, the law requires that the
candidate who is a green card holder must have "waived his status as a permanent resident
or immigrant of a foreign country." Therefore, his act of filing a certificate of candidacy for
elective office in the Philippines, did not of itself constitute a waiver of his status as a
permanent resident or immigrant of the United States. The waiver of his green card should
be manifested by some act or acts independent of and done prior to filing his candidacy for
elective office in this country. Without such prior waiver, he was "disqualified to run for any
elective office" (Sec. 68, Omnibus Election Code).
Respondent Merito Miguel admits that he holds a green card, which proves that he is a
permanent resident or immigrant it of the United States, but the records of this case are
starkly bare of proof that he had waived his status as such before he ran for election as
municipal mayor of Bolinao on January 18, 1988. We, therefore, hold that he was disqualified
to become a candidate for that office.
The reason for Section 68 of the Omnibus Election Code is not hard to find. Residence in the
municipality where he intends to run for elective office for at least one (1) year at the time of
filing his certificate of candidacy, is one of the qualifications that a candidate for elective
public office must possess (Sec. 42, Chap. 1, Title 2, Local Government Code). Miguel did not
possess that qualification because he was a permanent resident of the United States and he
resided in Bolinao for a period of only three (3) months (not one year) after his return to the
Philippines in November 1987 and before he ran for mayor of that municipality on January
18, 1988.
In banning from elective public office Philippine citizens who are permanent residents or
immigrants of a foreign country, the Omnibus Election Code has laid down a clear policy of
excluding from the right to hold elective public office those Philippine citizens who possess
dual loyalties and allegiance. The law has reserved that privilege for its citizens who have cast
their lot with our country "without mental reservations or purpose of evasion." The
assumption is that those who are resident aliens of a foreign country are incapable of such
entire devotion to the interest and welfare of their homeland for with one eye on their
public duties here, they must keep another eye on their duties under the laws of the foreign
country of their choice in order to preserve their status as permanent residents thereof.
Miguel insists that even though he applied for immigration and permanent residence in the
United States, he never really intended to live there permanently, for all that he wanted was
a green card to enable him to come and go to the U.S. with ease. In other words, he would
have this Court believe that he applied for immigration to the U.S. under false pretenses;
that all this time he only had one foot in the United States but kept his other foot in the
Philippines. Even if that were true, this Court will not allow itself to be a party to his duplicity
by permitting him to benefit from it, and giving him the best of both worlds so to speak.
Miguel's application for immigrant status and permanent residence in the U.S. and his
possession of a green card attesting to such status are conclusive proof that he is a
permanent resident of the U.S. despite his occasional visits to the Philippines. The waiver of
such immigrant status should be as indubitable as his application for it. Absent clear
evidence that he made an irrevocable waiver of that status or that he surrendered his green
card to the appropriate U.S. authorities before he ran for mayor of Bolinao in the local
elections on January 18, 1988, our conclusion is that he was disqualified to run for said public
office, hence, his election thereto was null and void.
WHEREFORE, the appealed orders of the COMELEC and the Court of Appeals in SPC Nos. 87-
551, 87-595 and 87-604, and CA-G.R. SP No. 14531 respectively, are hereby set aside. The
election of respondent Merito C. Miguel as municipal mayor of Bolinao, Pangasinan is hereby
annulled. Costs against the said respondent.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin,
Sarmiento, Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.
EN BANC
G.R. No. 151914 July 31, 2002
TEODULO M. COQUILLA, petitioner,
vs.
THE HON. COMMISSION ON ELECTIONS and MR. NEIL M. ALVAREZ, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the resolution, 1 dated July 19, 2001, of the Second
Division of the Commission on Elections (COMELEC), ordering the cancellation of the
certificate of candidacy of petitioner Teodulo M. Coquilla for the position of mayor of Oras,
Eastern Samar in the May 14, 2001 elections and the order, dated January 30, 2002, of the
COMELEC en banc denying petitioner’s motion for reconsideration.
The facts are as follows:
Petitioner Coquilla was born on February 17, 1938 of Filipino parents in Oras, Eastern Samar.
He grew up and resided there until 1965, when he joined the United States Navy. He was
subsequently naturalized as a U.S. citizen. 2 From 1970 to 1973, petitioner thrice visited the
Philippines while on leave from the U.S. Navy. 3 Otherwise, even after his retirement from the
U.S. Navy in 1985, he remained in the United States.
On October 15, 1998, petitioner came to the Philippines and took out a residence certificate,
although he continued making several trips to the United States, the last of which took place
on July 6, 2000 and lasted until August 5, 2000.4 Subsequently, petitioner applied for
repatriation under R.A. No. 81715 to the Special Committee on Naturalization. His application
was approved on November 7, 2000, and, on November 10, 2000, he took his oath as a
citizen of the Philippines. Petitioner was issued Certificate of Repatriation No. 000737 on
November 10, 2000 and Bureau of Immigration Identification Certificate No. 115123 on
November 13, 2000.
On November 21, 2000, petitioner applied for registration as a voter of Butnga, Oras, Eastern
Samar. His application was approved by the Election Registration Board on January 12,
2001.6 On February 27, 2001, he filed his certificate of candidacy stating therein that he had
been a resident of Oras, Eastern Samar for "two (2) years." 7
On March 5, 2001, respondent Neil M. Alvarez, who was the incumbent mayor of Oras and
who was running for reelection, sought the cancellation of petitioner’s certificate of
candidacy on the ground that the latter had made a material misrepresentation in his
certificate of candidacy by stating that he had been a resident of Oras for two years when in
truth he had resided therein for only about six months since November 10, 2000, when he
took his oath as a citizen of the Philippines.
The COMELEC was unable to render judgment on the case before the elections on May 14,
2001. Meanwhile, petitioner was voted for and received the highest number of votes (6,131)
against private respondent’s 5,752 votes, or a margin of 379 votes. On May 17, 2001,
petitioner was proclaimed mayor of Oras by the Municipal Board of Canvassers. 8 He
subsequently took his oath of office.
On July 19, 2001, the Second Division of the COMELEC granted private respondent’s petition
and ordered the cancellation of petitioner’s certificate of candidacy on the basis of the
following findings:
Respondent’s frequent or regular trips to the Philippines and stay in Oras,
Eastern Samar after his retirement from the U.S. Navy in 1985 cannot be
considered as a waiver of his status as a permanent resident or immigrant . . . of
the U.S.A. prior to November 10, 2000 as would qualify him to acquire the status
of residency for purposes of compliance with the one-year residency
requirement of Section 39(a) of the Local Government Code of 1991 in relation
to Sections 65 and 68 of the Omnibus Election Code. The one (1) year residency
requirement contemplates of the actual residence of a Filipino citizen in the
constituency where he seeks to be elected.
All things considered, the number of years he claimed to have resided or stayed
in Oras, Eastern Samar since 1985 as an American citizen and permanent
resident of the U.S.A. before November 10, 2000 when he reacquired his
Philippine citizenship by [repatriation] cannot be added to his actual residence
thereat after November 10, 2000 until May 14, 2001 to cure his deficiency in
days, months, and year to allow or render him eligible to run for an elective
office in the Philippines. Under such circumstances, by whatever formula of
computation used, respondent is short of the one-year residence requirement
before the May 14, 2001 elections.9
Petitioner filed a motion for reconsideration, but his motion was denied by the COMELEC en
banc on January 30, 2002. Hence this petition.
I.
Two questions must first be resolved before considering the merits of this case: (a) whether
the 30-day period for appealing the resolution of the COMELEC was suspended by the filing
of a motion for reconsideration by petitioner and (b) whether the COMELEC retained
jurisdiction to decide this case notwithstanding the proclamation of petitioner.
A. With respect to the first question, private respondent contends that the petition in
this case should be dismissed because it was filed late; that the COMELEC en banc had
denied petitioner’s motion for reconsideration for being pro forma; and that, pursuant to
Rule 19, §4 of the COMELEC Rules of Procedure, the said motion did not suspend the running
of the 30-day period for filing this petition. He points out that petitioner received a copy of
the resolution, dated July 19, 2001, of the COMELEC’s Second Division on July 28, 2001, so
that he had only until August 27, 2001 within which to file this petition. Since the petition in
this case was filed on February 11, 2002, the same should be considered as having been filed
late and should be dismissed.
Private respondent’s contention has no merit.
Rule 19 of the COMELEC Rules of Procedure provides in pertinent parts:
Sec. 2. Period for Filing Motions for Reconsideration. – A motion to reconsider a
decision, resolution, order, or ruling of a Division shall be filed within five days
from the promulgation thereof. Such motion, if not pro-forma, suspends the
execution for implementation of the decision, resolution, order, or ruling.
Sec. 4. Effect of Motion for Reconsideration on Period to Appeal. – A motion to
reconsider a decision, resolution, order, or ruling, when not pro-forma,
suspends the running of the period to elevate the matter to the Supreme Court.
The five-day period for filing a motion for reconsideration under Rule 19, §2 should be
counted from the receipt of the decision, resolution, order, or ruling of the COMELEC
Division.10 In this case, petitioner received a copy of the resolution of July 19, 2001 of the
COMELEC’s Second Division on July 28, 2001. Five days later, on August 2, 2001, he filed his
motion for reconsideration. On February 6, 2002, he received a copy of the order, dated
January 30, 2002, of the COMELEC en banc denying his motion for reconsideration. Five days
later, on February 11, 2002, he filed this petition for certiorari. There is no question,
therefore, that petitioner’s motion for reconsideration of the resolution of the COMELEC
Second Division, as well as his petition for certiorari to set aside of the order of the
COMELEC en banc, was filed within the period provided for in Rule 19, §2 of the COMELEC
Rules of Procedure and in Art. IX(A), §7 of the Constitution.
It is contended, however, that petitioner’s motion for reconsideration before the
COMELEC en banc did not suspend the running of the period for filing this petition because
the motion was pro forma and, consequently, this petition should have been filed on or
before August 27, 2001. It was actually filed, however, only on February 11, 2002. Private
respondent cites the finding of the COMELEC en banc that —
An incisive examination of the allegations in the Motion for Reconsideration
shows that the same [are] a mere rehash of his averments contained in
his Verified Answer and Memorandum. Neither did respondent raise new
matters that would sufficiently warrant a reversal of the assailed resolution of
the Second Division. This makes the said Motion pro forma.11
We do not think this contention is correct. The motion for reconsideration was not pro
forma and its filing did suspend the period for filing the petition for certiorari in this case. The
mere reiteration in a motion for reconsideration of the issues raised by the parties and
passed upon by the court does not make a motion pro forma; otherwise, the movant’s
remedy would not be a reconsideration of the decision but a new trial or some other
remedy.12 But, as we have held in another case:13
Among the ends to which a motion for reconsideration is addressed, one is
precisely to convince the court that its ruling is erroneous and improper,
contrary to the law or the evidence; and in doing so, the movant has to dwell of
necessity upon the issues passed upon by the court. If a motion for
reconsideration may not discuss these issues, the consequence would be that
after a decision is rendered, the losing party would be confined to filing only
motions for reopening and new trial.
Indeed, in the cases where a motion for reconsideration was held to be pro forma, the
motion was so held because (1) it was a second motion for reconsideration,14 or (2) it did not
comply with the rule that the motion must specify the findings and conclusions alleged to be
contrary to law or not supported by the evidence,15 or (3) it failed to substantiate the alleged
errors,15 or (4) it merely alleged that the decision in question was contrary to law,17 or (5) the
adverse party was not given notice thereof. 18 The 16-page motion for reconsideration filed
by petitioner in the COMELEC en banc suffers from none of the foregoing defects, and it was
error for the COMELEC en banc to rule that petitioner’s motion for reconsideration was pro
forma because the allegations raised therein are a mere "rehash" of his earlier pleadings or
did not raise "new matters." Hence, the filing of the motion suspended the running of the 30-
day period to file the petition in this case, which, as earlier shown, was done within the
reglementary period provided by law.
B. As stated before, the COMELEC failed to resolve private respondent’s petition for
cancellation of petitioner’s certificate of candidacy before the elections on May 14, 2001. In
the meantime, the votes were canvassed and petitioner was proclaimed elected with a
margin of 379 votes over private respondent. Did the COMELEC thereby lose authority to act
on the petition filed by private respondent?
R.A. No. 6646 provides:
SECTION 6. Effect of Disqualification Case. – Any candidate who has been
declared by final judgment to be disqualified shall not be voted for, and the
votes cast for him shall not be counted. If for any reason a candidate is not
declared by final judgment before an election to be disqualified and he is voted
for and receives the winning number of votes in such election, the Court or
Commission shall continue with the trial and hearing of the action, inquiry, or
protest and, upon motion of the complainant or any intervenor, may during the
pendency thereof order the suspension of the proclamation of such
candidate whenever the evidence of his guilt is strong. (Emphasis added)
SECTION 7. Petition to Deny Due Course To or Cancel a Certificate of Candidacy.
— The procedure hereinabove provided shall apply to petitions to deny due
course to or cancel a certificate of candidacy as provided in Section 78 of Batas
Pambansa Blg. 881.
The rule then is that candidates who are disqualified by final judgment before the election
shall not be voted for and the votes cast for them shall not be counted. But those against
whom no final judgment of disqualification had been rendered may be voted for and
proclaimed, unless, on motion of the complainant, the COMELEC suspends their
proclamation because the grounds for their disqualification or cancellation of their
certificates of candidacy are strong. Meanwhile, the proceedings for disqualification of
candidates or for the cancellation or denial of certificates of candidacy, which have been
begun before the elections, should continue even after such elections and proclamation of
the winners. In Abella v. COMELEC19 and Salcedo II v. COMELEC,20 the candidates whose
certificates of candidacy were the subject of petitions for cancellation were voted for and,
having received the highest number of votes, were duly proclaimed winners. This Court, in
the first case, affirmed and, in the second, reversed the decisions of the COMELEC rendered
after the proclamation of candidates, not on the ground that the latter had been divested of
jurisdiction upon the candidates’ proclamation but on the merits.
II.
On the merits, the question is whether petitioner had been a resident of Oras, Eastern Samar
at least one (1) year before the elections held on May 14, 2001 as he represented in his
certificate of candidacy. We find that he had not.
First, §39(a) of the Local Government Code (R.A No. 7160) provides:
Qualifications. - (a) An elective local official must be a citizen of the Philippines;
a registered voter in the barangay, municipality, city, or province or, in the case
of a member of the sangguniang panlalawigan, sangguniang panlungsod, or
sangguniang bayan, the district where he intends to be elected; a resident
therein for at least one (1) year immediately preceding the day of the election;
and able to read and write Filipino or any other local language or dialect.
(Emphasis added)
The term "residence" is to be understood not in its common acceptation as referring to
"dwelling" or "habitation,"21 but rather to "domicile" or legal residence,22 that is, "the place
where a party actually or constructively has his permanent home, where he, no matter
where he may be found at any given time, eventually intends to return and remain (animus
manendi)."23 A domicile of origin is acquired by every person at birth. It is usually the place
where the child’s parents reside and continues until the same is abandoned by acquisition of
new domicile (domicile of choice).24
In the case at bar, petitioner lost his domicile of origin in Oras by becoming a U.S. citizen
after enlisting in the U.S. Navy in 1965. From then on and until November 10, 2000, when he
reacquired Philippine citizenship, petitioner was an alien without any right to reside in the
Philippines save as our immigration laws may have allowed him to stay as a visitor or as a
resident alien.
Indeed, residence in the United States is a requirement for naturalization as a U.S. citizen.
Title 8, §1427(a) of the United States Code provides:
Requirements of naturalization. – Residence
(a) No person, except as otherwise provided in this subchapter, shall be
naturalized unless such applicant, (1) immediately preceding the date of filing
his application for naturalization has resided continuously, after being lawfully
admitted for permanent residence, within the United States for at least five
years and during the five years immediately preceding the date of filing his
petition has been physically present therein for periods totaling at least half of
that time, and who has resided within the State or within the district of the
Service in the United States in which the applicant filed the application for at
least three months, (2) has resided continuously within the United States from
the date of the application up to the time of admission to citizenship, and (3)
during all the period referred to in this subsection has been and still is a person
of good moral character, attached to the principles of the Constitution of the
United States, and well disposed to the good order and happiness of the United
States. (Emphasis added)
In Caasi v. Court of Appeals,25 this Court ruled that immigration to the United States by virtue
of a "greencard," which entitles one to reside permanently in that country, constitutes
abandonment of domicile in the Philippines. With more reason then does naturalization in a
foreign country result in an abandonment of domicile in the Philippines.
Nor can petitioner contend that he was "compelled to adopt American citizenship" only by
reason of his service in the U.S. armed forces. 26 It is noteworthy that petitioner was
repatriated not under R.A. No. 2630, which applies to the repatriation of those who lost their
Philippine citizenship by accepting commission in the Armed Forces of the United States, but
under R.A. No. 8171, which, as earlier mentioned, provides for the repatriation of, among
others, natural-born Filipinos who lost their citizenship on account of political or economic
necessity. In any event, the fact is that, by having been naturalized abroad, he lost his
Philippine citizenship and with it his residence in the Philippines. Until his reacquisition of
Philippine citizenship on November 10, 2000, petitioner did not reacquire his legal residence
in this country.
Second, it is not true, as petitioner contends, that he reestablished residence in this country
in 1998 when he came back to prepare for the mayoralty elections of Oras by securing a
Community Tax Certificate in that year and by "constantly declaring" to his townmates of his
intention to seek repatriation and run for mayor in the May 14, 2001 elections. 27 The status
of being an alien and a non-resident can be waived either separately, when one acquires the
status of a resident alien before acquiring Philippine citizenship, or at the same time when
one acquires Philippine citizenship. As an alien, an individual may obtain an immigrant visa
under §1328 of the Philippine Immigration Act of 1948 and an Immigrant Certificate of
Residence (ICR)29 and thus waive his status as a non-resident. On the other hand, he may
acquire Philippine citizenship by naturalization under C.A. No. 473, as amended, or, if he is a
former Philippine national, he may reacquire Philippine citizenship by repatriation or by an
act of Congress,30 in which case he waives not only his status as an alien but also his status as
a non-resident alien.
In the case at bar, the only evidence of petitioner’s status when he entered the country on
October 15, 1998, December 20, 1998, October 16, 1999, and June 23, 2000 is the statement
"Philippine Immigration [–] Balikbayan" in his 1998-2008 U.S. passport. As for his entry on
August 5, 2000, the stamp bore the added inscription "good for one year stay." 31 Under §2 of
R.A. No. 6768 (An Act Instituting a Balikbayan Program), the term balikbayan includes a
former Filipino citizen who had been naturalized in a foreign country and comes or returns to
the Philippines and, if so, he is entitled, among others, to a "visa-free entry to the Philippines
for a period of one (1) year" (§3(c)). It would appear then that when petitioner entered the
country on the dates in question, he did so as a visa-free balikbayan visitor whose stay as
such was valid for one year only. Hence, petitioner can only be held to have waived his status
as an alien and as a non-resident only on November 10, 2000 upon taking his oath as a
citizen of the Philippines under R.A. No. 8171. 32 He lacked the requisite residency to qualify
him for the mayorship of Oras, Eastern, Samar.
Petitioner invokes the ruling in Frivaldo v. Commission on Elections 33 in support of his
contention that the residency requirement in §39(a) of the Local Government Code includes
the residency of one who is not a citizen of the Philippines. Residency, however, was not an
issue in that case and this Court did not make any ruling on the issue now at bar. The
question in Frivaldo was whether petitioner, who took his oath of repatriation on the same
day that his term as governor of Sorsogon began on June 30, 1995, complied with the
citizenship requirement under §39(a). It was held that he had, because citizenship may be
possessed even on the day the candidate assumes office. But in the case of residency, as
already noted, §39(a) of the Local Government Code requires that the candidate must have
been a resident of the municipality "for at least one (1) year immediately preceding the day
of the election."
Nor can petitioner invoke this Court’s ruling in Bengzon III v. House of Representatives
Electoral Tribunal.34 What the Court held in that case was that, upon repatriation, a former
natural-born Filipino is deemed to have recovered his original status as a natural-born
citizen.
Third, petitioner nonetheless says that his registration as a voter of Butnga, Oras, Eastern
Samar in January 2001 is conclusive of his residency as a candidate because §117 of the
Omnibus Election Code requires that a voter must have resided in the Philippines for at least
one year and in the city or municipality wherein he proposes to vote for at least six months
immediately preceding the election. As held in Nuval v. Guray,35 however, registration as a
voter does not bar the filing of a subsequent case questioning a candidate’s lack of residency.
Petitioner’s invocation of the liberal interpretation of election laws cannot avail him any. As
held in Aquino v. Commission on Elections:36
A democratic government is necessarily a government of laws. In a republican
government those laws are themselves ordained by the people. Through their
representatives, they dictate the qualifications necessary for service in
government positions. And as petitioner clearly lacks one of the essential
qualifications for running for membership in the House of Representatives, not
even the will of a majority or plurality of the voters of the Second District of
Makati City would substitute for a requirement mandated by the fundamental
law itself.
Fourth, petitioner was not denied due process because the COMELEC failed to act on his
motion to be allowed to present evidence. Under §5(d), in relation to §7, of R.A. No. 6646
(Electoral Reforms Law of 1987), proceedings for denial or cancellation of a certificate of
candidacy are summary in nature. The holding of a formal hearing is thus not de rigeur. In
any event, petitioner cannot claim denial of the right to be heard since he filed a Verified
Answer, a Memorandum and a Manifestation, all dated March 19, 2001, before the
COMELEC in which he submitted documents relied by him in this petition, which, contrary to
petitioner’s claim, are complete and intact in the records.
III.
The statement in petitioner’s certificate of candidacy that he had been a resident of Oras,
Eastern Samar for "two years" at the time he filed such certificate is not true. The question is
whether the COMELEC was justified in ordering the cancellation of his certificate of
candidacy for this reason. We hold that it was. Petitioner made a false representation of a
material fact in his certificate of candidacy, thus rendering such certificate liable to
cancellation. The Omnibus Election Code provides:
 SEC. 74. Contents of certificate of candidacy. – The certificate of candidacy shall
state that the person filing it is announcing his candidacy for the office stated
therein and that he is eligible for said office; if for Member of the Batasang
Pambansa, the province, including its component cities, highly urbanized city or
district or sector which he seeks to represent; the political party to which he
belongs; civil status; his date of birth; residence; his post office address for all
election purposes; his profession or occupation; that he will support and defend
the Constitution of the Philippines and will maintain true faith and allegiance
thereto; that he will obey the laws, legal orders, and decrees promulgated by
the duly constituted authorities; that he is not a permanent resident or
immigrant to a foreign country; that the obligation imposed by his oath is
assumed voluntarily, without mental reservation or purpose of evasion; and that
the facts stated in the certificate of candidacy are true to the best of his
knowledge.
SEC. 78. Petition to deny due course to or cancel a certificate of candidacy. – A
verified petition seeking to deny due course or to cancel a certificate of
candidacy may be filed by any person exclusively on the ground that any
material representation contained therein as required under Section 74 hereof
is false. The petition may be filed at any time not later than twenty-five days
from the time of the filing of the certificate of candidacy and shall be decided,
after due notice and hearing, not later than fifteen days before the election.
Indeed, it has been held that a candidate’s statement in her certificate of candidacy for the
position of governor of Leyte that she was a resident of Kananga, Leyte when this was not
so37 or that the candidate was a "natural-born" Filipino when in fact he had become an
Australian citizen38 constitutes a ground for the cancellation of a certificate of candidacy. On
the other hand, we held in Salcedo II v. COMELEC39 that a candidate who used her husband’s
family name even though their marriage was void was not guilty of misrepresentation
concerning a material fact. In the case at bar, what is involved is a false statement
concerning a candidate’s qualification for an office for which he filed the certificate of
candidacy. This is a misrepresentation of a material fact justifying the cancellation of
petitioner’s certificate of candidacy. The cancellation of petitioner’s certificate of candidacy
in this case is thus fully justified.
WHEREFORE, the petition is DISMISSED and the resolution of the Second Division of the
Commission on Elections, dated July 19, 2001, and the order, dated January 30, 2002 of the
Commission on Elections en banc are AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Austria-Martinez, and Corona, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14441 December 17, 1966
PEDRO R. PALTING, petitioner,
vs.
SAN JOSE PETROLEUM INCORPORATED, respondent.
BARRERA, J.:
This is a petition for review of the order of August 29, 1958, later supplemented and
amplified by another dated September 9, 1958, of the Securities and Exchange Commission
denying the opposition to, and instead, granting the registration, and licensing the sale in the
Philippines, of 5,000,000 shares of the capital stock of the respondent-appellee San Jose
Petroleum, Inc. (hereafter referred to as SAN JOSE PETROLEUM), a corporation organized
and existing in the Republic of Panama.
On September 7, 1956, SAN JOSE PETROLEUM filed with the Philippine Securities and
Exchange Commission a sworn registration statement, for the registration and licensing for
sale in the Philippines Voting Trust Certificates representing 2,000,000 shares of its capital
stock of a par value of $0.35 a share, at P1.00 per share. It was alleged that the entire
proceeds of the sale of said securities will be devoted or used exclusively to finance the
operations of San Jose Oil Company, Inc. (a domestic mining corporation hereafter to be
referred to as SAN JOSE OIL) which has 14 petroleum exploration concessions covering an
area of a little less than 1,000,000 hectares, located in the provinces of Pangasinan, Tarlac,
Nueva Ecija, La Union, Iloilo, Cotabato, Davao and Agusan. It was the express condition of the
sale that every purchaser of the securities shall not receive a stock certificate, but a
registered or bearer-voting-trust certificate from the voting trustees named therein James L.
Buckley and Austin G.E. Taylor, the first residing in Connecticut, U.S.A., and the second in
New York City. While this application for registration was pending consideration by the
Securities and Exchange Commission, SAN JOSE PETROLEUM filed an amended Statement on
June 20, 1958, for registration of the sale in the Philippines of its shares of capital stock,
which was increased from 2,000,000 to 5,000,000, at a reduced offering price of from P1.00
to P0.70 per share. At this time the par value of the shares has also been reduced from $.35
to $.01 per share.1
Pedro R. Palting and others, allegedly prospective investors in the shares of SAN JOSE
PETROLEUM, filed with the Securities and Exchange Commission an opposition to
registration and licensing of the securities on the grounds that (1) the tie-up between the
issuer, SAN JOSE PETROLEUM, a Panamanian corporation and SAN JOSE OIL, a domestic
corporation, violates the Constitution of the Philippines, the Corporation Law and the
Petroleum Act of 1949; (2) the issuer has not been licensed to transact business in the
Philippines; (3) the sale of the shares of the issuer is fraudulent, and works or tends to work a
fraud upon Philippine purchasers; and (4) the issuer as an enterprise, as well as its business,
is based upon unsound business principles. Answering the foregoing opposition of Palting, et
al., the registrant SAN JOSE PETROLEUM claimed that it was a "business enterprise" enjoying
parity rights under the Ordinance appended to the Constitution, which parity right, with
respect to mineral resources in the Philippines, may be exercised, pursuant to the Laurel-
Langley Agreement, only through the medium of a corporation organized under the laws of
the Philippines. Thus, registrant which is allegedly qualified to exercise rights under the
Parity Amendment, had to do so through the medium of a domestic corporation, which is the
SAN JOSE OIL. It refused the contention that the Corporation Law was being violated, by
alleging that Section 13 thereof applies only to foreign corporations doing business in the
Philippines, and registrant was not doing business here. The mere fact that it was a holding
company of SAN JOSE OIL and that registrant undertook the financing of and giving technical
assistance to said corporation did not constitute transaction of business in the Philippines.
Registrant also denied that the offering for sale in the Philippines of its shares of capital stock
was fraudulent or would work or tend to work fraud on the investors. On August 29, 1958,
and on September 9, 1958 the Securities and Exchange Commissioner issued the orders
object of the present appeal.
The issues raised by the parties in this appeal are as follows:
1. Whether or not petitioner Pedro R. Palting, as a "prospective investor" in
respondent's securities, has personality to file the present petition for review of
the order of the Securities and Exchange Commission;
2. Whether or not the issue raised herein is already moot and academic;
3. Whether or not the "tie-up" between the respondent SAN JOSE PETROLEUM,
a foreign corporation, and SAN JOSE OIL COMPANY, INC., a domestic mining
corporation, is violative of the Constitution, the Laurel-Langley Agreement, the
Petroleum Act of 1949, and the Corporation Law; and
4. Whether or not the sale of respondent's securities is fraudulent, or would
work or tend to work fraud to purchasers of such securities in the Philippines.
1. In answer to the notice and order of the Securities and Exchange Commissioner, published
in 2 newspapers of general circulation in the Philippines, for "any person who is opposed" to
the petition for registration and licensing of respondent's securities, to file his opposition in 7
days, herein petitioner so filed an opposition. And, the Commissioner, having denied his
opposition and instead, directed the registration of the securities to be offered for sale,
oppositor Palting instituted the present proceeding for review of said order.
Respondent raises the question of the personality of petitioner to bring this appeal,
contending that as a mere "prospective investor", he is not an "Aggrieved" or "interested"
person who may properly maintain the suit. Citing a 1931 ruling of Utah State Supreme
Court2 it is claimed that the phrase "party aggrieved" used in the Securities Act3 and the
Rules of Court4 as having the right to appeal should refer only to issuers, dealers and
salesmen of securities.
It is true that in the cited case, it was ruled that the phrase "person aggrieved" is that party
"aggrieved by the judgment or decree where it operates on his rights of property or bears
directly upon his interest", that the word "aggrieved" refers to "a substantial grievance, a
denial of some personal property right or the imposition upon a party of a burden or
obligation." But a careful reading of the case would show that the appeal therein was
dismissed because the court held that an order of registration was not final and therefore
not appealable. The foregoing pronouncement relied upon by herein respondent was made
in construing the provision regarding an order of revocation which the court held was the
one appealable. And since the law provides that in revoking the registration of any security,
only the issuer and every registered dealer of the security are notified, excluding any person
or group of persons having no such interest in the securities, said court concluded that the
phrase "interested person" refers only to issuers, dealers or salesmen of securities.
We cannot consider the foregoing ruling by the Utah State Court as controlling on the issue
in this case. Our Securities Act in Section 7(c) thereof, requires the publication and notice of
the registration statement. Pursuant thereto, the Securities and Exchange Commissioner
caused the publication of an order in part reading as follows:
. . . Any person who is opposed with this petition must file his written opposition
with this Commission within said period (2 weeks). . . .
In other words, as construed by the administrative office entrusted with the enforcement of
the Securities Act, any person (who may not be "aggrieved" or "interested" within the legal
acceptation of the word) is allowed or permitted to file an opposition to the registration of
securities for sale in the Philippines. And this is in consonance with the generally accepted
principle that Blue Sky Laws are enacted to protect investors and prospective purchasers and
to prevent fraud and preclude the sale of securities which are in fact worthless or worth
substantially less than the asking price. It is for this purpose that herein petitioner duly filed
his opposition giving grounds therefor. Respondent SAN JOSE PETROLEUM was required to
reply to the opposition. Subsequently both the petition and the opposition were set for
hearing during which the petitioner was allowed to actively participate and did so by cross-
examining the respondent's witnesses and filing his memorandum in support of his
opposition. He therefore to all intents and purposes became a party to the proceedings. And
under the New Rules of Court,5 such a party can appeal from a final order, ruling or decision
of the Securities and Exchange Commission. This new Rule eliminating the word "aggrieved"
appearing in the old Rule, being procedural in nature,6 and in view of the express provision of
Rule 144 that the new rules made effective on January 1, 1964 shall govern not only cases
brought after they took effect but all further proceedings in cases then pending, except to
the extent that in the opinion of the Court their application would not be feasible or would
work injustice, in which event the former procedure shall apply, we hold that the present
appeal is properly within the appellate jurisdiction of this Court.
The order allowing the registration and sale of respondent's securities is clearly a final order
that is appealable. The mere fact that such authority may be later suspended or revoked,
depending on future developments, does not give it the character of an interlocutory or
provisional ruling. And the fact that seven days after the publication of the order, the
securities are deemed registered (Sec. 7, Com. Act 83, as amended), points to the finality of
the order. Rights and obligations necessarily arise therefrom if not reviewed on appeal.
Our position on this procedural matter — that the order is appealable and the appeal taken
here is proper — is strengthened by the intervention of the Solicitor General, under Section
23 of Rule 3 of the Rules of Court, as the constitutional issues herein presented affect the
validity of Section 13 of the Corporation Law, which, according to the respondent, conflicts
with the Parity Ordinance and the Laurel-Langley Agreement recognizing, it is claimed, its
right to exploit our petroleum resources notwithstanding said provisions of the Corporation
Law.
2. Respondent likewise contends that since the order of Registration/Licensing dated
September 9, 1958 took effect 30 days from September 3, 1958, and since no stay order has
been issued by the Supreme Court, respondent's shares became registered and licensed
under the law as of October 3, 1958. Consequently, it is asserted, the present appeal has
become academic. Frankly we are unable to follow respondent's argumentation. First it
claims that the order of August 29 and that of September 9, 1958 are not final orders and
therefor are not appealable. Then when these orders, according to its theory became final
and were implemented, it argues that the orders can no longer be appealed as the question
of registration and licensing became moot and academic.
But the fact is that because of the authority to sell, the securities are, in all probabilities, still
being traded in the open market. Consequently the issue is much alive as to whether
respondent's securities should continue to be the subject of sale. The purpose of the inquiry
on this matter is not fully served just because the securities had passed out of the hands of
the issuer and its dealers. Obviously, so long as the securities are outstanding and are placed
in the channels of trade and commerce, members of the investing public are entitled to have
the question of the worth or legality of the securities resolved one way or another.
But more fundamental than this consideration, we agree with the late Senator Claro M.
Recto, who appeared as amicus curiae in this case, that while apparently the immediate
issue in this appeal is the right of respondent SAN JOSE PETROLEUM to dispose of and sell its
securities to the Filipino public, the real and ultimate controversy here would actually call for
the construction of the constitutional provisions governing the disposition, utilization,
exploitation and development of our natural resources. And certainly this is neither moot nor
academic.
3. We now come to the meat of the controversy — the "tie-up" between SAN JOSE OIL on
the one hand, and the respondent SAN JOSE PETROLEUM and its associates, on the other.
The relationship of these corporations involved or affected in this case is admitted and
established through the papers and documents which are parts of the records: SAN JOSE OIL,
is a domestic mining corporation, 90% of the outstanding capital stock of which is owned by
respondent SAN JOSE PETROLEUM, a foreign (Panamanian) corporation, the majority interest
of which is owned by OIL INVESTMENTS, Inc., another foreign (Panamanian) company. This
latter corporation in turn is wholly (100%) owned by PANTEPEC OIL COMPANY, C.A., and
PANCOASTAL PETROLEUM COMPANY, C.A., both organized and existing under the laws of
Venezuela. As of September 30, 1956, there were 9,976 stockholders of PANCOASTAL
PETROLEUM found in 49 American states and U.S. territories, holding 3,476,988 shares of
stock; whereas, as of November 30, 1956, PANTEPEC OIL COMPANY was said to have
3,077,916 shares held by 12,373 stockholders scattered in 49 American state. In the two lists
of stockholders, there is no indication of the citizenship of these stockholders, 7 or of the total
number of authorized stocks of each corporation, for the purpose of determining the
corresponding percentage of these listed stockholders in relation to the respective capital
stock of said corporation.
Petitioner, as well as the amicus curiae and the Solicitor General8 contend that the
relationship between herein respondent SAN JOSE PETROLEUM and its subsidiary, SAN JOSE
OIL, violates the Petroleum Law of 1949, the Philippine Constitution, and Section 13 of the
Corporation Law, which inhibits a mining corporation from acquiring an interest in another
mining corporation. It is respondent's theory, on the other hand, that far from violating the
Constitution; such relationship between the two corporations is in accordance with the
Laurel-Langley Agreement which implemented the Ordinance Appended to the Constitution,
and that Section 13 of the Corporation Law is not applicable because respondent is not
licensed to do business, as it is not doing business, in the Philippines.
Article XIII, Section 1 of the Philippine Constitution provides:
SEC. 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy,
and other natural resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens
of the Philippines, or to corporations or associations at least sixty per centum of
the capital of which is owned by such citizens, subject to any existing right, grant,
lease or concession at the time of the inauguration of this Government
established under this Constitution. . . . (Emphasis supplied)
In the 1946 Ordinance Appended to the Constitution, this right (to utilize and exploit our
natural resources) was extended to citizens of the United States, thus:
Notwithstanding the provisions of section one, Article Thirteen, and section
eight, Article Fourteen, of the foregoing Constitution, during the effectivity of
the Executive Agreement entered into by the President of the Philippines with
the President of the United States on the fourth of July, nineteen hundred and
forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven
hundred and thirty-three, but in no case to extend beyond the third of July,
nineteen hundred and seventy-four, the disposition, exploitation, development,
and utilization of all agricultural, timber, and mineral lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, and other natural resources of the Philippines, and the operation of
public utilities shall, if open to any person, be open to citizens of the United
States, and to all forms of business enterprises owned or controlled, directly or
indirectly, by citizens of the United States in the same manner as to, and under
the same conditions imposed upon, citizens of the Philippines or corporations or
associations owned or controlled by citizens of the Philippines (Emphasis
supplied.)
In the 1954 Revised Trade Agreement concluded between the United States and the
Philippines, also known as the Laurel-Langley Agreement, embodied in Republic Act 1355,
the following provisions appear:
ARTICLE VI
1. The disposition, exploitation, development and utilization of all agricultural,
timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces and sources of potential energy, and
other natural resources of either Party, and the operation of public utilities,
shall, if open to any person, be open to citizens of the other Party and to all
forms of business enterprise owned or controlled, directly or indirectly, by
citizens of such other Party in the same manner as to and under the same
conditions imposed upon citizens or corporations or associations owned or
controlled by citizens of the Party granting the right.
2. The rights provided for in Paragraph 1 may be exercised, . . . in the case of
citizens of the United States, with respect to natural resources in the public
domain in the Philippines, only through the medium of a corporation organized
under the laws of the Philippines and at least 60% of the capital stock of which is
owned or controlled by citizens of the United States. . . .
3. The United States of America reserves the rights of the several States of the
United States to limit the extent to which citizens or corporations or
associations owned or controlled by citizens of the Philippines may engage in
the activities specified in this Article. The Republic of the Philippines reserves the
power to deny any of the rights specified in this Article to citizens of the United
 States who are citizens of States, or to corporations or associations at least 60%
of whose capital stock or capital is owned or controlled by citizens of States,
which deny like rights to citizens of the Philippines, or to corporations or
associations which are owned or controlled by citizens of the Philippines. . .
. (Emphasis supplied.)
Re-stated, the privilege to utilize, exploit, and develop the natural resources of this country
was granted, by Article XIII of the Constitution, to Filipino citizens or to corporations or
associations 60% of the capital of which is owned by such citizens. With the Parity
Amendment to the Constitution, the same right was extended to citizens of the United States
and business enterprises owned or controlled directly or indirectly, by citizens of the United
States.
There could be no serious doubt as to the meaning of the word "citizens" used in the
aforementioned provisions of the Constitution. The right was granted to 2 types of persons:
natural persons (Filipino or American citizens) and juridical persons (corporations 60% of
which capital is owned by Filipinos and business enterprises owned or controlled directly or
indirectly, by citizens of the United States). In American law, "citizen" has been defined as
"one who, under the constitution and laws of the United States, has a right to vote for
representatives in congress and other public officers, and who is qualified to fill offices in the
gift of the people. (1 Bouvier's Law Dictionary, p. 490.) A citizen is —
One of the sovereign people. A constituent member of the sovereignty,
synonymous with the people." (Scott v. Sandford, 19 Ho. [U.S.] 404, 15 L. Ed.
691.)
A member of the civil state entitled to all its privileges. (Cooley, Const. Lim. 77.
See U.S. v. Cruikshank 92 U.S. 542, 23 L. Ed. 588; Minor v. Happersett 21 Wall.
[U.S.] 162, 22 L. Ed. 627.)
These concepts clarified, is herein respondent SAN JOSE PETROLEUM an American business
enterprise entitled to parity rights in the Philippines? The answer must be in the negative, for
the following reasons:
Firstly — It is not owned or controlled directly by citizens of the United States, because it is
owned and controlled by a corporation, the OIL INVESTMENTS, another foreign
(Panamanian) corporation.
Secondly — Neither can it be said that it is indirectly owned and controlled by American
citizens through the OIL INVESTMENTS, for this latter corporation is in turn owned and
controlled, not by citizens of the United States, but still by two foreign (Venezuelan)
corporations, the PANTEPEC OIL COMPANY and PANCOASTAL PETROLEUM.
Thirdly — Although it is claimed that these two last corporations are owned and controlled
respectively by 12,373 and 9,979 stockholders residing in the different American states,
there is no showing in the certification furnished by respondent that the stockholders of
PANCOASTAL or those of them holding the controlling stock, are citizens of the United
States.
Fourthly — Granting that these individual stockholders are American citizens, it is yet
necessary to establish that the different states of which they are citizens, allow Filipino
citizens or corporations or associations owned or controlled by Filipino citizens, to engage in
the exploitation, etc. of the natural resources of these states (see paragraph 3, Article VI of
the Laurel-Langley Agreement, supra). Respondent has presented no proof to this effect.
Fifthly — But even if the requirements mentioned in the two immediately preceding
paragraphs are satisfied, nevertheless to hold that the set-up disclosed in this case, with a
long chain of intervening foreign corporations, comes within the purview of the Parity
Amendment regarding business enterprises indirectly owned or controlled by citizens of the
United States, is to unduly stretch and strain the language and intent of the law. For, to what
extent must the word "indirectly" be carried? Must we trace the ownership or control of
these various corporations ad infinitum for the purpose of determining whether the
American ownership-control-requirement is satisfied? Add to this the admitted fact that the
shares of stock of the PANTEPEC and PANCOASTAL which are allegedly owned or
controlled directly by citizens of the United States, are traded in the stock exchange in New
York, and you have a situation where it becomes a practical impossibility to determine at any
given time, the citizenship of the controlling stock required by the law. In the circumstances,
we have to hold that the respondent SAN JOSE PETROLEUM, as presently constituted, is not
a business enterprise that is authorized to exercise the parity privileges under the Parity
Ordinance, the Laurel-Langley Agreement and the Petroleum Law. Its tie-up with SAN JOSE
OIL is, consequently, illegal.
What, then, would be the Status of SAN JOSE OIL, about 90% of whose stock is owned by
SAN JOSE PETROLEUM? This is a query which we need not resolve in this case as SAN JOSE
OIL is not a party and it is not necessary to do so to dispose of the present controversy. But it
is a matter that probably the Solicitor General would want to look into.
There is another issue which has been discussed extensively by the parties. This is whether or
not an American mining corporation may lawfully "be in anywise interested in any other
corporation (domestic or foreign) organized for the purpose of engaging in agriculture or in
mining," in the Philippines or whether an American citizen owning stock in more than one
corporation organized for the purpose of engaging in agriculture or in mining, may own more
than 15% of the capital stock then outstanding and entitled to vote, of each of such
corporations, in view of the express prohibition contained in Section 13 of the Philippine
Corporation Law. The petitioner in this case contends that the provisions of the Corporation
Law must be applied to American citizens and business enterprise otherwise entitled to
exercise the parity privileges, because both the Laurel-Langley Agreement (Art. VI, par. 1)
and the Petroleum Act of 1948 (Art. 31), specifically provide that the enjoyment by them of
the same rights and obligations granted under the provisions of both laws shall be "in the
same manner as to, and under the same conditions imposed upon, citizens of the Philippines
or corporations or associations owned or controlled by citizens of the Philippines." The
petitioner further contends that, as the enjoyment of the privilege of exploiting mineral
resources in the Philippines by Filipino citizens or corporations owned or controlled by
citizens of the Philippines (which corporation must necessarily be organized under the
Corporation Law), is made subject to the limitations provided in Section 13 of the
Corporation Law, so necessarily the exercise of the parity rights by citizens of the United
States or business enterprise owned or controlled, directly or indirectly, by citizens of the
United States, must equally be subject to the same limitations contained in the aforesaid
Section 13 of the Corporation Law.
In view of the conclusions we have already arrived at, we deem it not indispensable for us to
pass upon this legal question, especially taking into account the statement of the respondent
(SAN JOSE PETROLEUM) that it is essentially a holding company, and as found by the
Securities and Exchange Commissioner, its principal activity is limited to the financing and
giving technical assistance to SAN JOSE OIL.
4. Respondent SAN JOSE PETROLEUM, whose shares of stock were allowed registration for
sale in the Philippines, was incorporated under the laws of Panama in April, 1956 with an
authorized capital stock of $500,000.00, American currency, divided into 50,000,000 shares
at par value of $0.01 per share. By virtue of a 3-party Agreement of June 14, 1956,
respondent was supposed to have received from OIL INVESTMENTS 8,000,000 shares of the
capital stock of SAN JOSE OIL (at par value of $0.01 per share), plus a note for $250,000.00
due in 6 months, for which respondent issued in favor of OIL INVESTMENTS 16,000,000
shares of its capital stock, at $0.01 per share or with a value of $160,000.00, plus a note for
$230,297.97 maturing in 2 years at 6% per annum interest,9 and the assumption of payment
of the unpaid price of 7,500,000 (of the 8,000,000 shares of SAN JOSE OIL).
On June 27, 1956, the capitalization of SAN JOSE PETROLEUM was increased from
$500,000.00 to $17,500,000.00 by increasing the par value of the same 50,000,000 shares,
from $0.01 to $0.35. Without any additional consideration, the 16,000,000 shares of $0.01
previously issued to OIL INVESTMENTS with a total value of $160,000.00 were changed with
16,000,000 shares of the recapitalized stock at $0.35 per share, or valued at $5,600,000.00.
And, to make it appear that cash was received for these re-issued 16,000,000 shares, the
board of directors of respondent corporation placed a valuation of $5,900,000.00 on the
8,000,000 shares of SAN JOSE OIL (still having par value of $0.10 per share) which were
received from OIL INVESTMENTS as part-consideration for the 16,000,000 shares at $0.01
per share.
In the Balance Sheet of respondent, dated July 12, 1956, from the $5,900,000.00, supposedly
the value of the 8,000,000 shares of SAN JOSE OIL, the sum of $5,100,000.00 was deducted,
corresponding to the alleged difference between the "value" of the said shares and the
subscription price thereof which is $800,000.00 (at $0.10 per share). From this $800,000.00,
the subscription price of the SAN JOSE OIL shares, the amount of $319,702.03 was deducted,
as allegedly unpaid subscription price, thereby giving a difference of $480,297.97, which was
placed as the amount allegedly paid in on the subscription price of the 8,000,000 SAN JOSE
OIL shares. Then, by adding thereto the note receivable from OIL INVESTMENTS, for
$250,000.00 (part-consideration for the 16,000,000 SAN JOSE PETROLEUM shares), and the
sum of $6,516.21, as deferred expenses, SAN JOSE PETROLEUM appeared to have assets in
the sum of $736,814.18.
These figures are highly questionable. Take the item $5,900,000.00 the valuation placed on
the 8,000,000 shares of SAN JOSE OIL. There appears no basis for such valuation other than
belief by the board of directors of respondent that "should San Jose Oil Company be granted
the bulk of the concessions applied for upon reasonable terms, that it would have a
reasonable value of approximately $10,000,000." 10 Then, of this amount, the subscription
price of $800,000.00 was deducted and called it "difference between the (above) valuation
and the subscription price for the 8,000,000 shares." Of this $800,000.00 subscription price,
they deducted the sum of $480,297.97 and the difference was placed as the unpaid portion
of the subscription price. In other words, it was made to appear that they paid in
$480,297.97 for the 8,000,000 shares of SAN JOSE OIL. This amount ($480,297.97) was
supposedly that $250,000.00 paid by OIL INVESMENTS for 7,500,000 shares of SAN JOSE OIL,
embodied in the June 14 Agreement, and a sum of $230,297.97 the amount expended or
advanced by OIL INVESTMENTS to SAN JOSE OIL. And yet, there is still an item among
respondent's liabilities, for $230,297.97 appearing as note payable to Oil Investments,
maturing in two (2) years at six percent (6%) per annum. 11 As far as it appears from the
records, for the 16,000,000 shares at $0.35 per share issued to OIL INVESTMENTS,
respondent SAN JOSE PETROLEUM received from OIL INVESTMENTS only the note for
$250,000.00 plus the 8,000,000 shares of SAN JOSE OIL, with par value of $0.10 per share or
a total of $1,050,000.00 — the only assets of the corporation. In other words, respondent It was also therein provided that the said Agreement shall be binding upon the parties
actually lost $4,550,000.00, which was received by OIL INVESTMENTS. thereto, their successors, and upon all holders of voting trust certificates.

But this is not all. Some of the provisions of the Articles of Incorporation of respondent SAN And these are the voting trust certificates that are offered to investors as authorized by
JOSE PETROLEUM are noteworthy; viz: Security and Exchange Commissioner. It can not be doubted that the sale of respondent's
securities would, to say the least, work or tend to work fraud to Philippine investors.

(1) the directors of the Company need not be shareholders;

FOR ALL THE FOREGOING CONSIDERATIONS, the motion of respondent to dismiss this
appeal, is denied and the orders of the Securities and Exchange Commissioner, allowing the
(2) that in the meetings of the board of directors, any director may be registration of Respondent's securities and licensing their sale in the Philippines are hereby
represented and may vote through a proxy who also need not be a director or set aside. The case is remanded to the Securities and Exchange Commission for appropriate
stockholder; and action in consonance with this decision. With costs. Let a copy of this decision be furnished
the Solicitor General for whatever action he may deem advisable to take in the premises. So
(3) that no contract or transaction between the corporation and any other ordered.
association or partnership will be affected, except in case of fraud, by the fact
that any of the directors or officers of the corporation is interested in, or is a Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez,
director or officer of, such other association or partnership, and that no such JJ., concur.
contract or transaction of the corporation with any other person or persons,
firm, association or partnership shall be affected by the fact that any director or
officer of the corporation is a party to or has an interest in, such contract or Castro, J., took no part.
transaction, or has in anyway connected with such other person or persons,
firm, association or partnership; and finally, that all and any of the persons who
may become director or officer of the corporation shall be relieved from all Republic of the Philippines
responsibility for which they may otherwise be liable by reason of any contract SUPREME COURT
entered into with the corporation, whether it be for his benefit or for the Manila
benefit of any other person, firm, association or partnership in which he may be
interested. FIRST DIVISION

These provisions are in direct opposition to our corporation law and corporate practices in
this country. These provisions alone would outlaw any corporation locally organized or doing
business in this jurisdiction. Consider the unique and unusual provision that no contract or
transaction between the company and any other association or corporation shall be affected
except in case of fraud, by the fact that any of the directors or officers of the company may G.R. Nos. 79926-27 October 17, 1991
be interested in or are directors or officers of such other association or corporation; and that
none of such contracts or transactions of this company with any person or persons, firms,
associations or corporations shall be affected by the fact that any director or officer of this STATE INVESTMENT HOUSE, INC. and STATE FINANCING CENTER, INC., petitioners,
company is a party to or has an interest in such contract or transaction or has any connection vs.
with such person or persons, firms associations or corporations; and that any and all persons CITIBANK, N.A., BANK OF AMERICA, NT & SA, HONGKONG & SHANGHAI BANKING
who may become directors or officers of this company are hereby relieved of all CORPORATION, and the COURT OF APPEALS, respondents.
responsibility which they would otherwise incur by reason of any contract entered into
which this company either for their own benefit, or for the benefit of any person, firm,
Roco, Bunag, Kapunan & Migallos for petitioners.
association or corporation in which they may be interested.
Agcaoili & Associates for Citibank, N.A, and Bank of America NT & SA.

The impact of these provisions upon the traditional judiciary relationship between the
Belo, Abiera & Associates for Hongkong & Shanghai Banking Corp.
directors and the stockholders of a corporation is too obvious to escape notice by those who
are called upon to protect the interest of investors. The directors and officers of the
company can do anything, short of actual fraud, with the affairs of the corporation even to
benefit themselves directly or other persons or entities in which they are interested, and
with immunity because of the advance condonation or relief from responsibility by reason of
such acts. This and the other provision which authorizes the election of non-stockholders as
directors, completely disassociate the stockholders from the government and management NARVASA, J.:
of the business in which they have invested.

The chief question in the appeal at bar is whether or not foreign banks licensed to do
To cap it all on April 17, 1957, admittedly to assure continuity of the management and business in the Philippines, may be considered "residents of the Philippine Islands" within the
stability of SAN JOSE PETROLEUM, OIL INVESTMENTS, as holder of the only subscribed meaning of Section 20 of the Insolvency Law (Act No. 1956, as amended, eff. May 20, 1909)
stock of the former corporation and acting "on behalf of all future holders of voting trust reading in part as follows: 1
certificates," entered into a voting trust agreement12 with James L. Buckley and Austin E.
Taylor, whereby said Trustees were given authority to vote the shares represented by the
outstanding trust certificates (including those that may henceforth be issued) in the
following manner:
An adjudication of insolvency may be made on the petition of three or more creditors, residents of the Philippine Islands,
whose credits or demands accrued in the Philippine Islands, and the amount of which credits or demands are in the
(a) At all elections of directors, the Trustees will designate a suitable proxy or
aggregate not less than one thousand pesos: Provided, that none of said creditors has become a creditor by assignment,
proxies to vote for the election of directors designated by the Trustees in their
however made, within thirty days prior to the filing of said petition. Such petition must be filed in the Court of First Instance
own discretion, having in mind the best interests of the holders of the voting
of the province or city in which the debtor resides or has his principal place of business, and must be verified by at least three
trust certificates, it being understood that any and all of the Trustees shall be
(3) of the petitioners. . . .
eligible for election as directors;

(b) On any proposition for removal of a director, the Trustees shall designate a
suitable proxy or proxies to vote for or against such proposition as the Trustees
in their own discretion may determine, having in mind the best interest of the The foreign banks involved in the controversy are Bank of America NT and SA, Citibank N.A. and Hongkong and Shanghai Banking Corporation.
holders of the voting trust certificates;
On December 11, 1981, they jointly filed with the Court of First Instance of Rizal a petition for involuntary insolvency of Consolidated Mines, Inc.
(CMI), which they amended four days later. 2 The case was docketed as Sp. Proc. No. 9263 and assigned to
(c) With respect to all other matters arising at any meeting of stockholders, the Branch 28 of the Court.
Trustees will instruct such proxy or proxies attending such meetings to vote the
shares of stock held by the Trustees in accordance with the written instructions
of each holder of voting trust certificates. (Emphasis supplied.) The petition for involuntary insolvency alleged:
1) that CMI had obtained loans from the three petitioning banks, and that as of
November/December, 1981, its outstanding obligations were as follows:
a) In favor of Bank of America (BA) P15,297,367.67
(as of December 10, 1981) US$ 4,175,831.88
(b) In favor of Citibank US$ 4,920,548.85
(as of December 10, 1981)
c) In favor of Hongkong & Shanghai Bank US$ 5,389,434.12
(as of November 30, 1981); P6,233,969.24
2) that in November, 1981, State Investment House, Inc. (SIHI) and State Financing Center,
Inc. (SFCI) had separately instituted actions for collection of sums of money and damages in
the Court of First Instance of Rizal against CMI, docketed respectively as Civil Cases
Numbered 43588 and 43677; and that on application of said plaintiffs, writs of preliminary
attachment had been issued which were executed on "the royalty/profit sharing payments
due CMI from Benguet Consolidated Mining, Inc;" and
3) that CMI had "committed specific acts of insolvency as provided in Section 20 of the
Insolvency Law, to wit:
xxx xxx xxx
5. that he (CMI) has suffered his (CMI's) property to remain under attachment or
legal process for three days for the purpose of hindering or delaying or
defrauding his (CMI's) creditors;
xxx xxx xxx
11. that being a merchant or tradesman he (CMI) has generally defaulted in the
payment of his (CMI's) current obligations for a period of thirty days; . . .
The petition was opposed by State Investment House, Inc. (SIHI) and State Financing Center,
Inc. (SFCI). 3 It claimed that:
1) the three petitioner banks had come to court with unclean hands in that they filed the
petition for insolvency — alleging the CMI was defrauding its creditors, and they wished all
creditors to share in its assets — although a few days earlier, they had "received for the
account of CMI substantial payments aggregating P10,800,000.00;"
2) the Court had no jurisdiction because the alleged acts of insolvency were false: the writs
of attachment against CMI had remained in force because there were "just, valid and lawful
grounds for the(ir) issuance," and CMI was not a "merchant or tradesman" nor had it
"generally defaulted in the payment of (its) obligations for a period of thirty days . . . ;"
3) the Court had no jurisdiction to take cognizance of the petition for insolvency because
petitioners are not resident creditors of CMI in contemplation of the Insolvency Law; and
4) the Court has no power to set aside the attachment issued in favor of intervenors-
oppositors SIHI and SFCI.
CMI filed its Answer to the petition for insolvency, asserting in the main that it was not
insolvent, 4 and later filed a "Motion to Dismiss Based on Affirmative Defense of Petitioner's
Lack of Capacity to Sue," echoing the theory of SIHI and SFCI that the petitioner banks are
not "Philippine residents." 5 Resolution on the motion was "deferred until after hearing of
the case on the merits" it appearing to the Court that the grounds therefor did not appear to
be indubitable. 6
SIHI and SFCI filed their own Answer-in-Intervention, 7
and served on the three petitioner banks requests for
admission of certain facts in accordance with Rule 26 of the Rules of Court, 8 receiving a
response only from Hongkong & Shanghai Bank. 9
SIHI and SFCI then filed a Motion for Summary Judgment dated May 23, 1983 "on the ground
that, based on the pleadings and admissions on record, the trial court had no jurisdiction to
adjudicate CMI insolvent since the petitioners (respondent foreign banks) are not "resident
creditors" of CMI as required under the Insolvency Law." 10 Oppositions to the motion were
filed, 11 to which a reply was submitted. 12
The Regional Trial Court 13
found merit in the motion for summary judgment. By Order dated October
10, 1983, it rendered "summary judgment dismissing the . . . petition for lack of jurisdiction
over the subject matter, with costs against petitioners." 14 It ruled that on the basis of the
"facts on record, as shown in the pleadings, motions and admissions of the parties, an
insolvency court could "not acquire jurisdiction to adjudicate the debtor as insolvent if the
creditors petitioning for adjudication of insolvency are not "residents" of the Philippines" —
citing a decision of the California Supreme Court which it declared "squarely applicable
especially considering that one of the sources of our Insolvency Law is the Insolvency Act of
California of 1895 . . . " And it declared that since petitioners had been merely licensed to do
business in the Philippines, they could not be deemed residents thereof.
The three foreign banks sought to take an appeal from the Order of October 10, 1983. They
filed a notice of appeal and a record on appeal. 15 SIHI and SFCI moved to dismiss their appeal
claiming it was attempted out of time. The Trial Court denied the motion.
SIHI and SFCI filed with this Court a petition for certiorari and prohibition (G.R. NO. 66449),
impugning that denial. The Court dismissed the petition and instead required the three banks
to file a petition for review in accordance with Rule 45 of the Rules of Court. 16 This the banks
did (their petition was docketed as G.R. No. 66804). However, by Resolution dated May 16,
1984, the court referred the petition for review to the Intermediate Appellate Court, where it
was docketed as AC SP-03674. 17
In the meantime, the Trial Court approved on May 3, 1985 the banks' record on appeal and transmitted it to this Court, where it was recorded as
UDK-6866. As might have been expected, this Court required the banks to file a petition for review under Rule 45, but they asked to be excused
from doing so since they had already filed such a petition, which had been referred to the Intermediate Appellate Court and was there pending
as AC-G.R. No. SP 03674, supra. This Court then also referred UDK-6866 to the Intermediate Appellate Court where it was docketed as AC-G.R.
No. CV 07830.
Both referred cases, AC-G.R. No. SP 03674 and AC-G.R. No. CV 07830, were consolidated by Resolution of the Court of Appeals dated April 9,
1986, and Decision thereon was promulgated on July 14, 1987 by the Fifteenth Division of said Court. 18
The Appellate Court reversed the Trial Court's Order of October 10, 1983 and remanded the case to it for further proceedings. It ruled:
1) that the purpose of the Insolvency Law was "to convert the assets of the bankrupt in cash for distribution among creditors, and then to relieve
the honest debtor from the weight of oppressive indebtedness and permit him to start life anew, free from the obligations and responsibilities
consequent upon business misfortunes;" 19
and that it was "crystal clear" that the law was "designed not
only for the benefit of the creditors but more importantly for the benefit of the debtor
himself," the object being "to provide not only for the suspension of payments and the
protection of creditors but also the discharge of insolvent honest debtors to enable them to
have a fresh start;"
2) that the Trial Court had placed "a very strained and restrictive interpretation of the term
"resident," as to exclude foreign banks which have been operating in this country since the
early part of the century," and "the better approach . . . would have been to harmonize the
provisions . . . (of the Insolvency Law) with similar provisions of other succeeding laws, like
the Corporation Code of the Philippines, the General Banking Act, the Offshore Banking Law
and the National Internal Revenue Code in connection with or related to their doing business
in the Philippines;"
3) that in light of said statutes, the three banks "are in truth and in fact considered as
"residents" of the Philippines for purposes of doing business in the Philippines and even for
taxation matters;"
4) that the banks had "complied with all the laws, rules and regulations (for doing business in
the country) and have been doing business in the Philippines for many years now;" that the
authority granted to them by the Securities and Exchange Commission upon orders of the
Monetary Board "covers not only transacting banking business . . . but likewise maintaining
suits "for recovery of any debt, claims or demand whatsoever," and that their petition for
involuntary insolvency was "nothing more than a suit aimed at recovering a debt granted by
them to Consolidated Mines, Inc., or at least a portion thereof;"
4) that to deprive the foreign banks of their right to proceed against their debtors through
insolvency proceedings would "contravene the basic standards of equity and fair play, . . .
would discourage their operations in economic development projects that create not only
jobs for our people but also opportunities for advancement as a nation;" and
5) that the terms "residence" and "domicile" do not mean the same thing, and that as
regards a corporation, it is generally deemed an "inhabitant" of the state under whose law it
is incorporated, and has a "residence" wherever it conducts its ordinary business, and may
have its legal "domicile" in one place and "residence" in another.
SIHI and SFCI moved for reconsideration and then, when rebuffed, took an appeal to this
Court. Here, they argue that the Appellate Court's judgment should be reversed because it
failed to declare that —
1) the failure of the three foreign banks to allege under oath in their petition for involuntary
insolvency that they are Philippine residents, wishing only to "be considered Philippine
residents," is fatal to their cause;
2) also fatal to their cause is their failure to prove, much less allege, that under the
domiciliary laws of the foreign banks, a Philippine corporation is allowed the reciprocal right
to petition for a debtor's involuntary insolvency;
3) in fact and in law, the three banks are not Philippine residents because:
a) corporations have domicile and residence only in the state of their
incorporation or in the place designated by law, although for limited and
exclusive purposes, other states may consider them as residents;
b) juridical persons may not have residence separate from their domicile;
4) actually, the non-resident status of the banks within the context of the Insolvency Law is
confirmed by other laws;
5) the license granted to the banks to do business in the Philippines does not make them
residents;
6) no substantive law explicitly grants foreign banks the power to petition for the
adjudication of the Philippine corporation as a bankrupt;
7) the Monetary Board can not appoint a conservator or receiver for a foreign bank or orders
its liquidation having only the power to revoke its license, subject to such proceedings as the
Solicitor General may thereafter deem proper to protect its creditors;
8) the foreign banks are not denied the right to collect their credits against Philippine
debtors, only the right to "petition for the harsh remedy of involuntary insolvency" not being
conceded to them;
9) said banks have come to court with unclean hands, their filing of the petition for
involuntary insolvency being an attempt to defeat validly acquired rights of domestic
corporations.
The concept of a foreign corporation under Section 123 of the Corporation Code is of "one
formed, organized or existing under laws other than those of the Philippines and . . . (which)
laws allow Filipino citizens and corporations to do business . . . ." There is no question that
the three banks are foreign corporations in this sence, with principal offices situated outside
of the Philippines. There is no question either that said banks have been licensed to do
business in this country and have in fact been doing business here for many years, through
branch offices or agencies, including "foreign currency deposit units;" in fact, one of them,
Hongkong & Shanghai Bank has been doing business in the Philippines since as early as 1875.
The issue is whether these Philippine branches or units may be considered "residents of the
Philippine Islands" as that term is used in Section 20 of the Insolvency Law, supra, 20 or
residents of the state under the laws of which they were respectively incorporated. The
answer cannot be found in the Insolvency Law itself, which contains no definition of the
term, resident, or any clear indication of its meaning. There are however other statutes,
albeit of subsequent enactment and effectivity, from which enlightening notions of the term
may be derived.
The National Internal Revenue Code declares that the term "'resident foreign corporation'
applies to a foreign corporation engaged in trade or business within the Philippines," as
distinguished from a " "non-resident foreign corporation" . . . (which is one) not engaged in
trade or business within the Philippines." 21
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries, affiliation, extension offices or any other units of
corporation or juridical person organized under the laws of any foreign country operating in the Philippines shall be considered residents of the
Philippines." 22
The General Banking Act, Republic Act No. 337, places "branches and agencies in the Philippines of foreign banks . . . (which are) called Philippine
branches," in the same category as "commercial banks, savings associations, mortgage banks, development banks, rural banks, stock savings and
loan associations" (which have been formed and organized under Philippine laws), making no distinction between the former and the later in so
far, as the terms "banking institutions" and "bank" are used in the Act, 23
declaring on the contrary that in "all matters
not specifically covered by special provisions applicable only to foreign banks, or their
branches and agencies in the Philippines, said foreign banks or their branches and agencies
lawfully doing business in the Philippines "shall be bound by all laws, rules, and regulations
applicable to domestic banking corporations of the same class, except such laws, rules and
regulations as provided for the creation, formation, organization, or dissolution of
corporations or as fix the relation, liabilities, responsibilities, or duties of members,
stockholders or officers or corporations." 24
This Court itself has already had occasion to hold 25
that a foreign corporation licitly doing business in the
Philippines, which is a defendant in a civil suit, may not be considered a non-resident within
the scope of the legal provision authorizing attachment against a defendant not residing in
the Philippine Islands;" 26 in other words, a preliminary attachment may not be applied for
and granted solely on the asserted fact that the defendant is a foreign corporation
authorized to do business in the Philippines — and is consequently and necessarily, "a party
who resides out of the Philippines." Parenthetically, if it may not be considered as a party not
residing in the Philippines, or as a party who resides out of the country, then, logically, it
must be considered a party who does reside in the Philippines, who is a resident of the
country. Be this as it may, this Court pointed out that:
. . . Our laws and jurisprudence indicate a purpose to assimilate foreign
corporations, duly licensed to do business here, to the status of domestic
corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry W.
Elser & Co., 46 Phil. 70, 76; Yu; Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think
it would be entirely out of line with this policy should we make a discrimination
against a foreign corporation, like the petitioner, and subject its property to the
harsh writ of seizure by attachment when it has complied not only with every
requirement of law made specially of foreign corporations, but in addition with
every requirement of law made of domestic corporations. . . . .
Obviously, the assimilation of foreign corporations authorized to do business in the
Philippines "to the status of domestic corporations," subsumes their being found and
operating as corporations, hence, residing, in the country.
The same principle is recognized in American law: that the "residence of a corporation, if it
can be said to have a residence, is necessarily where it exercises corporate functions . . . ;"
that it is .considered as dwelling "in the place where its business is done . . . ," as being
"located where its franchises are exercised . . . ," and as being "present where it is engaged in
the prosecution of the corporate enterprise;" that a "foreign corporation licensed to do
business in a state is a resident of any country where it maintains an office or agent for
transaction of its usual and customary business for venue purposes;" and that the "necessary
element in its signification is locality of existence." 27 Courts have held that "a domestic
corporation is regarded as having a residence within the state at any place where it is
engaged in the particulars of the corporate enterprise, and not only at its chief place or
home office;" 28 that "a corporation may be domiciled in one state and resident in another;
its legal domicil in the state of its creation presents no impediment to its residence in a real
and practical sense in the state of its business activities." 29
The foregoing propositions are in accord with the dictionary concept of residence as applied to juridical persons, a term which appears to
comprehend permanent as well as temporary residence.
The Court cannot thus accept the petitioners' theory that corporations may not have a residence (i.e., the place where they operate and transact
business) separate from their domicile (i.e., the state of their formation or organization), and that they may be considered by other states as
residents only for limited and exclusive purposes. Of course, as petitioners correctly aver, it is not really the grant of a license to a foreign
corporation to do business in this country that makes it a resident; the license merely gives legitimacy to its doing business here. What
effectively makes such a foreign corporation a resident corporation in the Philippines is its actually being in the Philippines and licitly doing
business here, "locality of existence" being, to repeat, the "necessary element in . . . (the) signification" of the term, resident corporation.
Neither can the Court accept the theory that the omission by the banks in their petition for involuntary insolvency of an explicit and categorical
statement that they are "residents of the Philippine Islands," is fatal to their cause. In truth, in light of the concept of resident foreign
corporations just expounded, when they alleged in that petition that they are foreign banking corporations, licensed to do business in the
Philippines, and actually doing business in this Country through branch offices or agencies, they were in effect stating that they are resident
foreign corporations in the Philippines.
There is, of course, as petitioners argue, no substantive law explicitly granting foreign banks the power to petition for the adjudication of a
Philippine corporation as a bankrupt. This is inconsequential, for neither is there any legal provision expressly giving domestic banks the same
power, although their capacity to petition for insolvency can scarcely be disputed and is not in truth disputed by petitioners. The law plainly
grants to a juridical person, whether it be a bank or not or it be a foreign or domestic corporation, as to natural persons as well, such a power to
petition for the adjudication of bankruptcy of any person, natural or juridical, provided that it is a resident corporation and joins at least two
other residents in presenting the petition to the Bankruptcy Court.
The petitioners next argue that "Philippine law is emphatic that only foreign corporations whose own laws give Philippine nationals reciprocal
rights may do business in the Philippines." As basis for the argument they invoke Section 123 of the Corporation Code which, however, does not
formulate the proposition in the same way. Section 123 does not say, as petitioners assert, that it is required that the laws under which foreign
corporations are formed "give Philippine nationals, reciprocal rights." What it does say is that the laws of the country or state under which a
foreign corporation is "formed, organized or existing . . . allow Filipino citizens and corporations to do business in its own country or state," which
is not quite the same thing. Now, it seems to the Court that there can be no serious debate about the fact that the laws of the countries under
which the three (3) respondent banks were formed or organized (Hongkong and the United States) do "allow Filipino citizens and corporations to
do business" in their own territory and jurisdiction. It also seems to the Court quite apparent that the Insolvency Law contains no requirement
that the laws of the state under which a foreign corporation has been formed or organized should grant reciprocal rights to Philippine citizens to
apply for involuntary insolvency of a resident or citizen thereof. The petitioners' point is thus not well taken and need not be belabored.
That the Monetary Board can not appoint a conservator or receiver for a foreign bank or order its liquidation having only the power to revoke its
license, subject to such proceedings as the Solicitor General may thereafter deem proper to protect its creditors, which is another point that
petitioners seek to make, is of no moment. It has no logical connection to the matter of whether or not the foreign bank may properly ask for a
judicial declaration of the involuntary insolvency of a domestic corporation, which is the issue at hand. The fact is, in any event, that the law is
not lacking in sanctions against foreign banks or powerless to protect the latter's creditors.
The petitioners contend, too, that the respondent banks have come to court with unclean hands, their filing of the petition for involuntary
insolvency being an attempt to defeat validly acquired rights of domestic corporations. The Court wishes to simply point out that the effects of
the institution of bankruptcy proceedings on all the creditors of the alleged bankrupt are clearly spelled out by the law, and will be observed by
the Insolvency Court regardless of whatever motives — apart from the desire to share in the assets of the insolvent in satisfying its credits —
that the party instituting the proceedings might have.
Still another argument put forth by the petitioners is that the three banks' failure to incorporate their branches in the Philippines into new banks
in accordance with said Section 68 of the General Banking Act connotes an intention on their part to continue as residents of their respective
states of incorporation and not to be regarded as residents of the Philippines. The argument is based on an incomplete and inaccurate quotation
of the cited Section. What Section 68 required of a "foreign bank presently having branches and agencies in the Philippines, . . . within one year
from the effectivity" of the General Banking Act, was to comply with any of three (3) options, not merely with one sole requirement. These three
(3) options are the following:
1) (that singled out and quoted by the petitioners, i.e.:) "incorporate its branch or branches into a new bank in accordance
with Philippine laws . . . ; or
2) "assign capital permanently to the local branch with the concurrent maintenance of a 'net due to' head office account
which shall include all net amounts due to other branches outside the Philippines in an amount which when added to the
assigned capital shall at all times be not less than the minimum amount of capital accounts required for domestic commercial
banks under section twenty-two of this Act;" or
3) "maintain a "net due to" head office account which shall include all net amounts due to other branches outside the
Philippines, in an amount which shall not be less than the minimum amount of capital accounts required for domestic
commercial banks under section twenty-two of this Act."
The less said about this argument then, the better.
The petitioners allege that three days before respondent banks filed their petition for involuntary insolvency against CMI, they received from the
latter substantial payments on account in the aggregate amount of P6,010,800.00, with the result that they were "preferred in the distribution of
CMI's assets thereby defrauding other creditors of CMI." Non sequitur. It is in any case a circumstance that the Bankruptcy Court may well take
into consideration in determining the manner and proportion by which the assets of the insolvent company shall be distributed among its
creditors; but it should not be considered a ground for giving the petition for insolvency short shrift. Moreover, the payment adverted to does
not appear to be all that large. The total liabilities of CMI to the three respondent banks as of December, 1981 was P21,531,336.91, and
US$14,485,814.85. Converted into Philippine currency at the rate of P7.899 to the dollar, the average rate of exchange during December,
1981, 30
the dollar account would be P114,423,451.50. Thus, the aggregate liabilities of CMI to
the banks, expressed in Philippine currency, was P135,954,788.41 as of December, 1981, and
therefore the payment to them of P6,010,800.00 constituted only some 4.42% of the total
indebtedness.
WHEREFORE, the petition is DENIED and the challenged Decision of the Court of Appeals is
AFFIRMED in toto, with costs against the petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio
THIRD DIVISION
G.R. No. 171995 April 18, 2012
STEELCASE, INC., Petitioner,
vs.
DESIGN INTERNATIONAL SELECTIONS, INC., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 assailing the March 31, 2005
Decision1 of the Court of Appeals (CA) which affirmed the May 29, 2000 Order 2 of the
Regional Trial Court, Branch 60, Makati City (RTC), dismissing the complaint for sum of
money in Civil Case No. 99-122 entitled "Steelcase, Inc. v. Design International Selections,
Inc."
The Facts
Petitioner Steelcase, Inc. (Steelcase) is a foreign corporation existing under the laws of
Michigan, United States of America (U.S.A.), and engaged in the manufacture of office
furniture with dealers worldwide.3 Respondent Design International Selections, Inc. (DISI) is a
corporation existing under Philippine Laws and engaged in the furniture business, including
the distribution of furniture.4
Sometime in 1986 or 1987, Steelcase and DISI orally entered into a dealership agreement
whereby Steelcase granted DISI the right to market, sell, distribute, install, and service its
products to end-user customers within the Philippines. The business relationship continued
smoothly until it was terminated sometime in January 1999 after the agreement was
breached with neither party admitting any fault. 5
On January 18, 1999, Steelcase filed a complaint 6 for sum of money against DISI alleging,
among others, that DISI had an unpaid account of US$600,000.00. Steelcase prayed that DISI
be ordered to pay actual or compensatory damages, exemplary damages, attorney’s fees,
and costs of suit.
In its Answer with Compulsory Counterclaims 7 dated February 4, 1999, DISI sought the
following: (1) the issuance of a temporary restraining order (TRO) and a writ of preliminary
injunction to enjoin Steelcase from selling its products in the Philippines except through DISI;
(2) the dismissal of the complaint for lack of merit; and (3) the payment of actual, moral and
exemplary damages together with attorney’s fees and expenses of litigation. DISI alleged
that the complaint failed to state a cause of action and to contain the required allegations on
Steelcase’s capacity to sue in the Philippines despite the fact that it (Steelcase) was doing
business in the Philippines without the required license to do so. Consequently, it posited
that the complaint should be dismissed because of Steelcase’s lack of legal capacity to sue in
Philippine courts.
On March 3, 1999, Steelcase filed its Motion to Admit Amended Complaint 8 which was
granted by the RTC, through then Acting Presiding Judge Roberto C. Diokno, in its
Order9 dated April 26, 1999. However, Steelcase sought to further amend its complaint by
filing a Motion to Admit Second Amended Complaint10 on March 13, 1999.
In his Order11 dated November 15, 1999, Acting Presiding Judge Bonifacio Sanz Maceda
dismissed the complaint, granted the TRO prayed for by DISI, set aside the April 26, 1999
Order of the RTC admitting the Amended Complaint, and denied Steelcase’s Motion to Admit
Second Amended Complaint. The RTC stated that in requiring DISI to meet the Dealer
Performance Expectation and in terminating the dealership agreement with DISI based on its
failure to improve its performance in the areas of business planning, organizational
structure, operational effectiveness, and efficiency, Steelcase unwittingly revealed that it
participated in the operations of DISI. It then concluded that Steelcase was "doing business"
in the Philippines, as contemplated by Republic Act (R.A.) No. 7042 (The Foreign Investments
Act of 1991), and since it did not have the license to do business in the country, it was barred
from seeking redress from our courts until it obtained the requisite license to do so. Its
determination was further bolstered by the appointment by Steelcase of a representative in
the Philippines. Finally, despite a showing that DISI transacted with the local customers in its
own name and for its own account, it was of the opinion that any doubt in the factual
environment should be resolved in favor of a pronouncement that a foreign corporation was
doing business in the Philippines, considering the twelve-year period that DISI had been
distributing Steelcase products in the Philippines.
Steelcase moved for the reconsideration of the questioned Order but the motion was denied
by the RTC in its May 29, 2000 Order.12
Aggrieved, Steelcase elevated the case to the CA by way of appeal, assailing the November
15, 1999 and May 29, 2000 Orders of the RTC. On March 31, 2005, the CA rendered its
Decision affirming the RTC orders, ruling that Steelcase was a foreign corporation doing or
transacting business in the Philippines without a license. The CA stated that the following
acts of Steelcase showed its intention to pursue and continue the conduct of its business in
the Philippines: (1) sending a letter to Phinma, informing the latter that the distribution
rights for its products would be established in the near future and directing other questions
about orders for Steelcase products to Steelcase International; (2) cancelling orders from
DISI’s customers, particularly Visteon, Phils., Inc. (Visteon); (3) continuing to send its products
to the Philippines through Modernform Group Company Limited (Modernform), as evidenced
by an Ocean Bill of Lading; and (4) going beyond the mere appointment of DISI as a dealer by
making several impositions on management and operations of DISI. Thus, the CA ruled that
Steelcase was barred from access to our courts for being a foreign corporation doing
business here without the requisite license to do so.
Steelcase filed a motion for reconsideration but it was denied by the CA in its Resolution
dated March 23, 2006.13
Hence, this petition.
The Issues
Steelcase filed the present petition relying on the following grounds:
I offices, whether called "liaison" offices or branches; appointing representatives or
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FOUND THAT
STEELCASE HAD BEEN "DOING BUSINESS" IN THE PHILIPPINES WITHOUT A LICENSE.
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT
RESPONDENT WAS ESTOPPED FROM CHALLENGING STEELCASE’S LEGAL CAPACITY TO SUE,
AS AN AFFIRMATIVE DEFENSE IN ITS ANSWER.
The issues to be resolved in this case are:
(1) Whether or not Steelcase is doing business in the Philippines without a
license; and
(2) Whether or not DISI is estopped from challenging the Steelcase’s legal
capacity to sue.
The Court’s Ruling
The Court rules in favor of the petitioner.
Steelcase is an unlicensed foreign corporation NOT doing business in the Philippines
Anent the first issue, Steelcase argues that Section 3(d) of R.A. No. 7042 or the Foreign
Investments Act of 1991 (FIA) expressly states that the phrase "doing business" excludes the
appointment by a foreign corporation of a local distributor domiciled in the Philippines which
transacts business in its own name and for its own account. Steelcase claims that it was not
doing business in the Philippines when it entered into a dealership agreement with DISI
where the latter, acting as the former’s appointed local distributor, transacted business in its
own name and for its own account. Specifically, Steelcase contends that it was DISI that sold
Steelcase’s furniture directly to the end-users or customers who, in turn, directly paid DISI
for the furniture they bought. Steelcase further claims that DISI, as a non-exclusive dealer in
the Philippines, had the right to market, sell, distribute and service Steelcase products in its
own name and for its own account. Hence, DISI was an independent distributor of Steelcase
products, and not a mere agent or conduit of Steelcase.
On the other hand, DISI argues that it was appointed by Steelcase as the latter’s exclusive
distributor of Steelcase products. DISI likewise asserts that it was not allowed by Steelcase to
transact business in its own name and for its own account as Steelcase dictated the manner
by which it was to conduct its business, including the management and solicitation of orders
from customers, thereby assuming control of its operations. DISI further insists that
Steelcase treated and considered DISI as a mere conduit, as evidenced by the fact that
Steelcase itself directly sold its products to customers located in the Philippines who were
classified as part of their "global accounts." DISI cited other established circumstances which
prove that Steelcase was doing business in the Philippines including the following: (1) the
sale and delivery by Steelcase of furniture to Regus, a Philippine client, through Modernform,
a Thai corporation allegedly controlled by Steelcase; (2) the imposition by Steelcase of
certain requirements over the management and operations of DISI; (3) the representations
made by Steven Husak as Country Manager of Steelcase; (4) the cancellation by Steelcase of
orders placed by Philippine clients; and (5) the expression by Steelcase of its desire to
maintain its business in the Philippines. Thus, Steelcase has no legal capacity to sue in
Philippine Courts because it was doing business in the Philippines without a license to do so.
The Court agrees with the petitioner.
The rule that an unlicensed foreign corporations doing business in the Philippine do not have
the capacity to sue before the local courts is well-established. Section 133 of the Corporation
Code of the Philippines explicitly states:
Sec. 133. Doing business without a license. - No foreign corporation transacting business in
the Philippines without a license, or its successors or assigns, shall be permitted to maintain
or intervene in any action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against before Philippine courts
or administrative tribunals on any valid cause of action recognized under Philippine laws.
The phrase "doing business" is clearly defined in Section 3(d) of R.A. No. 7042 (Foreign
Investments Act of 1991), to wit:
d) The phrase "doing business" shall include soliciting orders, service contracts, opening
distributors domiciled in the Philippines or who in any calendar year stay in the country for a
period or periods totalling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business, firm, entity or corporation in
the Philippines; 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: Provided,
however, That the phrase "doing business" shall not be deemed to include mere investment
as a shareholder by a foreign entity in domestic corporations duly registered to do business,
and/or the exercise of rights as such investor; nor having a nominee director or officer to
represent its interests in such corporation; nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own name and for its own
account; (Emphases supplied)
This definition is supplemented by its Implementing Rules and Regulations, Rule I, Section
1(f) which elaborates on the meaning of the same phrase:
f. "Doing business" shall include soliciting orders, service contracts, opening offices, whether
liaison offices or branches; appointing representatives or distributors, operating under full
control of the foreign corporation, domiciled in the Philippines or who in any calendar year
stay in the country for a period totalling one hundred eighty [180] days or more;
participating in the management, supervision or control of any domestic business, firm,
entity or corporation in the Philippines; 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.
The following acts shall not be deemed "doing business" in the Philippines:
1. Mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights as such
investor;
2. Having a nominee director or officer to represent its interest in such
corporation;
3. Appointing a representative or distributor domiciled in the Philippines which
transacts business in the representative's or distributor's own name and
account;
4. The publication of a general advertisement through any print or broadcast
media;
5. Maintaining a stock of goods in the Philippines solely for the purpose of
having the same processed by another entity in the Philippines;
6. Consignment by a foreign entity of equipment with a local company to be
used in the processing of products for export;
7. Collecting information in the Philippines; and
8. Performing services auxiliary to an existing isolated contract of sale which are
not on a continuing basis, such as installing in the Philippines machinery it has
manufactured or exported to the Philippines, servicing the same, training
domestic workers to operate it, and similar incidental services. (Emphases
supplied)
From the preceding citations, the appointment of a distributor in the Philippines is not
sufficient to constitute "doing business" unless it is under the full control of the foreign
corporation. On the other hand, if the distributor is an independent entity which buys and
distributes products, other than those of the foreign corporation, for its own name and its
own account, the latter cannot be considered to be doing business in the Philippines. 14 It
should be kept in mind that the determination of whether a foreign corporation is doing
business in the Philippines must be judged in light of the attendant circumstances. 15
In the case at bench, it is undisputed that DISI was founded in 1979 and is independently
owned and managed by the spouses Leandro and Josephine Bantug. 16 In addition to
Steelcase products, DISI also distributed products of other companies including carpet tiles,
relocatable walls and theater settings.17 The dealership agreement between Steelcase and
DISI had been described by the owner himself as:
xxx basically a buy and sell arrangement whereby we would inform Steelcase of the volume
of the products needed for a particular project and Steelcase would, in turn, give ‘special
quotations’ or discounts after considering the value of the entire package. In making the bid
of the project, we would then add out profit margin over Steelcase’s prices. After the
approval of the bid by the client, we would thereafter place the orders to Steelcase. The
latter, upon our payment, would then ship the goods to the Philippines, with us shouldering
the freight charges and taxes.18 [Emphasis supplied]
This clearly belies DISI’s assertion that it was a mere conduit through which Steelcase
conducted its business in the country. From the preceding facts, the only reasonable
conclusion that can be reached is that DISI was an independent contractor, distributing
various products of Steelcase and of other companies, acting in its own name and for its own
account.
The CA, in finding Steelcase to be unlawfully engaged in business in the Philippines, took into
consideration the delivery by Steelcase of a letter to Phinma informing the latter that the
distribution rights for its products would be established in the near future, and also its
cancellation of orders placed by Visteon. The foregoing acts were apparently misinterpreted
by the CA. Instead of supporting the claim that Steelcase was doing business in the country,
the said acts prove otherwise. It should be pointed out that no sale was concluded as a result
of these communications. Had Steelcase indeed been doing business in the Philippines, it
would have readily accepted and serviced the orders from the abovementioned Philippine
companies. Its decision to voluntarily cease to sell its products in the absence of a local
distributor indicates its refusal to engage in activities which might be construed as "doing
business."
Another point being raised by DISI is the delivery and sale of Steelcase products to a
Philippine client by Modernform allegedly an agent of Steelcase. Basic is the rule in
corporation law that a corporation has a separate and distinct personality from its
stockholders and from other corporations with which it may be connected. 19 Thus, despite
the admission by Steelcase that it owns 25% of Modernform, with the remaining 75% being
owned and controlled by Thai stockholders,20 it is grossly insufficient to justify piercing the
veil of corporate fiction and declare that Modernform acted as the alter ego of Steelcase to
enable it to improperly conduct business in the Philippines. The records are bereft of any
evidence which might lend even a hint of credence to DISI’s assertions. As such, Steelcase
cannot be deemed to have been doing business in the Philippines through Modernform.
Finally, both the CA and DISI rely heavily on the Dealer Performance Expectation required by
Steelcase of its distributors to prove that DISI was not functioning independently from
Steelcase because the same imposed certain conditions pertaining to business planning,
organizational structure, operational effectiveness and efficiency, and financial stability. It is
actually logical to expect that Steelcase, being one of the major manufacturers of office
systems furniture, would require its dealers to meet several conditions for the grant and
continuation of a distributorship agreement. The imposition of minimum standards
concerning sales, marketing, finance and operations is nothing more than an exercise of
sound business practice to increase sales and maximize profits for the benefit of both
Steelcase and its distributors. For as long as these requirements do not impinge on a
distributor’s independence, then there is nothing wrong with placing reasonable
expectations on them.
All things considered, it has been sufficiently demonstrated that DISI was an independent
contractor which sold Steelcase products in its own name and for its own account. As a
result, Steelcase cannot be considered to be doing business in the Philippines by its act of
appointing a distributor as it falls under one of the exceptions under R.A. No. 7042.
DISI is estopped from challenging Steelcase’s legal capacity to sue
Regarding the second issue, Steelcase argues that assuming arguendo that it had been
"doing business" in the Philippines without a license, DISI was nonetheless estopped from
challenging Steelcase’s capacity to sue in the Philippines. Steelcase claims that since DISI was
aware that it was doing business in the Philippines without a license and had benefited from
such business, then DISI should be estopped from raising the defense that Steelcase lacks the
capacity to sue in the Philippines by reason of its doing business without a license.
On the other hand, DISI argues that the doctrine of estoppel cannot give Steelcase the
license to do business in the Philippines or permission to file suit in the Philippines. DISI
claims that when Steelcase entered into a dealership agreement with DISI in 1986, it was not
doing business in the Philippines. It was after such dealership was put in place that it started
to do business without first obtaining the necessary license. Hence, estoppel cannot work
against it. Moreover, DISI claims that it suffered as a result of Steelcase’s "doing business"
and that it never benefited from the dealership and, as such, it cannot be estopped from
raising the issue of lack of capacity to sue on the part of Steelcase.
The argument of Steelcase is meritorious.
If indeed Steelcase had been doing business in the Philippines without a license, DISI would
nonetheless be estopped from challenging the former’s legal capacity to sue.
It cannot be denied that DISI entered into a dealership agreement with Steelcase and
profited from it for 12 years from 1987 until 1999. DISI admits that it complied with its
obligations under the dealership agreement by exerting more effort and making substantial
investments in the promotion of Steelcase products. It also claims that it was able to
establish a very good reputation and goodwill for Steelcase and its products, resulting in the
establishment and development of a strong market for Steelcase products in the Philippines.
Because of this, DISI was very proud to be awarded the "Steelcase International Performance
Award" for meeting sales objectives, satisfying customer needs, managing an effective
company and making a profit.21
Unquestionably, entering into a dealership agreement with Steelcase charged DISI with the
knowledge that Steelcase was not licensed to engage in business activities in the Philippines.
This Court has carefully combed the records and found no proof that, from the inception of
the dealership agreement in 1986 until September 1998, DISI even brought to Steelcase’s
attention that it was improperly doing business in the Philippines without a license. It was
only towards the latter part of 1998 that DISI deemed it necessary to inform Steelcase of the
impropriety of the conduct of its business without the requisite Philippine license. It should,
however, be noted that DISI only raised the issue of the absence of a license with Steelcase
after it was informed that it owed the latter US$600,000.00 for the sale and delivery of its
products under their special credit arrangement.
By acknowledging the corporate entity of Steelcase and entering into a dealership agreement
with it and even benefiting from it, DISI is estopped from questioning Steelcase’s existence
and capacity to sue. This is consistent with the Court’s ruling in Communication Materials
and Design, Inc. v. Court of Appeals22 where it was written:
Notwithstanding such finding that ITEC is doing business in the country, petitioner is
nonetheless estopped from raising this fact to bar ITEC from instituting this injunction case
against it.
A foreign corporation doing business in the Philippines may sue in Philippine Courts although
not authorized to do business here against a Philippine citizen or entity who had contracted
with and benefited by said corporation. To put it in another way, a party is estopped to
challenge the personality of a corporation after having acknowledged the same by entering
into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a
foreign as well as to domestic corporations. One who has dealt with a corporation of foreign
origin as a corporate entity is estopped to deny its corporate existence and capacity: The
principle will be applied to prevent a person contracting with a foreign corporation from
later taking advantage of its noncompliance with the statutes chiefly in cases where such
person has received the benefits of the contract.
The rule is deeply rooted in the time-honored axiom of Commodum ex injuria sua non
habere debet — no person ought to derive any advantage of his own wrong. This is as it
should be for as mandated by law, "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."
Concededly, corporations act through agents, like directors and officers. Corporate dealings
must be characterized by utmost good faith and fairness. Corporations cannot just feign
ignorance of the legal rules as in most cases, they are manned by sophisticated officers with
tried management skills and legal experts with practiced eye on legal problems. Each party to
a corporate transaction is expected to act with utmost candor and fairness and, thereby
allow a reasonable proportion between benefits and expected burdens. This is a norm which
should be observed where one or the other is a foreign entity venturing in a global market.
xxx
By entering into the "Representative Agreement" with ITEC, petitioner is charged with
knowledge that ITEC was not licensed to engage in business activities in the country, and is
thus estopped from raising in defense such incapacity of ITEC, having chosen to ignore or
even presumptively take advantage of the same.23 (Emphases supplied)
The case of Rimbunan Hijau Group of Companies v. Oriental Wood Processing
Corporation24 is likewise instructive:
Respondent’s unequivocal admission of the transaction which gave rise to the complaint
establishes the applicability of estoppel against it. Rule 129, Section 4 of the Rules on
Evidence provides that a written admission made by a party in the course of the proceedings
in the same case does not require proof. We held in the case of Elayda v. Court of Appeals,
that an admission made in the pleadings cannot be controverted by the party making such
admission and are conclusive as to him. Thus, our consistent pronouncement, as held in
cases such as Merril Lynch Futures v. Court of Appeals, is apropos:
The rule is that a party is estopped to challenge the personality of a corporation after having
acknowledged the same by entering into a contract with it. And the ‘doctrine of estoppel to
deny corporate existence applies to foreign as well as to domestic corporations;’ "one who
has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its
existence and capacity." The principle "will be applied to prevent a person contracting with a
foreign corporation from later taking advantage of its noncompliance with the statutes,
chiefly in cases where such person has received the benefits of the contract . . ."
All things considered, respondent can no longer invoke petitioner’s lack of capacity to sue in
this jurisdiction.1âwphi1 Considerations of fair play dictate that after having contracted and
benefitted from its business transaction with Rimbunan, respondent should be barred from
questioning the latter’s lack of license to transact business in the Philippines.
In the case of Antam Consolidated, Inc. v. CA, this Court noted that it is a common ploy of
defaulting local companies which are sued by unlicensed foreign corporations not engaged in
business in the Philippines to invoke the latter’s lack of capacity to sue. This practice of
domestic corporations is particularly reprehensible considering that in requiring a license,
the law never intended to prevent foreign corporations from performing single or isolated
acts in this country, or to favor domestic corporations who renege on their obligations to
foreign firms unwary enough to engage in solitary transactions with them. Rather, the law
was intended to bar foreign corporations from acquiring a domicile for the purpose of
business without first taking the steps necessary to render them amenable to suits in the
local courts. It was to prevent the foreign companies from enjoying the good while
disregarding the bad.
As a matter of principle, this Court will not step in to shield defaulting local companies from
the repercussions of their business dealings. While the doctrine of lack of capacity to sue
based on failure to first acquire a local license may be resorted to in meritorious cases, it is
not a magic incantation. It cannot be called upon when no evidence exists to support its
invocation or the facts do not warrant its application. In this case, that the respondent is
estopped from challenging the petitioners’ capacity to sue has been conclusively established,
and the forthcoming trial before the lower court should weigh instead on the other defenses
raised by the respondent.25 (Emphases supplied)
As shown in the previously cited cases, this Court has time and again upheld the principle
that a foreign corporation doing business in the Philippines without a license may still sue
before the Philippine courts a Filipino or a Philippine entity that had derived some benefit
from their contractual arrangement because the latter is considered to be estopped from
challenging the personality of a corporation after it had acknowledged the said corporation
by entering into a contract with it.26
In Antam Consolidated, Inc. v. Court of Appeals,27 this Court had the occasion to draw
attention to the common ploy of invoking the incapacity to sue of an unlicensed foreign
corporation utilized by defaulting domestic companies which seek to avoid the suit by the
former. The Court cannot allow this to continue by always ruling in favor of local companies,
despite the injustice to the overseas corporation which is left with no available remedy.
During this period of financial difficulty, our nation greatly needs to attract more foreign
investments and encourage trade between the Philippines and other countries in order to
rebuild and strengthen our economy. While it is essential to uphold the sound public policy
behind the rule that denies unlicensed foreign corporations doing business in the Philippines
access to our courts, it must never be used to frustrate the ends of justice by becoming an
all-encompassing shield to protect unscrupulous domestic enterprises from foreign entities
seeking redress in our country. To do otherwise could seriously jeopardize the desirability of
the Philippines as an investment site and would possibly have the deleterious effect of
hindering trade between Philippine companies and international corporations.
WHEREFORE, the March 31, 2005 Decision of the Court of Appeals and its March 23, 2006
Resolution are hereby REVERSED and SET ASIDE. The dismissal order of the Regional Trial
Court dated November 15, 1999 is hereby set aside. Steelcase’s Amended Complaint is
hereby ordered REINSTATED and the case is REMANDED to the RTC for appropriate action.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72147 December 1, 1987
WANG LABORATORIES, INC., petitioner,
vs.
THE HONORABLE RAFAEL T. MENDOZA, then Presiding Judge, Regional Trial Court, Branch
CXXXIV, Makati, Metro Manila, THE HONORABLE BERNARDO ABESAMIS, incumbent
Presiding Judge, Regional Trial Court, Branch CXX-XIV, Makati, Metro Manila, Public
Respondents and ANGARA CONCEPCION REGALA & CRUZ LAW OFFICES Private
Respondents, respondents.
PARAS, J.:
This is a petition for Certiorari, Prohibition and mandamus with Preliminary Injunction,
seeking: (1) to annul and set aside the order issued by the Regional Trial Court of Makati,
Branch CXXXIV, * ruling that (a) petitioner had voluntarily submitted itself to the jurisdiction
of the respondent court, and (b) granting respondents' Ex Abundante Cautela Motion for
Leave to Effect Extraterritorial Jurisdiction; (2) to prohibit respondent Court from proceeding
further in Civil Case No. 7183; and (3) to order the same Court to pass upon the legal and
factual issues raised in petitioner's Motion to Dismiss.
The factual background of this case is as follows:
Petitioner is a corporation duly organized under the laws of the United States with principal
address at One Industrial Avenue, Lowell, Massachusetts, U.S.A., engaged in the business of
manufacturing and selling computers worldwide. In the Philippines, petitioner sells its
products to EXXBYTE TECHNOLOGIES CORPORATION, hereinafter referred to as EXXBYTE, its
exclusive distributor. EXXBYTE is a domestic corporation engaged in the business of selling
computer products to the public in its own name for its own account (Petitioner's Brief, p. 2;
Rollo, pp. 268-319).
Angara, Concepcion, Regala & Cruz Law Offices (hereinafter referred to as ACCRALAW for
brevity) is a duly registered professional partnership (Rollo, p. 4).
On September 10, 1980, respondent ACCRALAW entered into a contract with EXXBYTE for
acquisition and installation of a Wang 2200 US Integrated Information System at the former's
office. As stipulated in the above-said contract, a letter of credit for US$ 86,142.55 was
thereafter opened by ACCRALAW in favor of petitioner herein to pay for the Wang 2200 US
System. Sometime in May 1981, the hardware was delivered and installed by EXXBYTE in
ACCRALAW's office (Rollo, p. 151).
On June 10, 1981, ACCRALAW and EXXBYTE entered into another contract for the
development of a data processing software program needed to computerize the ACCRALAW
office (Petitioner's Brief, p. 2).
Subsequent thereto and for one reason or the other, the contract for the development of a
data processing software program or ISLA was not implemented.
On May 7, 1984, ACCRALAW filed a complaint for breach of contract with damages, replevin
and attachment against herein petitioner (Rollo, p. 152), in Civil Case No. 7183 of the
Regional Trial Court, Makati (Petitioner's Brief, p. 3).
On May 23, 1984, petitioner filed a Motion to Dismiss the complaint on the ground that
there was improper service of summons, hence, the court below had not obtained
jurisdiction over the person of the petitioner (Petitioner's Brief, p. 3).
On July 13, 1984, petitioner filed a Motion for Deposition by Oral Examination for the
purpose of presenting testimonial evidence in support of its motion to dismiss. The
respondent court thereafter ordered the taking of the deposition by way of oral
examination.
On February 21, 1985, petitioner filed its reply to the opposition to motion to dismiss
(Petitioner's Brief, P. 3).
On March 29, 1985, ACCRALAW filed an Ex-Abundante Cautela Motion for leave to Effect
Extraterritorial Service of Summons on petitioner.
In an order dated April 24, 1985, respondent Judge Mendoza, among others, granted the Ex-
Abundante Cautela Motion to Effect Extraterritorial Service of Summons, denied the
petitioner's motion to dismiss on the ground that it had voluntarily submitted itself to the
jurisdiction of the court, and thus declined to consider the legal and factual issues raised in
the Motion to Dismiss.
Hence, this petition.
In the resolution of October 7, 1985, the Second Division of this Court without giving due
course to the petition resolved to require respondents to comment and to issue a temporary
restraining order enjoining respondent Judge from further proceeding with Civil Case No.
7183 (Rollo, pp. 138-139).
On October 31, 1985, private respondents submitted their comment (Rollo, pp. 147-178). In
the resolution of January 13, 1986, the Court resolved to give due course to the petition
(Rollo, p. 187-A). In the resolution of February 5, 1986, the Court granted petitioner's motion
to admit reply to comment and noted aforesaid reply. Petitioner submitted its brief on
September 15, 1986 (Rollo, p. 268); the respondents, on November 15, 1986 (Rollo, p. 272).
Petitioner assigns the following errors:
I.
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT
PETITIONER HAD VOLUNTARILY SUBMITTED TO THE JURISDICTION OF THE COURT BELOW.
II
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT
ACCRALAW CAN SERVE SUMMONS ON PETITIONER EXTRA-TERRITORIALLY.
III
RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT HOLDING
THAT THERE WAS IMPROPER SERVICE OF SUMMONS ON PETITIONER.
The petition is devoid of merit.
The only issue in this case is whether or not respondent Court has acquired jurisdiction over
the person of the petitioner, a foreign corporation.
In its Motion to Dismiss, petitioner interposed that the court has no jurisdiction over its
person primarily because it is a United States corporation with principal address at One
Industrial Avenue, Lowell, Massachusetts, U.S.A., is not domiciled in the Philippines, does not
have any office or place of business in the Philippines, is not licensed to engage and is not
engaging in business here. EXXBYTE upon whom summons was served on behalf of this
defendant is a local company entirely separate and distinct from and is not the
representative of the defendant (Rollo, pp. 57-60).
Petitioner's contention is untenable. The issue is not novel in our jurisdiction.
There are three (3) modes of effecting service of summons upon private foreign corporations
as provided for in Section 14, Rule 7 of the Rules of Court, to wit: (1) by serving upon the
agent designated in accordance with law to accept service of summons; (2) if there is no
resident agent, by service on the government official designated by law to that office; and (3)
by serving on any officer or agent of said corporation within the Philippines (Far East Int'l.
Import and Export Corp. v. Nankai Kogyo Co., Ltd., 6 SCRA 725 [1962]).
Summons intended for the petitioner was served on EXXBYTE at the 3rd. Floor, Zeta Building,
191 Salcedo Street, Legaspi Village, Makati, Metro Manila (Rollo, p. 57) as its duly authorized
and exclusive representative and distributor in the Philippines (Rollo, p. 24 and p. 149).
Petitioner opposed such service and filed a Motion to Dismiss on the ground of lack of
jurisdiction on its person, being a foreign corporation not engaged in business in the
Philippines. Evidence presented by private respondent however, shows that contrary to
petitioner's allegations, the various public advertisements of WANG and EXXBYTE clearly
show that Wang has appointed EXXBYTE, which is domiciled in the Philippines, as its
authorized exclusive representative in this country. In fact, WANG represents that its office
in the Philippines is EXXBYTE, while the letterhead of EXXBYTE and its invoices show that it is
WANG's representative. (Rollo, p. 65). Moreover, in its Reply to Opposition to Motion to
Dismiss, WANG itself admitted that it deals exclusively with EXXBYTE in the sale of its
products in the Philippines (Rollo, pp. 79 and 154).
In any event, as previously stated, private respondent moved further, ex abundante cautela,
for leave to effect extraterritorial service of summons on petitioner WANG. Private
respondent presented to the Court documentary evidence proving that the defendant Wang
has properties in the Philippines consisting of trademarks registered with the Philippine
Patent Office and that WANG designated Rafael E. Evangelists of 638 Philippine Banking
Building, Ayala Avenue, Makati, Metro Manila as its Resident Agent upon whom notice or
process affecting the mark may be served. The same counsel represented petitioner in the
oral deposition of Mr. Yeoh Asia Controller for Wang Laboratories (Annex "S," Petition).
Private respondent further showed that said trademarks have been judicially attached (Rollo,
p. 110). Petitioner in its Rejoinder to ACCRALAW's Reply, prays for the issuance of an order
holding in abeyance any and all proceedings relative to ACCRALAW's motion for leave of
court to effect extraterritorial service of summons (Rollo, p. 155).
Petitioner insists on its argument that extra-judicial summons or any kind thereof cannot
bind the petitioner inasmuch as it is not doing business in the Philippines nor is it licensed to
do business in the country.
In the cases of Mentholatum Co., Inc. v. Mangaliman (72 Phil. 524 119411 and Topweld
Manufacturing, Inc. v. Eced S.A. et al., 138 SCRA 118 [1985]), it was held that no general rule
or governing principle can be laid down as to what constitutes doing or "engaging" or
"trading" in business. Indeed each case must be judged in the light of its peculiar
environmental circumstances; upon peculiar facts and upon the language of the Statute
applicable (Far East Int'l. Import Export Corp. v. Nankai Kogyo, Co., Ltd. (6 SCRA 725 [1962]).
Under the circumstances; petitioner cannot unilaterally declare that it is not doing business
in the Philippines. In fact, it has installed, at least 26 different products in several
corporations in the Philippines since 1976 (Respondent's Brief, Rollo, p. 272). It has
registered its trade name with the Philippine Patents Office (ibid) and Mr. Yeoh who is
petitioner's controller in Asia has visited the office of its distributor for at least four times
where he conducted training programs in the Philippines (Oral Deposition, pp. 16; 22-23,
Rollo, pp. 335; 341-342, Annex "S" to Petitioner's Brief). Wang has allowed its registered logo
and trademark to be used by EXXBYTE (Pran Deposition, p. 23, Rollo, p. 342) and made it
known that there exists a designated distributor in the Philippines as published in its
advertisements.
Indeed it has been held that "where a single act or transaction of a foreign corporation is not
merely incidental or casual but is of such character as distinctly to indicate a purpose to do
other business in the State, such act constitutes doing business within the meaning of
statutes prescribing the conditions under which a foreign corporation may be served with
summons (Far East Int'l. Import and Export Corp. v. Nankai Kogyo Co. Ltd., 6 SCRA 725
[1962]).
Be that as it may, the issue on the suability of foreign corporation whether or not doing
business in the Philippines has already been laid to rest. The Court has categorically stated
that although a foreign corporation is not doing business in the Philippines, it may be sued
for acts done against persons in the Philippines. The Court has ruled as follows:
Indeed if a foreign corporation, not engaged in business in the
Philippines, is not barred from seeking redress from courts in the
Philippines, a fortiori, that same corporation cannot claim
exemption from being sued in Philippine courts for acts done
against a person or persons in the Philippines (Facilities
Management Corporation v. De la Osa, 89 SCRA 131 [1979]).
Furthermore, even though petitioner objects to the jurisdiction of the Court over its person,
the fact that it alleged non-jurisdictional grounds in its pleadings indicates that it has waived
lack of jurisdiction of the court.
As noted by the trial court, defendant Wang (petitioner herein) in its Motion to Dismiss
sought affirmative reliefs requiring the exercise of jurisdiction, by praying: (1) for authority to
take testimony by way of deposition upon oral examination; (2) for extension of time to file
opposition to plaintiffs' motion to effect Extraterritorial Service of Summons; (3) to hold in
abeyance any and all proceedings relative to plaintiffs' foregoing motion and (4) to consider
as a mere scrap of paper plaintiff's motion to strike out Deposition (Rollo, p. 111).
In addition, the records show that petitioner also prayed for: (1) authority to reset date of
taking of deposition; (2) admission of the formal stenographic notes and (3) suspension of
time to file responsive pleadings, not to mention its various participation in the proceedings
in the court other than for the purpose of objecting to lack of jurisdiction (Rollo, p. 169).
In fact, it is well settled that "A voluntary appearance is a waiver of the necessity of formal
notice." Thus, it has been 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 the appearance is for any other
purpose, the defendant is deemed to have submitted himself to the jurisdiction of the court.
Such an appearance gives the court jurisdiction over the person (Flores v. Zurbito, 37 Phil.
746 [1918]). Clarifying further, the Court has likewise ruled that even though the defendant
objects to the jurisdiction of the Court, if at the same time he alleges any non-jurisdictional
ground for dismissing the action, the Court acquires jurisdiction over him (Far East
International Import & Export Corporation v. Nankai Kogyo, Co., Ltd., 6 SCRA 725 11962]).
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, with costs against the
petitioner. The temporary restraining order is hereby lifted immediately.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-40163 June 19, 1982
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, DOMINGO GO, and LIM KIAT, petitioners,
vs.
HON. SERAFIN SALVADOR, Judge, Court of First Instance of Rizal, Caloocan City, Branch XIV
and LEVITON MANUFACTURING CO., INC., respondents.
ESCOLIN, J:
Challenged in this petition for certiorari and prohibition is the order of the respondent Judge
Serafin Salvador in Civil Case No. C-2891 of the Court of First Instance of Rizal, sustaining the
legal capacity of a foreign corporation to maintain a suit for unfair competition under Section
21-A of Republic Act No. 166, as amended, otherwise known as the Trademark Law.
On April 17, 1973, private respondent Leviton Manufacturing Co., Inc. filed a complaint for
unfair competition against petitioners Leviton Industries, Nena de la Cruz Lim, Domingo Go
and Lim Kiat before the Court of First Instance of Rizal, Branch XXXIII, presided by respondent
Judge Serafin Salvador. The complaint substantially alleges that plaintiff is a foreign
corporation organized and existing under the laws of the State of New York, United States of
America, with office located at 236 Greenpoint Avenue, Brooklyn City, State of New York,
U.S.A.; that defendant Leviton Industries is a partnership organized and existing under the
laws of the Philippines with principal office at 382 10th Avenue, Grace Park, Caloocan City;
while defendants Nena de la Cruz Lim, Domingo Go and Lim Kiat are the partners, with
defendant Domingo Go acting as General Manager of defendant Leviton Industries; that
plaintiff, founded in 1906 by Isidor Leviton, is the largest manufacturer of electrical wiring
devices in the United States under the trademark Leviton, which various electrical wiring
devices bearing the trademark Leviton and trade name Leviton Manufacturing Co., Inc. had
been exported to the Philippines since 1954; that due to the superior quality and widespread
use of its products by the public, the same are well known to Filipino consumers under the
trade name Leviton Manufacturing Co., Inc. and trademark Leviton; that long subsequent to
the use of plaintiff's trademark and trade name in the Philippines, defendants began
manufacturing and selling electrical ballast, fuse and oval buzzer under the trademark
Leviton and trade name Leviton Industries Co.; that Domingo Go, partner and general
manager of defendant partnership, had registered with the Philippine Patent Office the
trademarks Leviton Label and Leviton with respect to ballast and fuse under Certificate of
Registration Nos. SR-1132 and 15517, respectively, which registration was contrary to
paragraphs (d) and (e) of Section 4 of RA 166, as amended, and violative of plaintiff's right
over the trademark Leviton; that defendants not only used the trademark Leviton but
likewise copied the design used by plaintiff in distinguishing its trademark; and that the use
thereof by defendants of its products would cause confusion in the minds of the consumers
and likely to deceive them as to the source of origin, thereby enabling defendants to pass off
their products as those of plaintiff's. Invoking the provisions of Section 21-A of Republic Act
No. 166, plaintiff prayed for damages. It also sought the issuance of a writ of injunction to
prohibit defendants from using the trade name Leviton Industries, Co. and the trademark
Leviton.
Defendants moved to dismiss the complaint for failure to state a cause of action, drawing
attention to the plaintiff's failure to allege therein its capacity to sue under Section 21-A of
Republic Act No. 166, as amended. After the filing of the plaintiff's opposition and the
defendant's reply, the respondent judge denied the motion on the ground that the same did
not appear to be indubitable. On September 21, 1973, defendants filed their answer,
reiterating the ground supporting their motion to dismiss. Thereafter, defendants served
upon plaintiff a request for admission under Rule 26 of the Rules of Court, of the following
matters of fact, to wit:
(1) That the plaintiff is not actually manufacturing, selling and/or
distributing ballasts generally used in flourescent lighting;
(2) That plaintiff has no registered trademark or trade name in the
Philippine Patent Office of any of its products; and
(3) That plaintiff has no license to do business in the Philippines
under and by virtue of the provision of Act No. 1459, better known
as the Philippine Corporation Law, at the time it filed the
complaint. 1
Complying with the said request, plaintiff admitted:
That it does not manufacture ballasts; that it has not registered its trademark in the
Philippine Patent Office, but has filed with the same office an application of its trade mark on
April 16, 1971; and that it has no license to do business in the Philippines. 2
On the basis of these admissions, defendants filed an Urgent Supplemental Motion to
Dismiss. This was followed by the plaintiff's opposition, and the defendant's rejoinder, after
which respondent judge issued the questioned order 3 denying the motion, thus:
Acting on the Urgent Supplemental Motion to Dismiss, dated July 2,
1974, filed by counsels for the defendants, as well as the
oppositions thereto, the Court after a careful consideration of the
reasons adduced for and against said motion, is of the opinion that
the same should be, as it is hereby DENIED.
SO ORDERED.
The motion for reconsideration having likewise been denied, defendants instituted the
instant petition for certiorari and prohibition, charging respondent judge with grave abuse of
discretion in denying their motion to dismiss.
We agree with petitioners that respondent Leviton Marketing Co., Inc. had failed to allege
the essential facts bearing upon its capacity to sue before Philippine courts. Private
respondent's action is squarely founded on Section 21-A of Republic Act No. 166, as
amended, which we quote:
Sec. 21-A. Any foreign corporation or juristic person to which a
mark or tradename has been registered or assigned under this Act
may bring an action hereunder for infringement, for unfair
competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the
Philippines under Act numbered Fourteen Hundred and Fifty-Nine,
as amended, otherwise known as the Corporation Law, at the time
it brings the complaint; Provided, That the country of which the
said foreign corporation or juristic person is a citizen, or in which it
is domiciled, by treaty, convention or law, grants a similar privilege
to corporate or juristic persons of the Philippines. (As amended by
R.A. No. 638)
Undoubtedly, the foregoing section grants to a foreign corporation, whether or not licensed
to do business in the Philippines, the right to seek redress for unfair competition before
Philippine courts. But the said law is not without qualifications. Its literal tenor indicates as a
condition sine qua non the registration of the trade mark of the suing foreign corporation
with the Philippine Patent Office or, in the least, that it be an asignee of such registered
trademark. The said section further requires that the country, of which the plaintiff foreign
corporation or juristic person is a citizen or domicilliary, grants to Filipino corporations or
juristic entities the same reciprocal treatment, either thru treaty, convention or law,
All that is alleged in private respondent's complaint is that it is a foreign corporation. Such
bare averment not only fails to comply with the requirements imposed by the aforesaid
Section 21-A but violates as well the directive of Section 4, Rule 8 of the Rules of Court that
"facts showing the capacity of a party to sue or be sued or the authority of a party to sue or
be sued in a representative capacity or the legal existence of an organized association of
persons that is made a party, must be averred "
In the case at bar, private respondent has chosen to anchor its action under the Trademark
Law of the Philippines, a law which, as pointed out, explicitly sets down the conditions
precedent for the successful prosecution thereof. It is therefore incumbent upon private
respondent to comply with these requirements or aver its exemption therefrom, if such be
the case. It may be that private respondent has the right to sue before Philippine courts, but
our rules on pleadings require that the necessary qualifying circumstances which clothe it
with such right be affirmatively pleaded. And the reason therefor, as enunciated in "Atlantic
Mutual Insurance Co., et al. versus Cebu Stevedoring Co., Inc." 4 is that —
 these are matters peculiarly within the knowledge of appellants
alone, and it would be unfair to impose upon appellees the burden
of asserting and proving the contrary. It is enough that foreign
corporations are allowed by law to seek redress in our courts under
certain conditions: the interpretation of the law should not go so
far as to include, in effect, an inference that those conditions had
been met from the mere fact that the party sued is a foreign
corporation.
It was indeed in the light of this and other considerations that this
Court has seen fit to amend the former rule by requiring in the
revised rules (Section 4, Rule 8) that "facts showing the capacity of
a party to sue or be sued or the authority of a party to sue or be
sued in a representative capacity or the legal existence of an
organized association of persons that is made a party, must be
averred,
IN VIEW OF THE FOREGOING, the instant petition is hereby granted and, accordingly, the
order of the respondent judge dated September 27, 1974 denying petitioner's motion to
dismiss is hereby set aside. The Court of First Instance of Rizal (Caloocan City), the court of
origin, is hereby restrained from conducting further proceedings in Civil Case No. C-2891,
except to dismiss the same. No costs.
SO ORDERED.
Guerrero, Abad Santos and De Castro, JJ., concur.
Concepcion Jr., J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-63796-97 May 2, 1984
LA CHEMISE LACOSTE, S. A., petitioner,
vs.
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial Court, National
Capital Judicial Region, Manila and GOBINDRAM HEMANDAS, respondents.
G.R. No. L-65659 May 2l, 1984
GOBINDRAM HEMANDAS SUJANANI, petitioner,
vs.
HON. ROBERTO V. ONGPIN, in his capacity as Minister of Trade and Industry, and HON.
CESAR SAN DIEGO, in his capacity as Director of Patents, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97.
Ramon C. Fernandez for private respondent in 63796-97 and petitioner in 65659.
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not acquire an unbecoming
reputation among the manufacturing and trading centers of the world as a haven for
intellectual pirates imitating and illegally profiting from trademarks and tradenames which
have established themselves in international or foreign trade.
Before this Court is a petition for certiorari with preliminary injunction filed by La Chemise
Lacoste, S.A., a well known European manufacturer of clothings and sporting apparels sold in
the international market and bearing the trademarks "LACOSTE" "CHEMISE LACOSTE",
"CROCODILE DEVICE" and a composite mark consisting of the word "LACOSTE" and a
representation of a crocodile/alligator. The petitioner asks us to set aside as null and void,
the order of judge Oscar C. Fernandez, of Branch XLIX, Regional Trial Court, National Capital
Judicial Region, granting the motion to quash the search warrants previously issued by him
and ordering the return of the seized items.
The facts are not seriously disputed. The petitioner is a foreign corporation, organized and
existing under the laws of France and not doing business in the Philippines, It is undeniable
from the records that it is the actual owner of the abovementioned trademarks used on
clothings and other goods specifically sporting apparels sold in many parts of the world and
which have been marketed in the Philippines since 1964, The main basis of the private
respondent's case is its claim of alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg. No.
SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE LACOSTE &
CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts, sportswear and other
garment products of the company. Two years later, it applied for the registration of the same
trademark under the Principal Register. The Patent Office eventually issued an order dated
March 3, 1977 which states that:
xxx xxx xxx
... Considering that the mark was already registered in the
Supplemental Register in favor of herein applicant, the Office has
no other recourse but to allow the application, however, Reg. No.
SR-2225 is now being contested in a Petition for Cancellation
docketed as IPC No. 1046, still registrant is presumed to be the
owner of the mark until after the registration is declared cancelled.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title,
and interest in the trademark "CHEMISE LACOSTE & DEVICE".
On November 21, 1980, the petitioner filed its application for registration of the trademark
"Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application Serial No.
43241).The former was approved for publication while the latter was opposed by Games and
Garments in Inter Partes Case No. 1658. In 1982, the petitioner filed a Petition for the
Cancellation of Reg. No. SR-2225 docketed as Inter Partes Case No. 1689. Both cases have
now been considered by this Court in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of Investigation (NBI) a
letter-complaint alleging therein the acts of unfair competition being committed by
Hemandas and requesting their assistance in his apprehension and prosecution. The NBI
conducted an investigation and subsequently filed with the respondent court two
applications for the issuance of search warrants which would authorize the search of the
premises used and occupied by the Lacoste Sports Center and Games and Garments both
owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for violation of Article
189 of the Revised Penal Code, "it appearing to the satisfaction of the judge after examining
under oath applicant and his witnesses that there are good and sufficient reasons to believe
that Gobindram Hemandas ... has in his control and possession in his premises the ...
properties subject of the offense," (Rollo, pp. 67 and 69) The NBI agents executed the two
search warrants and as a result of the search found and seized various goods and articles
described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the trademark used by
him was different from petitioner's trademark and that pending the resolution of IPC No.
1658 before the Patent Office, any criminal or civil action on the same subject matter and
between the same parties would be premature.
The petitioner filed its opposition to the motion arguing that the motion to quash was fatally
defective as it cited no valid ground for the quashal of the search warrants and that the
grounds alleged in the motion were absolutely without merit. The State Prosecutor likewise
filed his opposition on the grounds that the goods seized were instrument of a crime and
necessary for the resolution of the case on preliminary investigation and that the release of
the said goods would be fatal to the case of the People should prosecution follow in court.
The respondent court was, however, convinced that there was no probable cause to justify
the issuance of the search warrants. Thus, in its order dated March 22, 1983, the search
warrants were recalled and set aside and the NBI agents or officers in custody of the seized
items were ordered to return the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
Did respondent judge act with grave abuse of discretion amounting
to lack of jurisdiction,
(i) in reversing the finding of probable cause which he himself had
made in issuing the search warrants, upon allegations which are
matters of defense and as such can be raised and resolved only
upon trial on the merits; and
 (ii) in finding that the issuance of the search warrants is premature
in the face of the fact that (a) Lacoste's registration of the subject
trademarks is still pending with the Patent Office with opposition
from Hemandas; and (b) the subject trademarks had been earlier
registered by Hemandas in his name in the Supplemental Register
of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following issues:
I (1) ... A foreign firm which does business through middlemen acting
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION TANTAMOUNT
TO LACK OF JURISDICTION IN ISSUING THE ORDER DATED APRIL 22, 1983.
Hemandas argues in his comment on the petition for certiorari that the petitioner being a
foreign corporation failed to allege essential facts bearing upon its capacity to sue before
Philippine courts. He states that not only is the petitioner not doing business in the
Philippines but it also is not licensed to do business in the Philippines. He also cites the case
of Leviton Industries v. Salvador (114 SCRA 420) to support his contention The Leviton case,
however, involved a complaint for unfair competition under Section 21-A of Republic Act No.
166 which provides:
Sec. 21 — A. Any foreign corporation or juristic person to which a
mark or tradename has been registered or assigned under this Act
may bring an action hereunder for infringement, for unfair
competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the
Philippines under Act numbered Fourteen Hundred and Fifty-Nine,
as amended, otherwise known as the Corporation Law, at the time
it brings the complaint; Provided, That the country of which the said
foreign corporation or juristic person is a citizen, or in which it is
domiciled, by treaty, convention or law, grants a similar privilege to
corporate or juristic persons of the Philippines.
We held that it was not enough for Leviton, a foreign corporation organized and existing
under the laws of the State of New York, United States of America, to merely allege that it is
a foreign corporation. It averred in Paragraph 2 of its complaint that its action was being filed
under the provisions of Section 21-A of Republic Act No. 166, as amended. Compliance with
the requirements imposed by the abovecited provision was necessary because Section 21-A
of Republic Act No. 166 having explicitly laid down certain conditions in a specific proviso,
the same must be expressly averred before a successful prosecution may ensue. It is
therefore, necessary for the foreign corporation to comply with these requirements or aver
why it should be exempted from them, if such was the case. The foreign corporation may
have the right to sue before Philippine courts, but our rules on pleadings require that the
qualifying circumstances necessary for the assertion of such right should first be affirmatively
pleaded.
In contradistinction, the present case involves a complaint for violation of Article 189 of the
Revised Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument, Hemandas argued in his
brief that the petitioner was doing business in the Philippines but was not licensed to do so.
To support this argument, he states that the applicable ruling is the case of Mentholatum
Co., Inc. v. Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., a foreign corporation
and Philippine-American Drug Co., the former's exclusive distributing agent in the Philippines
filed a complaint for infringement of trademark and unfair competition against the
Mangalimans.
The argument has no merit. The Mentholatum case is distinct from and inapplicable to the
case at bar. Philippine American Drug Co., Inc., was admittedly selling products of its
principal Mentholatum Co., Inc., in the latter's name or for the latter's account. Thus, this
Court held that "whatever transactions the Philippine-American Drug Co., Inc. had executed
in view of the law, the Mentholatum Co., Inc., did it itself. And, the Mentholatum Co., Inc.,
being a foreign doing business in the Philippines without the license required by Section 68
of the Corporation Law, it may not prosecute this action for violation of trademark and unfair
competition."
In the present case, however, the petitioner is a foreign corporation not doing business in
the Philippines. The marketing of its products in the Philippines is done through an exclusive
distributor, Rustan Commercial Corporation The latter is an independent entity which buys
and then markets not only products of the petitioner but also many other products bearing
equally well-known and established trademarks and tradenames. in other words, Rustan is
not a mere agent or conduit of the petitioner.
The rules and regulations promulgated by the Board of Investments pursuant to its rule-
making power under Presidential Decree No. 1789, otherwise known as the Omnibus
Investment Code, support a finding that the petitioner is not doing business in the
Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as one"
which includes, inter alia:
on their own names, such as indentors, commercial brokers or
commission merchants, shall not be deemed doing business in the
Philippines. But such indentors, commercial brokers or commission
merchants shall be the ones deemed to be doing business in the
Philippines.
(2) Appointing a representative or distributor who is domiciled in
the Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and for its
account, and not in the name or for the account of a principal Thus,
where a foreign firm is represented by a person or local company
which does not act in its name but in the name of the foreign firm
the latter is doing business in the Philippines.
xxx xxx xxx
Applying the above provisions to the facts of this case, we find and conclude that the
petitioner is not doing business in the Philippines. Rustan is actually a middleman acting and
transacting business in its own name and or its own account and not in the name or for the
account of the petitioner.
But even assuming the truth of the private respondent's allegation that the petitioner failed
to allege material facts in its petition relative to capacity to sue, the petitioner may still
maintain the present suit against respondent Hemandas. As early as 1927, this Court was,
and it still is, of the view that a foreign corporation not doing business in the Philippines
needs no license to sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 115), this Court
held that a foreign corporation which has never done any business in the Philippines and
which is unlicensed and unregistered to do business here, but is widely and favorably known
in the Philippines through the use therein of its products bearing its corporate and
tradename, has a legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the same name as the
foreign corporation, when it appears that they have personal knowledge of the existence of
such a foreign corporation, and it is apparent that the purpose of the proposed domestic
corporation is to deal and trade in the same goods as those of the foreign corporation.
We further held:
xxx xxx xxx
... That company is not here seeking to enforce any legal or control
rights arising from, or growing out of, any business which it has
transacted in the Philippine Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill,
whenever that reputation, corporate name or goodwill have,
through the natural development of its trade, established
themselves.' And it contends that its rights to the use of its
corporate and trade name:
Is a property right, a right in rem, which it may assert and protect
against all the world, in any of the courts of the world-even in
jurisdictions where it does not transact business-just the same as it
may protect its tangible property, real or personal, against trespass,
or conversion. Citing sec. 10, Nims on Unfair Competition and
TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks,
Trade Names and Unfair Competition and cases cited.' That point is
sustained by the authorities, and is well stated in Hanover Star
Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the
syllabus says:
Since it is the trade and not the mark that is to be protected, a
trade-mark acknowledges no territorial boundaries of
municipalities or states or nations, but extends to every market
where the trader's goods have become known and Identified by the
use of the mark.
Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent
setting. Our jurisprudence is replete with cases illustrating instances when foreign
corporations not doing business in the Philippines may nonetheless sue in our courts. In East
Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign
corporation to sue on isolated transactions. In General Garments Corp. v. Director of
Patents (41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a foreign
corporation not licensed to do and not doing business in the Philippines, to file a petition for
cancellation of a trademark before the Patent Office.
More important is the nature of the case which led to this petition. What preceded this
petition for certiorari was a letter complaint filed before the NBI charging Hemandas with a
criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution
follows after the completion of the preliminary investigation being conducted by the Special
Prosecutor the information shall be in the name of the People of the Philippines and no
longer the petitioner which is only an aggrieved party since a criminal offense is essentially
an act against the State. It is the latter which is principally the injured party although there is
a private right violated. Petitioner's capacity to sue would become, therefore, of not much
significance in the main case. We cannot snow a possible violator of our criminal statutes to
escape prosecution upon a far-fetched contention that the aggrieved party or victim of a
crime has no standing to sue.
In upholding the right of the petitioner to maintain the present suit before our courts for
unfair competition or infringement of trademarks of a foreign corporation, we are moreover
recognizing our duties and the rights of foreign states under the Paris Convention for the
Protection of Industrial Property to which the Philippines and France are parties. We are
simply interpreting and enforcing a solemn international commitment of the Philippines
embodied in a multilateral treaty to which we are a party and which we entered into because
it is in our national interest to do so.
The Paris Convention provides in part that:
ARTICLE 1
(1) The countries to which the present Convention applies
constitute themselves into a Union for the protection of industrial
property.
(2) The protection of industrial property is concerned with patents,
utility models, industrial designs, trademarks service marks, trade
names, and indications of source or appellations of origin, and the
repression of unfair competition.
xxx xxx xxx
ARTICLE 2
(2) Nationals of each of the countries of the Union shall as regards
the protection of industrial property, enjoy in all the other
countries of the Union the advantages that their respective laws
now grant, or may hereafter grant, to nationals, without prejudice
to the rights specially provided by the present Convention.
Consequently, they shall have the same protection as the latter,
and the same legal remedy against any infringement of their rights,
provided they observe the conditions and formalities imposed upon
nationals.
xxx xxx xxx
ARTICLE 6
(1) The countries of the Union undertake, either administratively if
their legislation so permits, or at the request of an interested party,
to refuse or to cancel the registration and to prohibit the use of a
trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be
well-known in that country as being already the mark of a person
entitled to the benefits of the present Convention and used for
Identical or similar goods. These provisions shall also apply when
the essential part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create confusion
therewith.
xxx xxx xxx
ARTICLE 8
A trade name shall be protected in all the countries of the Union
without the obligation of filing or registration, whether or not it
forms part of a trademark.
xxx xxx xxx
ARTICLE 10bis
(1) The countries of the Union are bound to assure to persons
entitled to the benefits of the Union effective protection against
unfair competition.
xxx xxx xxx
ARTICLE 10ter
(1) The countries of the Union undertake to assure to nationals of
the other countries of the Union appropriate legal remedies to
repress effectively all the acts referred to in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit
syndicates and associations which represent the industrialists,
producers or traders concerned and the existence of which is not
contrary to the laws of their countries, to take action in the Courts
or before the administrative authorities, with a view to the
repression of the acts referred to in Articles 9, 10 and 10bis, in so
far as the law of the country in which protection is claimed allows
such action by the syndicates and associations of that country.
xxx xxx xxx
ARTICLE 17
Every country party to this Convention undertakes to adopt, in
accordance with its constitution, the measures necessary to ensure
the application of this Convention.
It is understood that at the time an instrument of ratification or
accession is deposited on behalf of a country; such country will be
in a position under its domestic law to give effect to the provisions
of this Convention. (61 O.G. 8010)
xxx xxx xxx
In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) the United States Circuit Court of
Appeals had occasion to comment on the extraterritorial application of the Paris Convention
It said that:
[11] The International Convention is essentially a compact between
the various member countries to accord in their own countries to
citizens of the other contracting parties trademark and other rights
comparable to those accorded their own citizens by their domestic
law. The underlying principle is that foreign nationals should be
given the same treatment in each of the member countries as that
country makes available to its own citizens. In addition, the
Convention sought to create uniformity in certain respects by
obligating each member nation 'to assure to nationals of countries
of the Union an effective protection against unfair competition.'
[12] The Convention is not premised upon the Idea that the trade-
mark and related laws of each member nation shall be given extra-
territorial application, but on exactly the converse principle that
each nation's law shall have only territorial application. Thus a
foreign national of a member nation using his trademark in
commerce in the United States is accorded extensive protection
here against infringement and other types of unfair competition by
virtue of United States membership in the Convention. But that
protection has its source in, and is subject to the limitations of,
American law, not the law of the foreign national's own country. ...
By the same token, the petitioner should be given the same treatment in the Philippines as
we make available to our own citizens. We are obligated to assure to nationals of "countries
of the Union" an effective protection against unfair competition in the same way that they
are obligated to similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20, 1980 issued a
memorandum addressed to the Director of the Patents Office directing the latter:
xxx xxx xxx
... to reject all pending applications for Philippine registration of
signature and other world famous trademarks by applicants other
than its original owners or users.
The conflicting claims over internationally known trademarks
involve such name brands as Lacoste, Jordache, Gloria Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta,
Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and
Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and
other legal action by the trademarks' foreign or local owners or
original users.
The memorandum is a clear manifestation of our avowed adherence to a policy of
cooperation and amity with all nations. It is not, as wrongly alleged by the private
respondent, a personal policy of Minister Luis Villafuerte which expires once he leaves the
Ministry of Trade. For a treaty or convention is not a mere moral obligation to be enforced or
not at the whims of an incumbent head of a Ministry. It creates a legally binding obligation
on the parties founded on the generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land. (Constitution, Art. II, Sec. 3).
The memorandum reminds the Director of Patents of his legal duty to obey both law and
treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave abuse of
discretion in issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the search warrants
reveals the fact that they are not appropriate for quashing a warrant. They are matters of
defense which should be ventilated during the trial on the merits of the case. For instance,
on the basis of the facts before the Judge, we fail to understand how he could treat a bare
allegation that the respondent's trademark is different from the petitioner's trademark as a
sufficient basis to grant the motion to quash. We will treat the issue of prejudicial question
later. Granting that respondent Hemandas was only trying to show the absence of probable
cause, we, nonetheless, hold the arguments to be untenable.
As a mandatory requirement for the issuance of a valid search warrant, the Constitution
requires in no uncertain terms the determination of probable cause by the judge after
examination under oath or affirmation of the complainant and the witnesses he may
produce (Constitution, Art. IV, Sec. 3). Probable cause has traditionally meant such facts and
circumstances antecedent to the issuance of the warrant that are in themselves sufficient to
induce a cautious man to rely upon them and act in pursuance thereof (People v. Sy Juco, 64
Phil. 667).
This concept of probable cause was amplified and modified by our ruling in Stonehill v.
Diokno, (20 SCRA 383) that probable cause "presupposes the introduction of competent
proof that the party against whom it is sought has performed particular acts, or committed
specific omissions, violating a given provision of our criminal laws."
The question of whether or not probable cause exists is one which must be decided in the
light of the conditions obtaining in given situations (Central Bank v. Morfe, 20 SCRA 507). We
agree that there is no general formula or fixed rule for the determination of the existence of
probable cause since, as we have recognized in Luna v. Plaza (26 SCRA 310), the existence
depends to a large degree upon the finding or opinion of the judge conducting the
examination. However, the findings of the judge should not disregard the facts before him
nor run counter to the clear dictates of reason. More so it is plain that our country's ability to
abide by international commitments is at stake.
The records show that the NBI agents at the hearing of the application for the warrants
before respondent court presented three witnesses under oath, sworn statements, and
various exhibits in the form of clothing apparels manufactured by Hemandas but carrying the
trademark Lacoste. The respondent court personally interrogated Ramon Esguerra, Samuel
Fiji, and Mamerto Espatero by means of searching questions. After hearing the testimonies
and examining the documentary evidence, the respondent court was convinced that there
were good and sufficient reasons for the issuance of the warrant. And it then issued the
warrant.
The respondent court, therefore, complied with the constitutional and statutory
requirements for the issuance of a valid search warrant. At that point in time, it was fully
convinced that there existed probable cause. But after hearing the motion to quash and the
oppositions thereto, the respondent court executed a complete turnabout and declared that
there was no probable cause to justify its earlier issuance of the warrants.
True, the lower court should be given the opportunity to correct its errors, if there be any,
but the rectification must, as earlier stated be based on sound and valid grounds. In this case,
there was no compelling justification for the about face. The allegation that vital facts were
deliberately suppressed or concealed by the petitioner should have been assessed more
carefully because the object of the quashal was the return of items already seized and easily
examined by the court. The items were alleged to be fake and quite obviously would be
needed as evidence in the criminal prosecution. Moreover, an application for a search
warrant is heard ex parte. It is neither a trial nor a part of the trial. Action on these
applications must be expedited for time is of the essence. Great reliance has to be accorded
by the judge to the testimonies under oath of the complainant and the witnesses. The
allegation of Hemandas that the applicant withheld information from the respondent court
was clearly no basis to order the return of the seized items.
Hemandas relied heavily below and before us on the argument that it is the holder of a
certificate of registration of the trademark "CHEMISE LACOSTE & CROCODILE DEVICE".
Significantly, such registration is only in the Supplemental Register.
A certificate of registration in the Supplemental Register is not prima facie evidence of the
validity of registration, of the registrant's exclusive right to use the same in connection with
the goods, business, or services specified in the certificate. Such a certificate of registration
cannot be filed, with effect, with the Bureau of Customs in order to exclude from the
Philippines, foreign goods bearing infringement marks or trade names (Rule 124, Revised
Rules of Practice Before the Phil. Pat. Off. in Trademark Cases; Martin, Philippine Commercial
Laws, 1981, Vol. 2, pp. 513-515).
Section 19-A of Republic Act 166 as amended not only provides for the keeping of the
supplemental register in addition to the principal register but specifically directs that:
xxx xxx xxx
The certificates of registration for marks and trade names
registered on the supplemental register shall be conspicuously
different from certificates issued for marks and trade names on the
principal register.
xxx xxx xxx
The reason is explained by a leading commentator on Philippine Commercial Laws:
The registration of a mark upon the supplemental register is not, as
in the case of the principal register, prima facie evidence of (1) the
validity of registration; (2) registrant's ownership of the mark; and
(3) registrant's exclusive right to use the mark. It is not subject to
opposition, although it may be cancelled after its issuance. Neither
may it be the subject of interference proceedings. Registration on
the supplemental register is not constructive notice of registrant's
claim of ownership. A supplemental register is provided for the
registration of marks which are not registrable on the principal
register because of some defects (conversely, defects which make a
mark unregistrable on the principal register, yet do not bar them
from the supplemental register.) (Agbayani, II Commercial Laws of
the Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay & Co., et
al., Dec. No. 254 of Director of Patents, Apr. 30, 1963);
Registration in the Supplemental Register, therefore, serves as notice that the registrant is
using or has appropriated the trademark. By the very fact that the trademark cannot as yet
be entered in the Principal Register, all who deal with it should be on guard that there are
certain defects, some obstacles which the user must Still overcome before he can claim legal
ownership of the mark or ask the courts to vindicate his claims of an exclusive right to the
use of the same. It would be deceptive for a party with nothing more than a registration in
the Supplemental Register to posture before courts of justice as if the registration is in the
Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on
application Serial No. 30954 that "registrant is presumed to be the owner of the mark until
after the registration is declared cancelled" is, therefore, misplaced and grounded on shaky
foundation, The supposed presumption not only runs counter to the precept embodied in
Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark
Cases but considering all the facts ventilated before us in the four interrelated petitions
involving the petitioner and the respondent, it is devoid of factual basis. And even in cases
where presumption and precept may factually be reconciled, we have held that the
presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R. No. L10612, May 30,
1958, Unreported). One may be declared an unfair competitor even if his competing
trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil. 928; La Yebana Co.
v. Chua Seco & Co., 14 Phil. 534).
By the same token, the argument that the application was premature in view of the pending
case before the Patent Office is likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co. 1658 do not partake of
the nature of a prejudicial question which must first be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the
pendency of a pre-judicial question in a civil case, may only be
presented by any party before or during the trial of the criminal
action.
The case which suspends the criminal prosecution must be a civil case which is determinative
of the innocence or, subject to the availability of other defenses, the guilt of the accused. The
pending case before the Patent Office is an administrative proceeding and not a civil case.
The decision of the Patent Office cannot be finally determinative of the private respondent's
innocence of the charges against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil
Code and the Rules of Court, and as uniformly applied in numerous
decisions of this Court, (Berbari v. Concepcion, 40 Phil. 837 (1920);
Aleria v. Mendoza, 83 Phil. 427 (1949); People v. Aragon, 94 Phil.
357 (1954); Brito-Sy v. Malate Taxicab & Garage, Inc., 102 Phil 482
(1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v. Concepcion, 2
SCRA 178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia, 22
SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA 271) the doctrine
of prejudicial question was held inapplicable because no criminal
case but merely an administrative case and a civil suit were
involved. The Court, however, held that, in view of the peculiar
circumstances of that case, the respondents' suit for damages in
the lower court was premature as it was filed during the pendency
of an administrative case against the respondents before the
POLCOM. 'The possibility cannot be overlooked,' said the Court,
'that the POLCOM may hand down a decision adverse to the
respondents, in which case the damage suit will become unfounded
and baseless for wanting in cause of action.') the doctrine of pre-
judicial question comes into play generally in a situation where a
civil action and a criminal action both penned and there exists in
the former an issue which must be preemptively resolved before
the criminal action may proceed, because howsoever the issue
raised in the civil action is resolved would be determinative juris et
de jure of the guilt or innocence of the accused in the criminal case.
In the present case, no civil action pends nor has any been instituted. What was pending was
an administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with exceptional or special
circumstances which render a criminal prosecution premature pending the promulgation of
the administrative decision, no such peculiar circumstances are present in this case.
Moreover, we take note of the action taken by the Patents Office and the Minister of Trade
and affirmed by the Intermediate Appellate Court in the case of La Chemise Lacoste S. A.
v. Ram Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade discussed in this
decision was involved in the appellate court's decision. The Minister as the "implementing
authority" under Article 6bis of the Paris Convention for the protection of Industrial Property
instructed the Director of Patents to reject applications for Philippine registration of
signature and other world famous trademarks by applicants other than its original owners or
users. The brand "Lacoste" was specifically cited together with Jordache, Gloria Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar dela Renta, Calvin Klein, Givenchy,
Ralph Laurence, Geoffrey Beene, Lanvin, and Ted Lapidus. The Director of Patents was
likewise ordered to require Philippine registrants of such trademarks to surrender their
certificates of registration. Compliance by the Director of Patents was challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani decision which
we cite with approval sustained the power of the Minister of Trade to issue the
implementing memorandum and, after going over the evidence in the records, affirmed the
decision of the Director of Patents declaring La Chemise Lacoste &A. the owner of the
disputed trademark and crocodile or alligator device. The Intermediate Appellate Court
speaking through Mr. Justice Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent
authority of the country of registration,' has found that among
other well-known trademarks 'Lacoste' is the subject of conflicting
claims. For this reason, applications for its registration must be
rejected or refused, pursuant to the treaty obligation of the
Philippines.
Apart from this finding, the annexes to the opposition, which La
Chemise Lacoste S.A. filed in the Patent Office, show that it is the
owner of the trademark 'Lacoste' and the device consisting of a
representation of a crocodile or alligator by the prior adoption and
use of such mark and device on clothing, sports apparel and the
like. La Chemise Lacoste S.A, obtained registration of these mark
and device and was in fact issued renewal certificates by the French
National Industry Property Office.
xxx xxx xxx
Indeed, due process is a rule of reason. In the case at bar the order
of the Patent Office is based not only on the undisputed fact of
ownership of the trademark by the appellee but on a prior
determination by the Minister of Trade, as the competent authority
under the Paris Convention, that the trademark and device sought
to be registered by the appellant are well-known marks which the
Philippines, as party to the Convention, is bound to protect in favor
of its owners. it would be to exalt form over substance to say that
under the circumstances, due process requires that a hearing
should be held before the application is acted upon.
The appellant cites section 9 of Republic Act No. 166, which
requires notice and hearing whenever an opposition to the
registration of a trademark is made. This provision does not apply,
however, to situations covered by the Paris Convention, where the
appropriate authorities have determined that a well-known
trademark is already that of another person. In such cases, the
countries signatories to the Convention are obliged to refuse or to
cancel the registration of the mark by any other person or
authority. In this case, it is not disputed that the trademark Lacoste
is such a well-known mark that a hearing, such as that provided in
Republic Act No. 166, would be superfluous.
The issue of due process was raised and fully discussed in the appellate court's decision. The
court ruled that due process was not violated.
In the light of the foregoing it is quite plain that the prejudicial question argument is without
merit.
We have carefully gone over the records of all the cases filed in this Court and find more than
enough evidence to sustain a finding that the petitioner is the owner of the trademarks
"LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and the composite mark
of LACOSTE and the representation of the crocodile or alligator. Any pretensions of the
private respondent that he is the owner are absolutely without basis. Any further ventilation
of the issue of ownership before the Patent Office will be a superfluity and a dilatory tactic.
The issue of whether or not the trademark used by the private respondent is different from
the petitioner's trade mark is a matter of defense and will be better resolved in the criminal
proceedings before a court of justice instead of raising it as a preliminary matter in an
administrative proceeding.
The purpose of the law protecting a trademark cannot be overemphasized. They are to point
out distinctly the origin or ownership of the article to which it is affixed, to secure to him,
who has been instrumental in bringing into market a superior article of merchandise, the
fruit of his industry and skill, and to prevent fraud and imposition (Etepha v. Director of
Patents, 16 SCRA 495).
The legislature has enacted laws to regulate the use of trademarks and provide for the
protection thereof. Modern trade and commerce demands that depredations on legitimate
trade marks of non-nationals including those who have not shown prior registration thereof
should not be countenanced. The law against such depredations is not only for the
protection of the owner of the trademark but also, and more importantly, for the protection
of purchasers from confusion, mistake, or deception as to the goods they are buying. (Asari
Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General Garments Corporation v. Director of Patents, 41
SCRA 50).
The law on trademarks and tradenames is based on the principle of business integrity and
common justice' This law, both in letter and spirit, is laid upon the premise that, while it
encourages fair trade in every way and aims to foster, and not to hamper, competition, no
one, especially a trader, is justified in damaging or jeopardizing another's business by fraud,
deceipt, trickery or unfair methods of any sort. This necessarily precludes the trading by one
dealer upon the good name and reputation built up by another (Baltimore v. Moses, 182 Md
229, 34 A (2d) 338).
The records show that the goodwill and reputation of the petitioner's products bearing the
trademark LACOSTE date back even before 1964 when LACOSTE clothing apparels were first
marketed in the Philippines. To allow Hemandas to continue using the trademark Lacoste for
the simple reason that he was the first registrant in the Supplemental Register of a
trademark used in international commerce and not belonging to him is to render nugatory
the very essence of the law on trademarks and tradenames.
We now proceed to the consideration of the petition in Gobindram Hemandas Suianani
u. Hon. Roberto V Ongpin, et al. (G.R. No. 65659).
Actually, three other petitions involving the same trademark and device have been filed with
this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504) the petitioner
asked for the following relief:
IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that
the Resolutions of the respondent Court of January 3, 1983
and February 24, 1983 be nullified; and that the Decision of the
same respondent Court of June 30, 1983 be declared to be the law
on the matter; (b) that the Director of Patents be directed to issue
the corresponding registration certificate in the Principal Register;
and (c) granting upon the petitioner such other legal and equitable
remedies as are justified by the premises.
On December 5, 1983, we issued the following resolution:
Considering the allegations contained, issues raised and the
arguments adduced in the petition for review, the respondent's
comment thereon, and petitioner's reply to said comment, the
Court Resolved to DENY the petition for lack of merit.
The Court further Resolved to CALL the attention of the Philippine
Patent Office to the pendency in this Court of G.R. No. 563796-97
entitled 'La Chemise Lacoste, S.A. v. Hon. Oscar C. Fernandez and
Gobindram Hemandas' which was given due course on June 14,
1983 and to the fact that G.R. No. 63928-29 entitled 'Gobindram
Hemandas v. La Chemise Lacoste, S.A., et al.' filed on May 9, 1983
was dismissed for lack of merit on September 12, 1983. Both
petitions involve the same dispute over the use of the trademark
'Chemise Lacoste'.
The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et al. (G.R. No. 63928-
29) prayed for the following:
I. On the petition for issuance of writ of preliminary injunction, an
order be issued after due hearing:
l. Enjoining and restraining respondents Company, attorneys-in-
fact, and Estanislao Granados from further proceedings in the
unfair competition charges pending with the Ministry of Justice
filed against petitioner;
2. Enjoining and restraining respondents Company and its
attorneys-in-fact from causing undue publication in newspapers of
general circulation on their unwarranted claim that petitioner's
products are FAKE pending proceedings hereof; and
3. Enjoining and restraining respondents Company and its
attorneys-in-fact from sending further threatening letters to
petitioner's customers unjustly stating that petitioner's products
they are dealing in are FAKE and threatening them with
confiscation and seizure thereof.
II. On the main petition, judgment be rendered:
l. Awarding and granting the issuance of the Writ of Prohibition,
prohibiting, stopping, and restraining respondents from further
committing the acts complained of;
2. Awarding and granting the issuance of the Writ of Mandamus,
ordering and compelling respondents National Bureau of
Investigation, its aforenamed agents, and State Prosecutor
Estanislao Granados to immediately comply with the Order of the
Regional Trial Court, National Capital Judicial Region, Branch XLIX,
Manila, dated April 22, 1983, which directs the immediate return of
the seized items under Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been
previously issued by this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and
equitable in the premises.
As earlier stated, this petition was dismissed for lack of merit on September 12, 1983. Acting
on a motion for reconsideration, the Court on November 23, 1983 resolved to deny the
motion for lack of merit and declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as null and void and for the
prohibiting of the enforcement of the following memorandum of respondent Minister
Roberto Ongpin:
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
xxx xxx xxx
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-
making and adjudicatory powers of the Minister of Trade and Industry and provides inter
alia, that 'such rule-making and adjudicatory powers should be revitalized in order that the
Minister of Trade and Industry can ...apply more swift and effective solutions and remedies
to old and new problems ... such as the infringement of internationally-known tradenames
and trademarks ...'and in view of the decision of the Intermediate Appellate Court in the case
of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. Sp. No. 13359 (17) June 1983]
which affirms the validity of the MEMORANDUM of then Minister Luis R. Villafuerte dated 20
November 1980 confirming our obligations under the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a
signatory, you are hereby directed to implement measures necessary to effect compliance
with our obligations under said convention in general, and, more specifically, to honor our
commitment under Section 6 bis thereof, as follows:
1. Whether the trademark under consideration is well-known in the
Philippines or is a mark already belonging to a person entitled to
the benefits of the CONVENTION, this should be established,
pursuant to Philippine Patent Office procedures in inter partes and
ex parte cases, according to any of the following criteria or any
combination thereof:
(a) a declaration by the Minister of Trade and Industry that' the
trademark being considered is already well-known in the
Philippines such that permission for its use by other than its original
owner will constitute a reproduction, imitation, translation or other
infringement;
(b) that the trademark is used in commerce internationally,
supported by proof that goods bearing the trademark are sold on
an international scale, advertisements, the establishment of
factories, sales offices, distributorships, and the like, in different
countries, including volume or other measure of international trade
and commerce;
 (c) that the trademark is duly registered in the industrial property
office(s) of another country or countries, taking into consideration
the dates of such registration;
(d) that the trademark has been long established and obtained
goodwill and general international consumer recognition as
belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming
ownership and has the right to registration under the provisions of
the aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall
include tradenames, service marks, logos, signs, emblems, insignia
or other similar devices used for Identification and recognition by
consumers.
3. The Philippine Patent Office shall refuse all applications for, or
cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a
person, natural or corporate, who is a citizen of a country signatory
to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
4. The Philippine Patent Office shall give due course to the
Opposition in cases already or hereafter filed against the
registration of trademarks entitled to protection of Section 6 bis of
said PARIS CONVENTION as outlined above, by remanding
applications filed by one not entitled to such protection for final
disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature
and other world famous trademarks filed by applicants other than
their original owners or users shall be rejected forthwith. Where
such applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to
the Philippine Patent Office for immediate cancellation
proceedings.
6. Consistent with the foregoing, you are hereby directed to
expedite the hearing and to decide without delay the following
cases pending before your Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise
Lacoste, S.A. for the cancellation of Certificate of Registration No.
SR-2225 issued to Gobindram Hemandas, assignee of Hemandas
and Company;
2. INTER PARTES CASE NO. 1658-Opposition filed by Games and
Garments Co. against the registration of the trademark Lacoste
sought by La Chemise Lacoste, S.A.;
3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise
Lacoste, S.A. against the registration of trademark Crocodile Device
and Skiva sought by one Wilson Chua.
Considering our discussions in G.R. Nos. 63796-97, we find the petition in G.R. No. 65659 to
be patently without merit and accordingly deny it due course.
In complying with the order to decide without delay the cases specified in the memorandum,
the Director of Patents shall limit himself to the ascertainment of facts in issues not resolved
by this decision and apply the law as expounded by this Court to those facts.
One final point. It is essential that we stress our concern at the seeming inability of law
enforcement officials to stem the tide of fake and counterfeit consumer items flooding the
Philippine market or exported abroad from our country. The greater victim is not so much
the manufacturer whose product is being faked but the Filipino consuming public and in the
case of exportations, our image abroad. No less than the President, in issuing Executive
Order No. 913 dated October 7, 1983 to strengthen the powers of the Minister of Trade and
Industry for the protection of consumers, stated that, among other acts, the dumping of
substandard, imitated, hazardous, and cheap goods, the infringement of internationally
known tradenames and trademarks, and the unfair trade practices of business firms has
reached such proportions as to constitute economic sabotage. We buy a kitchen appliance, a
household tool, perfume, face powder, other toilet articles, watches, brandy or whisky, and
items of clothing like jeans, T-shirts, neck, ties, etc. — the list is quite length — and pay good
money relying on the brand name as guarantee of its quality and genuine nature only to
explode in bitter frustration and genuine nature on helpless anger because the purchased
item turns out to be a shoddy imitation, albeit a clever looking counterfeit, of the quality
product. Judges all over the country are well advised to remember that court processes
should not be used as instruments to, unwittingly or otherwise, aid counterfeiters and
intellectual pirates, tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of solemn commitments
pursuant to international conventions and treaties.
WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order dated April
22, 1983 of the respondent regional trial court is REVERSED and SET ASIDE. Our Temporary
Restraining Order dated April 29, 1983 is ma(i.e. PERMANENT. The petition in G.R. NO. 65659
is DENIED due course for lack of merit. Our Temporary Restraining Order dated December 5,
1983 is LIFTED and SET ASIDE, effective immediately.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 73765 August 26, 1991
HANG LUNG BANK, LTD., petitioner,
vs.
HON. FELINTRIYE G. SAULOG, Presiding Judge, Regional Trial Court, National Capital
Judicial Region, Branch CXLII, Makati, Metro Manila, and CORDOVA CHIN
SAN, respondents.
Belo, Abiera & Associates for petitioner.
Castelo Law Office for private respondent.
FERNAN, C.J.:
Challenged in this petition for certiorari which is anchored on grave abuse of discretion, are
two orders of the Regional Trial Court, Branch CXLII of Makati, Metro Manila dismissing the
complaint for collection of a sum of money and denying the motion for reconsideration of
the dismissal order on the ground that petitioner, a Hongkong-based bank, is barred by the
General Banking Act from maintaining a suit in this jurisdiction.
The records show that on July 18, 1979, petitioner Hang Lung Bank, Ltd., which was not
doing business in the Philippines, entered into two (2) continuing guarantee agreements with
Cordova Chin San in Hongkong whereby the latter agreed to pay on demand all sums of
money which may be due the bank from Worlder Enterprises to the extent of the total
amount of two hundred fifty thousand Hongkong dollars (HK $250,000). 1
Worlder Enterprises having defaulted in its payment, petitioner filed in the Supreme Court of
Hongkong a collection suit against Worlder Enterprises and Chin San. Summonses were
allegedly served upon Worlder Enterprises and Chin San at their addresses in Hongkong but
they failed to respond thereto. Consequently, the Supreme Court of Hongkong issued the
following:
JUDGMENT
THE 14th DAY OF JUNE, 1984
No notice of intention to defend having been given by the 1st and 2nd
Defendants herein, IT IS THIS DAY ADJUDGED that: —
(1) the 1st Defendant (Ko Ching Chong Trading otherwise known as the Worlder
Enterprises) do pay the Plaintiff the sum of HK$1,117,968.36 together with
interest on the respective principal sums of HK$196,591.38, HK$200,216.29,
HK$526,557.63, HK$49,350.00 and HK$3,965.50 at the rates of 1.7% per month
(or HK$111.40 per day), 18.5% per annum (or HK$101.48 per day), 1.85% per
month (or HK$324.71 per day), 1.55% per month (or HK$25.50 per day) and
 1.7% per month (or HK$2.25 per day) respectively from 4th May 1984 up to the
date of payment; and
(2) the 2nd Defendant (Cordova Chin San) do pay the Plaintiff the sum of
HK$279,325.00 together with interest on the principal sum of HK$250,000.00 at
the rate of 1.7% per month (or HK$141.67 per day) from 4th May 1984 up to the
date of payment.
AND IT IS ADJUDGED that the 1st and 2nd Defendants do pay the Plaintiff the
sum of HK$970.00 fixed costs.
N.J. BARNETT
Registrar
Thereafter, petitioner through counsel sent a demand letter to Chin San at his Philippine
address but again, no response was made thereto. Hence, on October 18, 1984, petitioner
instituted in the court below an action seeking "the enforcement of its just and valid claims
against private respondent, who is a local resident, for a sum of money based on a
transaction which was perfected, executed and consummated abroad." 2
In his answer to the complaint, Chin San raised as affirmative defenses: lack of cause of
action, incapacity to sue and improper venue. 3
Pre-trial of the case was set for June 17, 1985 but it was postponed to July 12, 1985.
However, a day before the latter pre-trial date, Chin San filed a motion to dismiss the case
and to set the same for hearing the next day. The motion to dismiss was based on the
grounds that petitioner had no legal capacity to sue and that venue was improperly laid.
Acting on said motion to dismiss, on December 20, 1985, the lower court 4 issued the
following order:
On defendant Chin San Cordova's motion to dismiss, dated July 10, 1985;
plaintiff's opposition, dated July 12, 1985; defendant's reply, dated July 22,
1985; plaintiff's supplemental opposition, dated September 13, 1985, and
defendant's rejoinder filed on September 23, 1985, said motion to dismiss is
granted.
Section 14, General Banking Act provides:
"No foreign bank or banking corporation formed, organized or
existing under any laws other than those of the Republic of the
Philippines, shall be permitted to transact business in the
Philippines, or maintain by itself any suit for the recovery of any
debt, claims or demands whatsoever until after it shall have
obtained, upon order of the Monetary Board, a license for that
purpose."
Plaintiff Hang Lung Bank, Ltd. with business and postal address at the 3rd Floor,
United Centre, 95 Queensway, Hongkong, does not do business in the
Philippines. The continuing guarantee, Annexes "A" and "B" appeared to have
been transacted in Hongkong. Plaintiff's Annex "C" shows that it had already
obtained judgment from the Supreme Court of Hongkong against defendant
involving the same claim on June 14, 1984.
The cases of Mentholatum Company, Inc. versus Mangaliman, 72 Phil. 524
and Eastern Seaboard Navigation, Ltd. versus Juan Ysmael & Company, Inc., 102
Phil. 1-8, relied upon by plaintiff, deal with isolated transaction in the Philippines
of foreign corporation. Such transaction though isolated is the one that
conferred jurisdiction to Philippine courts, but in the instant case, the
transaction occurred in Hongkong.
Case dismissed. The instant complaint not the proper action.
SO ORDERED.5
Petitioner filed a motion for the reconsideration of said order but it was denied for lack of
merit.6 Hence, the instant petition for certiorari seeking the reversal of said orders "so as to
allow petitioner to enforce through the court below its claims against private respondent as
recognized by the Supreme Court of Hongkong."7
Petitioner asserts that the lower court gravely abused its discretion in: (a) holding that the
complaint was not the proper action for purposes of collecting the amount guaranteed by
Chin San "as recognized and adjudged by the Supreme Court of Hongkong;" (b) interpreting
Section 14 of the General Banking Act as precluding petitioner from maintaining a suit before
Philippine courts because it is a foreign corporation not licensed to do business in the
Philippines despite the fact that it does not do business here; and (c) impliedly sustaining
private respondent's allegation of improper venue.
We need not detain ourselves on the issue of improper venue. Suffice it to state that private
respondent waived his right to invoke it when he forthwith filed his answer to the complaint
thereby necessarily implying submission to the jurisdiction of the court.8
The resolution of this petition hinges on a determination of whether petitioner foreign
banking corporation has the capacity to file the action below.
Private respondent correctly contends that since petitioner is a bank, its capacity to file an
action in this jurisdiction is governed by the General Banking Act (Republic Act No. 337),
particularly Section 14 thereof which provides:
SEC. 14. No foreign bank or banking corporation formed, organized or existing
under any laws other than those of the Republic of the Philippines shall be
permitted to transact business in the Philippines, or maintain by itself or
assignee any suit for the recovery of any debt, claims, or demand whatsoever,
until after it shall have obtained, upon order of the Monetary Board, a license
for that purpose from the Securities and Exchange Commissioner. Any officer,
director or agent of any such corporation who transacts business in the
Philippines without the said license shall be punished by imprisonment for not
less than one year nor more than ten years and by a fine of not less than one
thousand pesos nor more than ten thousand pesos. (45 O.G. No. 4, 1647, 1649-
1650)
In construing this provision, we adhere to the interpretation given by this Court to the almost
identical Section 69 of the old Corporation Law (Act No. 1459) which reads:
SEC. 69. No foreign corporation or corporation formed, organized, or existing
under any laws other than those of the Philippines shall be permitted to transact
business in the Philippines or maintain by itself or assignee any suit for the
recovery of any debt, claim, or demand whatever, unless it shall have the license
prescribed in the section immediately preceding. Any officer, director or agent
of the corporation or any person transacting business for any foreign
corporation not having the license prescribed shall be punished by
imprisonment for not less than six months nor more than two years or by a fine
of not less than two hundred pesos nor more than one thousand pesos, or by
both such imprisonment and fine, in the discretion of the Court.
In a long line of cases, this Court has interpreted this last quoted provision as not altogether
prohibiting a foreign corporation not licensed to do business in the Philippines from suing or
maintaining an action in Philippine courts. 9 What it seeks to prevent is a foreign corporation
doing business in the Philippines without a license from gaining access to Philippine courts.
As elucidated in Marshall-Wells Co. vs. Elser & Co., 46 Phil. 70:
The object of the statute was to subject the foreign corporation doing business
in the Philippines to the jurisdiction of its courts. The object of the statute was
not to prevent it from performing single acts but to prevent it from acquiring a
domicile for the purpose of business without taking the steps necessary to
render it amenable to suit in the local courts. The implication of the law is that it
was never the purpose of the Legislature to exclude a foreign corporation which
happens to obtain an isolated order for business from the Philippines from
securing redress from Philippine courts, and thus, in effect, to permit persons to
avoid their contract made with such foreign corporation. The effect of the
statute preventing foreign corporations from doing business and from bringing
actions in the local courts, except on compliance with elaborate requirements,
must not be unduly extended or improperly applied. It should not be construed
to extend beyond the plain meaning of its terms, considered in connection with
its object, and in connection with the spirit of the entire law.
The fairly recent case of Universal Shipping Lines vs. Intermediate Appellate Court,10 although
dealing with the amended version of Section 69 of the old Corporation Law, Section 133 of
the Corporation Code (Batas Pambansa Blg. 68), but which is nonetheless apropos, states the
rule succinctly: "it is not the lack of the prescribed license (to do business in the Philippines)
but doing business without license, which bars a foreign corporation from access to our
courts."
Thus, we have ruled that a foreign corporation not licensed to do business in the Philippines
may file a suit in this country due to the collision of two vessels at the harbor of Manila11 and
for the loss of goods bound for Hongkong but erroneously discharged in Manila. 12
Indeed, the phraseologies of Section 14 of the General Banking Act and its almost identical
counterpart Section 69 of the old Corporation Law are misleading in that they seem to
require a foreign corporation, including a foreign bank or banking corporation, not licensed
to do business and not doing business in the Philippines to secure a license from the
Securities and Exchange Commission before it can bring or maintain an action in Philippine to file the suit at bar, and for whose services it has agreed to pay an
courts. To avert such misimpression, Section 133 of the Corporation Code is now more amount equivalent to 25% of the total amount due and owing, as of
plainly worded thus: and by way of attorney's fees plus costs of suit.

No foreign corporation transacting business in the Philippines without a license,
or its successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative agency of the
Philippines.
Under this provision, we have ruled that a foreign corporation may sue in this jurisdiction for
infringement of trademark and unfair competition although it is not doing business in the
Philippines13 because the Philippines was a party to the Convention of the Union of Paris for
the Protection of IndustrialProperty.14
We even went further to say that a foreign corporation not licensed to do business in the
Philippines may not be denied the right to file an action in our courts for an isolated
transaction in this country.15
WHEREFORE, premises considered, it is most respectfully prayed of this
Honorable Court that judgment be rendered ordering the defendant:
a) To pay plaintiff the sum of HK$279,325.00 together with interest
on the principal sum of HK$260,000.00 at the rate of HK$1.7% (sic)
per month (or HK$141.67 per day) from May 4, 1984 until the
aforesaid amount is paid in full;
b) To pay an amount equivalent to 25% of the total amount due
and demandable as of and by way of attorney's fees; and
c) To pay costs of suit, and

Since petitioner foreign banking corporation was not doing business in the Philippines, it may
not be denied the privilege of pursuing its claims against private respondent for a contract
which was entered into and consummated outside the Philippines. Otherwise we will be
hampering the growth and development of business relations between Filipino citizens and
foreign nationals. Worse, we will be allowing the law to serve as a protective shield for
unscrupulous Filipino citizens who have business relationships abroad.
In its pleadings before the court, petitioner appears to be in a quandary as to whether the
suit below is one for enforcement or recognition of the Hongkong judgment. Its complaint
states:
COMES NOW Plaintiff, by undersigned counsel, and to this Honorable Court,
most respectfully alleges that:
1. Plaintiff is a corporation duly organized and existing under and by
virtue of the laws of Hongkong with business and postal address at
the 3rd Floor, United Centre, 95 Queensway, Hongkong, not doing
business in the Philippines, but is suing for this isolated transaction,
but for purposes of this complaint may be served with summons
and legal processes of this Honorable Court, at the 6th Floor,
Cibeles Building, 6780 Ayala Avenue, Makati, Metro Manila, while
defendant Cordova Chin San, may be served with summons and
other legal processes of this Honorable Court at the Municipality of
Moncada, Province of Tarlac, Philippines;
2. On July 18, 1979 and July 25, 1980, the defendant executed
Continuing Guarantees, in consideration of plaintiff's from time to
time making advances, or coming to liability or discounting bills or
otherwise giving credit or granting banking facilities from time to
time to, or on account of the Wolder Enterprises (sic), photocopies
of the Contract of Continuing Guarantees are hereto attached as
Annexes "A" and "B", respectively, and made parts hereof;
Plaintiff prays for such other and further reliefs, to which it may by law and
equity, be entitled.16
The complaint therefore appears to be one of the enforcement of the Hongkong judgment
because it prays for the grant of the affirmative relief given by said foreign
judgment.17 Although petitioner asserts that it is merely seeking the recognition of its claims
based on the contract sued upon and not the enforcement of the Hongkong judgment18 it
should be noted that in the prayer of the complaint, petitioner simply copied the Hongkong
judgment with respect to private respondent's liability.
However, a foreign judgment may not be enforced if it is not recognized in the jurisdiction
where affirmative relief is being sought.1âwphi1 Hence, in the interest of justice, the
complaint should be considered as a petition for the recognition of the Hongkong judgment
under Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private
respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or
clear mistake of fact and law, if applicable.
WHEREFORE, the questioned orders of the lower court are hereby set aside. Civil Case No.
8762 is reinstated and the lower court is directed to proceed with dispatch in the disposition
of said case. This decision is immediately executory. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 99358 January 30, 1995

3. In June 1984, a complaint was filed by plaintiff against the
Wolder Enterprises (sic) and defendant Cordova Chin San, in The
Supreme Court of Hongkong, under Case No. 3176, and pursuant to DJUMANTAN, petitioner,
which complaint, a judgment dated 14th day of July, 1984 was vs.
rendered by The Supreme Court of Hongkong ordering to (sic) HON. ANDREA D. DOMINGO, COMMISSIONER OF THE BOARD OF IMMIGRATION, HON.
defendant Cordova Chin San to pay the plaintiff the sum of REGINO R. SANTIAGO and HON. JORGE V. SARMIENTO, COMMISSIONERS BUREAU OF
HK$279,325.00 together with interest on the principal sum of IMMIGRATION AND DEPORTATION, respondents.
HK$250,000.00 at the rate of HK$1.7% per month or (HK$141.67)
per day from 4th May, 1984 up to the date the said amount is paid
in full, and to pay the sum of HK$970.00 as fixed cost, a photocopy
of the Judgment rendered by The Supreme Court of Hongkong is
hereto attached as Annex "C" and made an integral part hereof.
QUIASON, J.:

4. Plaintiff has made demands upon the defendant in this case to

This is a petition for certiorari under Rule 65 of the Revised Rules of Court with preliminary
pay the aforesaid amount the last of which is by letter dated July
injunction, to reverse and set aside the Decision dated September 27, 1990 of the
16, 1984 sent by undersigned counsel, a photocopy of the letter of
Commission on Immigration and Deportation (CID), ordering the deportation of petitioner
demand is hereto attached as Annex "D" and the Registry Return
and its Resolution dated January 29, 1991, denying the motion for reconsideration.
Card hereto attached as Annex "E", respectively, and made parts
hereof. However, this notwithstanding, defendant failed and
refused and still continue to fail and refuse to make any payment to I
plaintiff on the aforesaid amount of HK$279,325.00 plus interest on
the principal sum of HK$250,000.00 at the rate of (HK$141.67) per
day from May 4, 1984 up to the date of payment; Bernard Banez, the husband of Marina Cabael, went to Indonesia as a contract worker.

5. In order to protect and safeguard the rights and interests of On April 3, 1974, he embraced and was converted to Islam. On May 17, 1974, he married
herein plaintiff, it has engaged the services of undersigned counsel, petitioner in accordance with Islamic rites. He returned to the Philippines in January 1979.
On January 13, 1979, petitioner and her two children with Banez, (two-year old Marina and
nine-month old Nikulas) arrived in Manila as the "guests" of Banez. The latter made it appear
that he was just a friend of the family of petitioner and was merely repaying the hospitability
extended to him during his stay in Indonesia.
When petitioner and her two children arrived at the Ninoy Aquino International Airport on
January 13, 1979, Banez, together with Marina Cabael, met them.
Banez executed an "Affidavit of Guaranty and Support," for his "guests," stating inter alia,
that:
That I am the guarantor for the entry into the Philippines of Mrs.
Djumantan, 42 years old, and her two minor children, MARINA, 2
years old, and NIKULAS, 9 months old, all Indonesian citizens, who
are coming as temporary visitors.
That I am willing to guaranty them out of gratitude to their family
for the hospitality they have accorded me during the few years that
I have stayed in Indonesia in connection with my employment
thereat.
That I guaranty they are law abiding citizens and I guaranty their
behavior while they are in the Philippines; I also guaranty their
support and that they will not become a public charge.
That I guaranty their voluntary departure upon the termination of
the authorized stay granted them by the Government (Rollo, p. 41).
As "guests," petitioner and her two children lived in the house of Banez.
Petitioner and her children were admitted to the Philippines as temporary visitors under
Section 9(a) of the Immigration Act of 1940.
In 1981, Marina Cabael discovered the true relationship of her husband and petitioner. She
filed a complaint for "concubinage" with the Municipal Trial Court of Urdaneta, Pangasinan
against the two. This case was, however, dismissed for lack of merit.
On March 25, 1982, the immigration status of petitioner was changed from temporary visitor
to that of permanent resident under Section 13(a) of the same law. On April 14, 1982,
petitioner was issued an alien certificate of registration.
Not accepting the set-back, Banez' eldest son, Leonardo, filed a letter complaint with the
Ombudsman, who subsequently referred the letter to the CID. On the basis of the said letter,
petitioner was detained at the CID detention cell. She later released pending the deportation
proceedings (DEP Case No. 90-400) after posting a cash bond (Rollo, pp. 15-16). Thereafter,
she manifested to the CID that she be allowed to depart voluntarily from the Philippines and
asked for time to purchase her airline ticket (Rollo, p. 10). However, she a change of heart
and moved for the dismissal of the deportation case on the ground that she was validly
married to a Filipino citizen (Rollo, pp. 11-12).
In the Decision dated September 27, 1990, the CID, through public respondents, disposed as
follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the Board of
Commissioners finds the second marriage of Bernardo Banes to
respondent Djumantan irregular and not in accordance with the
laws of the Philippines. We revoke the Section 13(a) visa previously
granted to her (Rollo, p. 23).
Public respondents denied petitioner's motion for reconsideration in their Resolution dated
January 29, 1991 (Rollo, pp. 31-33).
Hence, this petition.
We issued a temporary restraining order, directing public respondents to cease and desist
from executing or implementing the Decision dated September 27, 1990 and the Resolution
dated January 29, 1991 (Rollo, pp. 34-36).
On September 20, 1994, Leonardo C. Banez manifested that his father died on August 14,
1994 and that he and his mother were withdrawing their objection to the granting of a
permanent resident visa to petitioner (Rollo, pp. 173-175).
II
Petitioner claims that her marriage to Banez was valid under Article 27 of P.D. No. 1085, the
Muslim Code, which recognizes the practice of polyandry by Muslim males. From that
premise, she argues that under Articles 109 of the Civil Code of the Philippines, Article 68 of
the Family Code and Article 34 of the Muslim Code, the husband and wife are obliged to live
together and under Article 110 of the Civil Code of the Philippines, the husband is given the
right to fix the conjugal residence. She claims that public respondents have no right to order
the couple to live separately (Rollo, pp. 5-7).
When asked to comment on the petition, the Solicitor General took the position that the CID
could not order petitioner's deportation because its power to do so had prescribed under
Section 37 (b) of the Immigration Act of 1940 (Rollo, pp. 57-74).
III
We need not resolve the validity of petitioner's marriage to Banez, if under the law the CID
can validly deport petitioner as an "undesirable alien" regardless of her marriage to a Filipino
citizen. Therefore, to be first resolved is the question on petitioner's immigration status,
particularly the legality of her admission into the country and the change of her status from
temporary visitor to permanent resident. Upon a finding that she was not lawfully admitted
into the country and she did not lawfully acquire permanent residency, the next question is
whether the power to deport her has prescribed.
There was a blatant abuse of our immigration laws in effecting petitioner's entry into the
country and the change of her immigration status from temporary visitor to permanent
resident. All such privileges were obtained through misinterpretation.
Never was the marriage of petitioner to Banez disclosed to the immigration authorities in her
applications for temporary visitor's visa and for permanent residency.
The civil status of an alien applicant for admission as a temporary visitor is a matter that
could influence the exercise of discretion on the part of the immigration authorities. The
immigration authorities would be less inclined to allow the entry of a woman who claims to
have entered into a marriage with a Filipino citizen, who is married to another woman
(Cf. Shiu Shin Man v. Galang, 3 SCRA 871 [1961]).
Generally, the right of the President to expel or deport aliens whose presence is deemed
inimical to the public interest is as absolute and unqualified as the right to prohibit and
prevent their entry into the country (Annotations, 8 ALR 1286). this right is based on the fact
that since the aliens are not part of the nation, their admission into the territory is a matter
of pure permission and simple tolerance which creates no obligation on the part of the
government to permit them to stay (3 Am. Jur. 2d. 72).
The interest, which an alien has in being admitted into or allowed to continue to reside in the
country, is protected only so far as Congress may choose to protect it (United States ex rel.
Kaloudis v. Shauhnessy 180 F. 2d. 489).
There is no law guaranteeing aliens married to Filipino citizens the right to be admitted,
much less to be given permanent residency, in the Philippines.
The fact of marriage by an alien to a citizen does not withdraw her from the operation of the
immigration laws governing the admission and exclusion of aliens (United States ex rel.
Knauff v. Shauhnessy, 338 US 537 94 L. Ed. 317, 70 S. Ct. 309 [1950]; Low Wah Suey v.
Backus, 225 US 460 56 L. Ed. 1165, 32 S. Ct. 734 [1912]; Annotations, 71 ALR 1213). Marriage
of an alien woman to a Filipino husband does not ipso facto make her a Filipino citizen and
does not excuse her from her failure to depart from the country upon the expiration of her
extended stay here as an alien (Joaquin v. Galang, 33 SCRA 362 [1970]).
Under Section 9 of the Immigration Act of 1940, it is not mandatory for the CID to admit any
alien who applies for a visitor's visa. Once admitted into the country, the alien has no right to
an indefinite stay. Under Section 13 of the law, an alien allowed to stay temporarily may
apply for a change of status and "may be admitted" as a permanent resident. Among those
considered qualified to apply for permanent residency if the wife or husband of a Philippine
citizen (Immigration Act of 1940, Sec. 13[a]). The entry of aliens into the country and their
admission as immigrants is not a matter of right, even if they are legally married to Filipino
citizens.
IV
We now address the issue raised by the Solicitor General that the right of public respondents
to deport petitioner has prescribed, citing Section 37(b) of the Immigration Act of 1940.
Said Section 37(b) provides:
 Deportation may be effected under clauses 2, 7, 8, 11 and 12 of
paragraph (a) of this section at any time after entry, but shall not be
effected under any clause unless the arrest in the deportation
proceedings is made within five years after the cause for
deportation arises. Deportation under clauses 3 and 4 shall not be
effected if the court, or judge thereof, when sentencing the alien,
shall recommend to the Commissioner of Immigration that the
alien be not deported (As amended by Rep. Act No. 503).
Section 37(a) of the said law mentioned in Section 37(b) thereof provides:
The following aliens shall be arrested upon the warrant of the
Commissioner of Immigration or of any other officer designated by
him for the purpose and deported upon the warrant of the
Commissioner of Immigration after a determination by the Board of
Commissioners of the existence of the ground for deportation as
charged against the alien:
1) Any alien who enters the Philippines after the effective date of
this Act by means of false and misleading statements or without
inspection and admission by the immigration authorities at a
designating port of entry or at any place other than at a designated
port of entry.
2) Any alien who enters the Philippines after the effective date of
this Act, who was not lawfully admissible at the time of entry;
3) Any alien who, after the effective date of this Act, is convicted in
the Philippines and sentenced for a term of one year or more for a
crime involving moral turpitude committed within five years after
his entry, is so convicted and sentenced more than once;
4) Any alien who is convicted and sentenced for a violation of the
law governing prohibited drugs;
5) Any alien who practices prostitution or is an inmate of a house of
prostitution or is connected with the management of a house of
prostitution, or is a procurer;
6) Any alien who becomes a public charge within five years after
entry from causes not affirmatively shown to have arisen
subsequent to entry;
7) Any alien who remains in the Philippines in violation of any
limitation or condition under which he was admitted a non-
immigrant;
8) Any alien who believes in, advises, advocates or teaches the
overthrow by force and violence of the Government of the
Philippines, or of constituted law and authority, or who disbelieves
in or is opposed to organized government, or who advises,
advocates, or teaches the assault or assassination of public officials
because of their office, or who advises, advocates, or teaches the
unlawful destruction of property, or who is a member of or
affiliated with any organization entertaining, advocating or teaching
such doctrines, or who on any manner whatsoever lends assistance,
financial or otherwise, to the dissemination of such doctrines;
9) Any alien who commits any of the acts described in Sections
forty-five and forty-six of this Act, independent of criminal action
which may be brought against him: Provided, That in the case of an
alien who, for any reason, is convicted and sentenced to suffer both
imprisonment and deportation, said alien shall first serve the entire
period of his imprisonment before he is actually
deported: Provided, however, That the imprisonment may be
waived by the Commissioner of Immigration with the consent of
the Department Head, and upon payment by the alien concerned of
such amount as the Commissioner may fix and approved by the
Department Head, and upon payment by the alien concerned of
such amount as the Commissioner may fix and approved by the
Department Head (as amended by R.A. No. 144);
10) Any alien who, at any time within five years after entry, shall
have been convicted of violating the provisions of the Philippine
Commonwealth Act Numbered Six hundred and fifty-three,
otherwise known as the Philippine Alien Registration Act of 1941
(now Republic Act No. 562), or who, at any time after entry, shall
have been convicted more than once of violating the provisions of
the same Act;
11) Any alien who engages in profiteering, hoarding, or black-
marketing, independent of any criminal action which may be
brought against him;
12) Any alien who is convicted of any offense penalized under
Commonwealth Act Numbered Four hundred and seventy-three,
otherwise known as the Revised Naturalization Laws of the
Philippines, or any law relating to acquisition of Philippine
citizenship;
13) Any alien who defrauds his creditor by absconding or alienating
properties, to prevent them from being attached or executed.
Under clause 1 of Section 37(a), an "alien who enters the Philippines after the effective date
of this Act by means of false and misleading statements or without inspection and admission
by the immigration authorities at a designated port of entry or at any place other than at a
designated port of entry" is subject to deportation.
The deportation of an alien under said clause of Section 37(a) has a prescriptive period and
"shall not be effected ... unless the arrest in the deportation proceedings is made within five
years after the cause for deportation arises" (Immigration Act of 1940, Sec. 37[b]).
Congress may impose a limitation of time for the deportation of alien from the country
(Costanzo v. Tillinghast, 287 US 341 77 L. Ed. 350, 53 S. Ct. 152 [1932]; Guiney v. Bonham [CA
9] 261 F. 582, 8 ALR 1282).
In Board of Commissioners (CID) v. Dela Rosa, 197 SCRA 853 (1991), we held that under
Section 37(b) of the Immigration Act of 1940, the deportation of an alien may be barred after
the lapse of five years after the cause of deportation arises. Justice Feliciano, in his dissenting
opinion, qualified the broad statement of the law as follows:
Examination of the above quoted Section 37 (b) shows that the five
(5) year limitation is applicable only where deportation is sought to
be effected under clauses of Section 37 (a) other than clauses 2, 7,
8, 11 and 12; that where deportation or exclusion is sought to be
effected under clauses of Section 37(a), no period of limitation is
applicable; and that to the contrary, deportation or exclusion may
be effected "at any time after entry."
Justice Davide, in his dissenting opinion, clarified:
Note that the five-year period applies only to clauses other than 2,
7, 8, 11 and 12 of paragraph (a) of the Section. In respect to clauses
2, 7, 8, 11, and 12, the limitation does not apply.
In Lam Shee v. Bengzon, 93 Phil. 1065 (1953), the alien admitted that she had gained
entrance into the Philippines fraudulently by making use of the name of a Chinese resident-
merchant other than that of her lawful husband. The Court, however, held that she could no
longer be deported "for the simple reason that more than 5 years had elapsed from the date
of her admission."
The right of public respondents to deport petitioner has prescribed.
Petitioner was admitted and allowed entry into the Philippines on January 13, 1979 on the
basis of false and misleading statements in her application and in the other supporting
documents submitted to the immigration authorities. Leonardo C. Banez first complained
with the CID on November 19, 1980 about the manner petitioner was admitted into the
country and asked for her deportation (Rollo, pp. 77-78). After the EDSA Revolution, he sent
a follow-up letter to the CID requesting action on his 1980 letter-complaint (Rollo, p. 78).
Tolling the prescriptive period from November 19, 1980, when Leonardo C. Banez informed
the CID of the illegal entry of petitioner into the country, more than five years had elapsed
before the issuance of the order of her deportation on September 27, 1990.
In their Comment, public respondents urged that what is barred under Section 37(b) is the
deportation of an alien and claimed that what they ordered was not the deportation of
petitioner but merely the revocation of Section 13(a) which refers to the visa previously
granted her (Rollo, p. 102).
The "arrest" contemplated by Section 37(b) refers to the arrest for the purpose of carrying
out an order for deportation and not the arrest prior to proceedings to determine the right
of the alien to stay in the country. When public respondents revoked the permanent
residence visa issued to petitioner, they, in effect, ordered her arrest and deportation as an
overstaying alien.
WHEREFORE, the petition is GRANTED and the temporary restraining order issued on June 4,
1991 is MADE PERMANENT.
The Decision of the Board of Commissioners dated September 27, 1990 revoking the
issuance of the permanent resident visa to petitioner and the Resolution dated January 29,
1991 are REVERSED.
On November 27, 1982 in San Francisco, California, Rebecca gave birth to Marie Josephine
Alexandra or Alix. From then on, Vicente and Rebecca's marital relationship seemed to have
soured as the latter, sometime in 1996, initiated divorce proceedings in the Dominican
Republic. Before the Court of the First Instance of the Judicial District of Santo Domingo,
Rebecca personally appeared, while Vicente was duly represented by counsel. On February
22, 1996, the Dominican court issued Civil Decree No. 362/96,8 ordering the dissolution of
the couple's marriage and "leaving them to remarry after completing the legal
requirements," but giving them joint custody and guardianship over Alix. Over a year later,
the same court would issue Civil Decree No. 406/97,9 settling the couple's property relations
pursuant to an Agreement10 they executed on December 14, 1996. Said agreement
specifically stated that the "conjugal property which they acquired during their marriage
consist[s] only of the real property and all the improvements and personal properties therein
contained at 502 Acacia Avenue, Alabang, Muntinlupa."11

SO ORDERED. Meanwhile, on March 14, 1996, or less than a month from the issuance of Civil Decree No.
362/96, Rebecca filed with the Makati City RTC a petition12 dated January 26, 1996, with
attachments, for declaration of nullity of marriage, docketed as Civil Case No. 96-378.
Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Rebecca, however, later moved13 and secured approval14 of the motion to withdraw the
Kapunan and Mendoza, JJ., concur. petition.

Feliciano and Francisco, JJ., took no part. On May 29, 1996, Rebecca executed an Affidavit of Acknowledgment15 stating under oath
that she is an American citizen; that, since 1993, she and Vicente have been living separately;
and that she is carrying a child not of Vicente.
Republic of the Philippines
SUPREME COURT
Manila On March 21, 2001, Rebecca filed another petition, this time before the Muntinlupa City RTC,
for declaration of absolute nullity of marriage 16 on the ground of Vicente's alleged
psychological incapacity. Docketed as Civil Case No. 01-094 and entitled as Maria Rebecca
SECOND DIVISION
Makapugay Bayot v. Vicente Madrigal Bayot, the petition was eventually raffled to Branch
256 of the court. In it, Rebecca also sought the dissolution of the conjugal partnership of
G.R. No. 155635 November 7, 2008 gains with application for support pendente lite for her and Alix. Rebecca also prayed that
Vicente be ordered to pay a permanent monthly support for their daughter Alix in the
amount of PhP 220,000.
MARIA REBECCA MAKAPUGAY BAYOT, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and VICENTE MADRIGAL BAYOT, respondents. On June 8, 2001, Vicente filed a Motion to Dismiss 17 on, inter alia, the grounds of lack of
cause of action and that the petition is barred by the prior judgment of divorce. Earlier, on
June 5, 2001, Rebecca filed and moved for the allowance of her application for
x-------------------------------------------x support pendente lite.

G.R. No. 163979 November 7, 2008 To the motion to dismiss, Rebecca interposed an opposition, insisting on her Filipino
citizenship, as affirmed by the Department of Justice (DOJ), and that, therefore, there is no
valid divorce to speak of.
MARIA REBECCA MAKAPUGAY BAYOT, petitioner,
vs.
VICENTE MADRIGAL BAYOT, respondent. Meanwhile, Vicente, who had in the interim contracted another marriage, and Rebecca
commenced several criminal complaints against each other. Specifically, Vicente filed
adultery and perjury complaints against Rebecca. Rebecca, on the other hand, charged
DECISION
Vicente with bigamy and concubinage.

VELASCO, JR., J.:

Ruling of the RTC on the Motion to Dismiss
and Motion for Support Pendente Lite
The Case
On August 8, 2001, the RTC issued an Order18 denying Vicente's motion to dismiss Civil Case
Before us are these two petitions interposed by petitioner Maria Rebecca Makapugay Bayot No. 01-094 and granting Rebecca's application for support pendente lite, disposing as
impugning certain issuances handed out by the Court of Appeals (CA) in CA-G.R. SP No. follows:
68187.
Wherefore, premises considered, the Motion to Dismiss filed by the respondent
In the first, a petition for certiorari1 under Rule 65 and docketed as G.R. No. is DENIED. Petitioner's Application in Support of the Motion for Support
155635, Rebecca assails and seeks to nullify the April 30, 2002 Resolution2 of the CA, as Pendente Lite is hereby GRANTED. Respondent is hereby ordered to remit the
reiterated in another Resolution of September 2, 2002,3 granting a writ of preliminary amount of TWO HUNDRED AND TWENTY THOUSAND PESOS (Php 220,000.00) a
injunction in favor of private respondent Vicente Madrigal Bayot staving off the trial court's month to Petitioner as support for the duration of the proceedings relative to
grant of support pendente lite to Rebecca. the instant Petition.

The second, a petition for review under Rule 45,4 docketed G.R. No. 163979, assails the
March 25, 2004 Decision5 of the CA, (1) dismissing Civil Case No. 01-094, a suit for
declaration of absolute nullity of marriage with application for support commenced by
Rebecca against Vicente before the Regional Trial Court (RTC) in Muntinlupa City; and (2)
setting aside certain orders and a resolution issued by the RTC in the said case.
Per its Resolution of August 11, 2004, the Court ordered the consolidation of both cases.
SO ORDERED.19
The RTC declared, among other things, that the divorce judgment invoked by Vicente as bar
to the petition for declaration of absolute nullity of marriage is a matter of defense best
taken up during actual trial. As to the grant of support pendente lite, the trial court held that
a mere allegation of adultery against Rebecca does not operate to preclude her from
receiving legal support.

The Facts
Vicente and Rebecca were married on April 20, 1979 in Sanctuario de San Jose, Greenhills,
Mandaluyong City. On its face, the Marriage Certificate 6 identified Rebecca, then 26 years
old, to be an American citizen7 born in Agaña, Guam, USA to Cesar Tanchiong Makapugay,
American, and Helen Corn Makapugay, American.
Following the denial20 of his motion for reconsideration of the above August 8, 2001 RTC
order, Vicente went to the CA on a petition for certiorari, with a prayer for the issuance of a
temporary restraining order (TRO) and/or writ of preliminary injunction. 21 His petition was
docketed as CA-G.R. SP No. 68187.
Grant of Writ of Preliminary Injunction by the CA
On January 9, 2002, the CA issued the desired TRO.22 On April 30, 2002, the appellate court
granted, via a Resolution, the issuance of a writ of preliminary injunction, the decretal
portion of which reads:
IN VIEW OF ALL THE FOREGOING, pending final resolution of the petition at bar,
let the Writ of Preliminary Injunction be ISSUED in this case, enjoining the
respondent court from implementing the assailed Omnibus Order dated August
8, 2001 and the Order dated November 20, 2001, and from conducting further
proceedings in Civil Case No. 01-094, upon the posting of an injunction bond in
the amount of P250,000.00.
SO ORDERED.23
Rebecca moved24 but was denied reconsideration of the aforementioned April 30, 2002
resolution. In the meantime, on May 20, 2002, the preliminary injunctive writ 25 was issued.
Rebecca also moved for reconsideration of this issuance, but the CA, by Resolution dated
September 2, 2002, denied her motion.
The adverted CA resolutions of April 30, 2002 and September 2, 2002 are presently being
assailed in Rebecca's petition for certiorari, docketed under G.R. No. 155635.
Ruling of the CA
Pending resolution of G.R. No. 155635, the CA, by a Decision dated March 25, 2004,
effectively dismissed Civil Case No. 01-094, and set aside incidental orders the RTC issued in
relation to the case. The fallo of the presently assailed CA Decision reads:
IN VIEW OF THE FOREGOING, the petition is GRANTED. The Omnibus Order
dated August 8, 2001 and the Order dated November 20, 2001
are REVERSED and SET ASIDE and a new one entered DISMISSING Civil Case No.
01-094, for failure to state a cause of action. No pronouncement as to costs.
SO ORDERED.26
To the CA, the RTC ought to have granted Vicente's motion to dismiss on the basis of the
following premises:
(1) As held in China Road and Bridge Corporation v. Court of Appeals, the hypothetical-
admission rule applies in determining whether a complaint or petition states a cause of
action.27 Applying said rule in the light of the essential elements of a cause of
action,28 Rebecca had no cause of action against Vicente for declaration of nullity of
marriage.
(2) Rebecca no longer had a legal right in this jurisdiction to have her marriage with Vicente
declared void, the union having previously been dissolved on February 22, 1996 by the
foreign divorce decree she personally secured as an American citizen. Pursuant to the second
paragraph of Article 26 of the Family Code, such divorce restored Vicente's capacity to
contract another marriage.
(3) Rebecca's contention about the nullity of a divorce, she being a Filipino citizen at the time
the foreign divorce decree was rendered, was dubious. Her allegation as to her alleged
Filipino citizenship was also doubtful as it was not shown that her father, at the time of her
birth, was still a Filipino citizen. The Certification of Birth of Rebecca issued by the
Government of Guam also did not indicate the nationality of her father.
(4) Rebecca was estopped from denying her American citizenship, having professed to have
that nationality status and having made representations to that effect during momentous
events of her life, such as: (a) during her marriage; (b) when she applied for divorce; and (c)
when she applied for and eventually secured an American passport on January 18, 1995, or a
little over a year before she initiated the first but later withdrawn petition for nullity of her
marriage (Civil Case No. 96-378) on March 14, 1996.
(5) Assuming that she had dual citizenship, being born of a purportedly Filipino father in
Guam, USA which follows the jus soli principle, Rebecca's representation and assertion about
being an American citizen when she secured her foreign divorce precluded her from denying
her citizenship and impugning the validity of the divorce.
Rebecca seasonably filed a motion for reconsideration of the above Decision, but this
recourse was denied in the equally assailed June 4, 2004 Resolution. 29 Hence, Rebecca's
Petition for Review on Certiorari under Rule 45, docketed under G.R. No. 163979.
The Issues
In G.R. No. 155635, Rebecca raises four (4) assignments of errors as grounds for the
allowance of her petition, all of which converged on the proposition that the CA erred in
enjoining the implementation of the RTC's orders which would have entitled her to support
pending final resolution of Civil Case No. 01-094.
In G.R. No. 163979, Rebecca urges the reversal of the assailed CA decision submitting as
follows:
I
THE COURT OF APPEALS GRAVELY ERRED IN NOT MENTIONING AND NOT
TAKING INTO CONSIDERATION IN ITS APPRECIATION OF THE FACTS THE FACT OF
PETITIONER'S FILIPINO CITIZENSHIP AS CATEGORICALLY STATED AND ALLEGED
IN HER PETITION BEFORE THE COURT A QUO.
II
THE COURT OF APPEALS GRAVELY ERRED IN RELYING ONLY ON ANNEXES TO THE
PETITION IN RESOLVING THE MATTERS BROUGHT BEFORE IT.
III
THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO CONSIDER THAT
RESPONDENT IS ESTOPPED FROM CLAIMING THAT HIS MARRIAGE TO
PETITIONER HAD ALREADY BEEN DISSOLVED BY VIRTUE OF HIS SUBSEQUENT
AND CONCURRENT ACTS.
IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THERE WAS ABUSE
OF DISCRETION ON THE PART OF THE TRIAL COURT, MUCH LESS A GRAVE
ABUSE.30
We shall first address the petition in G.R. No. 163979, its outcome being determinative of the
success or failure of the petition in G.R. No. 155635.
Three legal premises need to be underscored at the outset. First, a divorce obtained abroad
by an alien married to a Philippine national may be recognized in the Philippines, provided
the decree of divorce is valid according to the national law of the foreigner.31 Second, the
reckoning point is not the citizenship of the divorcing parties at birth or at the time of
marriage, but their citizenship at the time a valid divorce is obtained abroad. And third, an
absolute divorce secured by a Filipino married to another Filipino is contrary to our concept
of public policy and morality and shall not be recognized in this jurisdiction. 32
Given the foregoing perspective, the determinative issue tendered in G.R. No. 155635, i.e.,
the propriety of the granting of the motion to dismiss by the appellate court, resolves itself
into the questions of: first, whether petitioner Rebecca was a Filipino citizen at the time the
divorce judgment was rendered in the Dominican Republic on February 22, 1996;
and second, whether the judgment of divorce is valid and, if so, what are its consequent legal
effects?
The Court's Ruling
The petition is bereft of merit.
Rebecca an American Citizen in the Purview of This Case
There can be no serious dispute that Rebecca, at the time she applied for and obtained her
divorce from Vicente, was an American citizen and remains to be one, absent proof of an
effective repudiation of such citizenship. The following are compelling circumstances
indicative of her American citizenship: (1) she was born in Agaña, Guam, USA; (2) the
principle of jus soli is followed in this American territory granting American citizenship to
those who are born there; and (3) she was, and may still be, a holder of an American
passport.33
And as aptly found by the CA, Rebecca had consistently professed, asserted, and represented
herself as an American citizen, particularly: (1) during her marriage as shown in the marriage
certificate; (2) in the birth certificate of Alix; and (3) when she secured the divorce from the
Dominican Republic. Mention may be made of the Affidavit of Acknowledgment 34 in which
she stated being an American citizen.
 It is true that Rebecca had been issued by the Bureau of Immigration (Bureau) of
Identification (ID) Certificate No. RC 9778 and a Philippine Passport. On its face, ID Certificate
No. RC 9778 would tend to show that she has indeed been recognized as a Filipino citizen. It
cannot be over-emphasized, however, that such recognition was given only on June 8, 2000
upon the affirmation by the Secretary of Justice of Rebecca's recognition pursuant to the
Order of Recognition issued by Bureau Associate Commissioner Edgar L. Mendoza.
For clarity, we reproduce in full the contents of ID Certificate No. RC 9778:
To Whom It May Concern:
This is to certify that *MARIA REBECCA MAKAPUGAY BAYOT* whose photograph
and thumbprints are affixed hereto and partially covered by the seal of this
Office, and whose other particulars are as follows:
Place of Birth: Guam, USA Date of Birth: March 5, 1953
Sex: female Civil Status: married Color of
Hair: brown
Color of Eyes: brown Distinguishing marks on face: none
was - r e c o g n i z e d - as a citizen of the Philippines as per pursuant to Article
IV, Section 1, Paragraph 3 of the 1935 Constitution per order of Recognition JBL
95-213 signed by Associate Commissioner Jose B. Lopez dated October 6, 1995,
and duly affirmed by Secretary of Justice Artemio G. Tuquero in his
1st Indorsement dated June 8, 2000.
Issued for identification purposes only. NOT VALID for travel purposes.
Given under my hand and seal this 11th day of October, 1995
(SGD) EDGAR L. MENDOZA
ASSO. COMMISSIONER
Official Receipt No. 5939988
issued at Manila
dated Oct. 10, 1995 for P 2,000
From the text of ID Certificate No. RC 9778, the following material facts and dates may be
deduced: (1) Bureau Associate Commissioner Jose B. Lopez issued the Order of Recognition
on October 6, 1995; (2) the 1st Indorsement of Secretary of Justice Artemio G. Tuquero
affirming Rebecca's recognition as a Filipino citizen was issued on June 8, 2000 or almost five
years from the date of the order of recognition; and (3) ID Certificate No. RC 9778 was
purportedly issued on October 11, 1995 after the payment of the PhP 2,000 fee on October
10, 1995 per OR No. 5939988.
What begs the question is, however, how the above certificate could have been issued by
the Bureau on October 11, 1995 when the Secretary of Justice issued the required
affirmation only on June 8, 2000. No explanation was given for this patent aberration. There
seems to be no error with the date of the issuance of the 1st Indorsement by Secretary of
Justice Tuquero as this Court takes judicial notice that he was the Secretary of Justice from
February 16, 2000 to January 22, 2001. There is, thus, a strong valid reason to conclude that
the certificate in question must be spurious.
Under extant immigration rules, applications for recognition of Filipino citizenship require
the affirmation by the DOJ of the Order of Recognition issued by the Bureau. Under
Executive Order No. 292, also known as the 1987 Administrative Code, specifically in its Title
III, Chapter 1, Sec. 3(6), it is the DOJ which is tasked to "provide immigration and
naturalization regulatory services and implement the laws governing citizenship and the
admission and stay of aliens." Thus, the confirmation by the DOJ of any Order of Recognition
for Filipino citizenship issued by the Bureau is required.
Pertinently, Bureau Law Instruction No. RBR-99-00235 on Recognition as a Filipino Citizen
clearly provides:
The Bureau [of Immigration] through its Records Section shall automatically
furnish the Department of Justice an official copy of its Order of Recognition
within 72 days from its date of approval by the way of indorsement for
confirmation of the Order by the Secretary of Justice pursuant to Executive
Order No. 292. No Identification Certificate shall be issued before the date of
confirmation by the Secretary of Justice and any Identification Certificate issued
by the Bureau pursuant to an Order of Recognition shall prominently indicate
thereon the date of confirmation by the Secretary of Justice. (Emphasis ours.)
Not lost on the Court is the acquisition by Rebecca of her Philippine passport only on June
13, 2000, or five days after then Secretary of Justice Tuquero issued the 1st Indorsement
confirming the order of recognition. It may be too much to attribute to coincidence this
unusual sequence of close events which, to us, clearly suggests that prior to said affirmation
or confirmation, Rebecca was not yet recognized as a Filipino citizen. The same sequence
would also imply that ID Certificate No. RC 9778 could not have been issued in 1995, as
Bureau Law Instruction No. RBR-99-002 mandates that no identification certificate shall be
issued before the date of confirmation by the Secretary of Justice. Logically, therefore, the
affirmation or confirmation of Rebecca's recognition as a Filipino citizen through the
1st Indorsement issued only on June 8, 2000 by Secretary of Justice Tuquero corresponds to
the eventual issuance of Rebecca's passport a few days later, or on June 13, 2000 to be
exact.
When Divorce Was Granted Rebecca, She Was not a
Filipino Citizen and Was not Yet Recognized as One
The Court can assume hypothetically that Rebecca is now a Filipino citizen. But from the
foregoing disquisition, it is indubitable that Rebecca did not have that status of, or at least
was not yet recognized as, a Filipino citizen when she secured the February 22, 1996
judgment of divorce from the Dominican Republic.
The Court notes and at this juncture wishes to point out that Rebecca voluntarily withdrew
her original petition for declaration of nullity (Civil Case No. 96-378 of the Makati City RTC)
obviously because she could not show proof of her alleged Filipino citizenship then. In fact, a
perusal of that petition shows that, while bearing the date January 26, 1996, it was only filed
with the RTC on March 14, 1996 or less than a month after Rebecca secured, on February 22,
1996, the foreign divorce decree in question. Consequently, there was no mention about
said divorce in the petition. Significantly, the only documents appended as annexes to said
original petition were: the Vicente-Rebecca Marriage Contract (Annex "A") and Birth
Certificate of Alix (Annex "B"). If indeed ID Certificate No. RC 9778 from the Bureau was truly
issued on October 11, 1995, is it not but logical to expect that this piece of document be
appended to form part of the petition, the question of her citizenship being crucial to her
case?
As may be noted, the petition for declaration of absolute nullity of marriage under Civil Case
No. 01-094, like the withdrawn first petition, also did not have the ID Certificate from the
Bureau as attachment. What were attached consisted of the following material documents:
Marriage Contract (Annex "A") and Divorce Decree. It was only through her Opposition (To
Respondent's Motion to Dismiss dated 31 May 2001) 36 did Rebecca attach as Annex "C" ID
Certificate No. RC 9778.
At any rate, the CA was correct in holding that the RTC had sufficient basis to dismiss the
petition for declaration of absolute nullity of marriage as said petition, taken together with
Vicente's motion to dismiss and Rebecca's opposition to motion, with their respective
attachments, clearly made out a case of lack of cause of action, which we will expound later.
Validity of Divorce Decree
Going to the second core issue, we find Civil Decree Nos. 362/96 and 406/97 valid.
First, at the time of the divorce, as above elucidated, Rebecca was still to be recognized,
assuming for argument that she was in fact later recognized, as a Filipino citizen, but
represented herself in public documents as an American citizen. At the very least, she chose,
before, during, and shortly after her divorce, her American citizenship to govern her marital
relationship. Second, she secured personally said divorce as an American citizen, as is evident
in the text of the Civil Decrees, which pertinently declared:
IN THIS ACTION FOR DIVORCE in which the parties expressly submit to the
jurisdiction of this court, by reason of the existing incompatibility of
temperaments x x x. The parties MARIA REBECCA M. BAYOT, of United States
nationality, 42 years of age, married, domiciled and residing at 502 Acacia Ave.,
Ayala Alabang, Muntin Lupa, Philippines, x x x, who personally appeared before
this court, accompanied by DR. JUAN ESTEBAN OLIVERO, attorney, x x x and
VICENTE MADRIGAL BAYOT, of Philippine nationality, of 43 years of age, married
and domiciled and residing at 502 Acacia Ave., Ayala Alabang, Muntin Lupa,
Filipino, appeared before this court represented by DR. ALEJANDRO TORRENS,
attorney, x x x, revalidated by special power of attorney given the 19th of
February of 1996, signed before the Notary Public Enrico L. Espanol of the City
of Manila, duly legalized and authorizing him to subscribe all the acts concerning
this case.37 (Emphasis ours.)
Third, being an American citizen, Rebecca was bound by the national laws of the United
States of America, a country which allows divorce. Fourth, the property relations of Vicente
and Rebecca were properly adjudicated through their Agreement 38 executed on December
14, 1996 after Civil Decree No. 362/96 was rendered on February 22, 1996, and duly affirmed
by Civil Decree No. 406/97 issued on March 4, 1997. Veritably, the foreign divorce secured by
Rebecca was valid.
To be sure, the Court has taken stock of the holding in Garcia v. Recio that a foreign divorce
can be recognized here, provided the divorce decree is proven as a fact and as valid under
the national law of the alien spouse. 39 Be this as it may, the fact that Rebecca was clearly an
American citizen when she secured the divorce and that divorce is recognized and allowed in
any of the States of the Union,40 the presentation of a copy of foreign divorce decree duly
authenticated by the foreign court issuing said decree is, as here, sufficient.
It bears to stress that the existence of the divorce decree has not been denied, but in fact
admitted by both parties. And neither did they impeach the jurisdiction of the divorce court
nor challenge the validity of its proceedings on the ground of collusion, fraud, or clear
mistake of fact or law, albeit both appeared to have the opportunity to do so. The same
holds true with respect to the decree of partition of their conjugal property. As this Court
explained in Roehr v. Rodriguez:
Before our courts can give the effect of res judicata to a foreign judgment [of
divorce] x x x, it must be shown that the parties opposed to the judgment had
been given ample opportunity to do so on grounds allowed under Rule 39,
Section 50 of the Rules of Court (now Rule 39, Section 48, 1997 Rules of Civil
Procedure), to wit:
SEC. 50. Effect of foreign judgments.--The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the
judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title; but the judgment may
be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
It is essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its
efficacy. In this jurisdiction, our Rules of Court clearly provide that with respect
to actions in personam, as distinguished from actions in rem, a foreign judgment
|merely constitutes prima facie evidence of the justness of the claim of a party
and, as such, is subject to proof to the contrary. 41
As the records show, Rebecca, assisted by counsel, personally secured the foreign divorce
while Vicente was duly represented by his counsel, a certain Dr. Alejandro Torrens, in said
proceedings. As things stand, the foreign divorce decrees rendered and issued by the
Dominican Republic court are valid and, consequently, bind both Rebecca and Vicente.
Finally, the fact that Rebecca may have been duly recognized as a Filipino citizen by force of
the June 8, 2000 affirmation by Secretary of Justice Tuquero of the October 6, 1995 Bureau
Order of Recognition will not, standing alone, work to nullify or invalidate the foreign divorce
secured by Rebecca as an American citizen on February 22, 1996. For as we stressed at the
outset, in determining whether or not a divorce secured abroad would come within the pale
of the country's policy against absolute divorce, the reckoning point is the citizenship of the
parties at the time a valid divorce is obtained.42
Legal Effects of the Valid Divorce
Given the validity and efficacy of divorce secured by Rebecca, the same shall be given a res
judicata effect in this jurisdiction. As an obvious result of the divorce decree obtained, the
marital vinculum between Rebecca and Vicente is considered severed; they are both freed
from the bond of matrimony. In plain language, Vicente and Rebecca are no longer husband
and wife to each other. As the divorce court formally pronounced: "[T]hat the marriage
between MARIA REBECCA M. BAYOT and VICENTE MADRIGAL BAYOT is hereby dissolved x x
x leaving them free to remarry after completing the legal requirements."43
Consequent to the dissolution of the marriage, Vicente could no longer be subject to a
husband's obligation under the Civil Code. He cannot, for instance, be obliged to live with,
observe respect and fidelity, and render support to Rebecca. 44
The divorce decree in question also brings into play the second paragraph of Art. 26 of the
Family Code, providing as follows:
Art. 26. x x x x
Where a marriage between a Filipino citizen and a foreigner is validly celebrated
and a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall likewise have
capacity to remarry under Philippine law. (As amended by E.O. 227)
In Republic v. Orbecido III, we spelled out the twin elements for the applicability of the
second paragraph of Art. 26, thus:
x x x [W]e state the twin elements for the application of Paragraph 2 of Article
26 as follows:
1. There is a valid marriage that has been celebrated between a Filipino citizen
and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating him or her
to remarry.
The reckoning point is not the citizenship of the parties at the time of the
celebration of the marriage, but their citizenship at the time a valid divorce is
obtained abroad by the alien spouse capacitating the latter to remarry. 45
Both elements obtain in the instant case. We need not belabor further the fact of marriage
of Vicente and Rebecca, their citizenship when they wed, and their professed citizenship
during the valid divorce proceedings.
Not to be overlooked of course is the fact that Civil Decree No. 406/97 and the Agreement
executed on December 14, 1996 bind both Rebecca and Vicente as regards their property
relations. The Agreement provided that the ex-couple's conjugal property consisted only
their family home, thus:
9. That the parties stipulate that the conjugal property which they acquired
during their marriage consists only of the real property and all the
improvements and personal properties therein contained at 502 Acacia Avenue,
Ayala Alabang, Muntinlupa, covered by TCT No. 168301 dated Feb. 7, 1990
issued by the Register of Deeds of Makati, Metro Manila registered in the name
of Vicente M. Bayot, married to Rebecca M. Bayot, x x x. 46 (Emphasis ours.)
This property settlement embodied in the Agreement was affirmed by the divorce court
which, per its second divorce decree, Civil Decree No. 406/97 dated March 4, 1997, ordered
that, "THIRD: That the agreement entered into between the parties dated 14th day of
December 1996 in Makati City, Philippines shall survive in this Judgment of divorce by
reference but not merged and that the parties are hereby ordered and directed to comply
with each and every provision of said agreement."47
Rebecca has not repudiated the property settlement contained in the Agreement. She is thus
estopped by her representation before the divorce court from asserting that her and
Vicente's conjugal property was not limited to their family home in Ayala Alabang. 48
No Cause of Action in the Petition for Nullity of Marriage
Upon the foregoing disquisitions, it is abundantly clear to the Court that Rebecca lacks, under
the premises, cause of action. Philippine Bank of Communications v. Trazo explains the
concept and elements of a cause of action, thus:
A cause of action is an act or omission of one party in violation of the legal right
of the other. A motion to dismiss based on lack of cause of action hypothetically
admits the truth of the allegations in the complaint. The allegations in a
complaint are sufficient to constitute a cause of action against the defendants if,
hypothetically admitting the facts alleged, the court can render a valid judgment
upon the same in accordance with the prayer therein. A cause of action exists if
the following elements are present, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation
on the part of the named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action for recovery of damages. 49
One thing is clear from a perusal of Rebecca's underlying petition before the RTC, Vicente's
motion to dismiss and Rebecca's opposition thereof, with the documentary evidence
attached therein: The petitioner lacks a cause of action for declaration of nullity of marriage,
a suit which presupposes the existence of a marriage.
To sustain a motion to dismiss for lack of cause of action, the movant must show that the
claim for relief does not exist rather than that a claim has been defectively stated or is
ambiguous, indefinite, or uncertain.50 With the valid foreign divorce secured by Rebecca, who has been granted permanent residence in the Philippines (Exhs. "D" and "E"). A former
there is no more marital tie binding her to Vicente. There is in fine no more marriage to be employee of Scandinavian Airlines System, he is now Manager of M. Y. Travel International
dissolved or nullified. Hongkong Ltd., with a monthly salary of P1,200.00, plus allowances. It does not appear that
either petitioner has been convicted of a crime involving moral turpitude. On the other hand,
the minor sought to be adopted has been living with them ever since the marriage of
The Court to be sure does not lose sight of the legal obligation of Vicente and Rebecca to petitioners. Petitioner husband has treated the minor as his son, and the latter calls him
support the needs of their daughter, Alix. The records do not clearly show how he had "Daddy." Although the possibility exists that petitioners may yet have their own children, the
discharged his duty, albeit Rebecca alleged that the support given had been insufficient. At adoption at this time, before any such children is begotten, may strengthen, rather than
any rate, we do note that Alix, having been born on November 27, 1982, reached the disrupt, future domestic relations."cralaw virtua1aw library
majority age on November 27, 2000, or four months before her mother initiated her petition
for declaration of nullity. She would now be 26 years old. Hence, the issue of back support, The court a quo denied the adoption sought, saying:jgc:chanrobles.com.ph
which allegedly had been partly shouldered by Rebecca, is best litigated in a separate civil
action for reimbursement. In this way, the actual figure for the support of Alix can be proved "In Sp. Proc. No. D-00011, adoption of Benigno Lim, this court has had occasion to rule that a
as well as the earning capacity of both Vicente and Rebecca. The trial court can thus Filipino cannot adopt an alien (Chinese) minor about 19 years old. The adoption would not
determine what Vicente owes, if any, considering that support includes provisions until the confer Philippine citizenship on the Chinese, but could definitely: legalize his stay in this
child concerned shall have finished her education. country. It was also stated that conversely, an alien cannot adopt a Filipino unless the
adoption would make the Filipino minor a citizen of the alien’s country. As petitioner
Upon the foregoing considerations, the Court no longer need to delve into the issue husband in this case is a Danish subject, it has to be held that he cannot legally adopt the
tendered in G.R. No. 155635, that is, Rebecca's right to support pendente lite. As it were, her minor Charles Joseph Blancaflor Weeks, whose citizenship is of this country, following that of
entitlement to that kind of support hinges on the tenability of her petition under Civil Case his natural mother."cralaw virtua1aw library
No. 01-094 for declaration of nullity of marriage. The dismissal of Civil Case No. 01-094 by
the CA veritably removed any legal anchorage for, and effectively mooted, the claim for If we understand the decision correctly, the adoption was denied solely because the same
support pendente lite. would not result in the loss of the minor’s Filipino citizenship and the acquisition by him of
the citizenship of his adopter. Unfortunately, the Juvenile and Domestic Relations Court did
not expound the reasons for its opinion; but it is clear that, if pursued to its logical
WHEREFORE, the petition for certiorari in G.R. No. 155635 is hereby DISMISSED on the consequences, the judgment appealed from would operate to impose a further prerequisite
ground of mootness, while the petition for review in G.R. No. 163979 is hereby DENIED for on adoptions by aliens beyond those required by law. As pointed out by the Solicitor General
lack of merit. Accordingly, the March 25, 2004 Decision and June 4, 2004 Resolution of the in his brief, the present Civil Code in force (Article 335) only disqualifies from being adopters
CA in CA-G.R. SP No. 68187 are hereby AFFIRMED. Costs against petitioner. those aliens that are either (a) non-resident or (b) who are resident but the Republic of the
Philippines has broken diplomatic relations with their government. Outside of these two
cases, alienage by itself alone does not disqualify a foreigner from adopting a person under
SO ORDERED.
our law. Petitioners admittedly do not fall in either class.

EN BANC The criterion adopted by the Court a quo would demand as a condition for the approval of
the adoption that the process should result in the acquisition, by the person adopted, of the
[G.R. No. L-21951. November 27, 1964.] alien citizenship of the adopting parent. This finds no support in the law, for, as observed by
this Court in Ching Leng v. Galang, G.R. No. L-11931, promulgated on 27 October 1958, the
IN THE MATTER OF THE PETITION OF THE MINOR CHARLES JOSEPH BLANCAFLOR WEEKS. citizenship of the adopter is a matter political, and not civil, in nature, and the ways in which
UGGI LINDAMAND THERKELSEN and ERLINDA G. BLANCAFLOR, Petitioners-Appellants, v. it should be conferred lay outside the ambit of the Civil Code. It is not within the province of
REPUBLIC OF THE PHILIPPINES, Respondent-Appellee. our civil law to determine how or when citizenship in a foreign state is to be acquired. The
disapproval of the adoption of an alien child in order to forestall circumvention of our
Campos, Mendoza & Hernandez for Petitioners-Appellants. exclusion laws does not warrant denial of the adoption of a Filipino minor by qualified alien
adopting parents, since it is not shown that our public policy would be thereby subverted.
Solicitor General and J. Domingo de Leon for Respondent-Appellee.
IN VIEW OF THE FOREGOING, the decision appealed from is reversed, and the court a quo is
directed to allow the adoption sought. Without costs.
SYLLABUS
Bengzon, C.J., Bautista Angelo, Concepcion, Barrera, Paredes, Dizon, Regala, Makalintal,
Bengzon, J.P. and Zaldivar, JJ., concur.

1. ADOPTION; DISQUALIFICATIONS; ALIENAGE BY ITSELF DOES NOT DISQUALIFY FOREIGNER

FROM ADOPTING A FILIPINO. — The present Civil Code in force (Article 335) only disqualifies
from being adopters those aliens that are either (a) non-resident or (b) who are resident but Republic of the Philippines
the Republic of the Philippines has broken diplomatic relations with their government. SUPREME COURT
Outside of these two cases, alienage by itself alone does not disqualify a foreigner from Manila
adopting a person under our laws.
THIRD DIVISION
2. ID.; ID.; ACQUISITION BY ADOPTED OF CITIZENSHIP OF ADOPTING PARENT NOT REQUIRED.
— It is not a condition for the approval of an adoption that the process should result in the
acquisition, by the person adopted, of the alien citizenship of the adopting parent. G.R. No. 193707 December 10, 2014

NORMA A. DEL SOCORRO, for and in behalf of her minor child RODERIGO NORJO VAN
WILSEM, Petitioner,
DECISION
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
REYES, J.B.L., J.:
DECISION

This appeal was taken against a decision of the Manila Juvenile and Domestic Relations
Court, in its special proceedings No. D-00007, denying appellants’ application for adoption of PERALTA, J.:
the minor Charles Joseph Blancaflor Weeks.
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
The factual background of the case is stated in the decision appealed from to be as
seeking to reverse and set aside the Orders1 dated February 19, 2010 and September 1,
follows:jgc:chanrobles.com.ph
2010, respectively, of the Regional Trial Court of Cebu City (RTC-Cebu), which dismissed the
criminal case entitled People of the Philippines v. Ernst Johan Brinkman Van Wilsem,
"In this adoption proceeding, the petitioners are husband and wife who were married on
docketed as Criminal Case No. CBU-85503, for violation of Republic Act (R.A.) No. 9262,
June 2, 1962, or barely a year ago. The minor sought to be adopted, born on February 16,
otherwise known as the Anti-Violence Against Women and Their Children Act of 2004.
1960, is the natural child of petitioner’s wife. His father was Charles Joseph Weeks, who
abandoned mother and child after the latter’s birth. He is said to have gone back to the
United States. The following facts are culled from the records:

Except for the legal impediment hereinafter to be mentioned, the facts before the Court may
warrant the approval of the adoption sought herein. Petitioner husband is a Danish subject,
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem
contracted marriage in Holland on September 25, 1990. 2 On January 19, 1994, they were
blessed with a son named Roderigo Norjo Van Wilsem, who at the time of the filing of the
instant petition was sixteen (16) years of age.3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree
issued by the appropriate Court of Holland.4 At that time, their son was only eighteen (18)
months old.5 Thereafter, petitioner and her son came home to the Philippines. 6
According to petitioner, respondent made a promise to provide monthly support to their son
in the amount of Two Hundred Fifty (250) Guildene (which is equivalent to Php17,500.00
more or less).7 However, since the arrival of petitioner and her son in the Philippines,
respondent never gave support to the son, Roderigo. 8
Not long thereafter, respondent cameto the Philippines and remarried in Pinamungahan,
Cebu, and since then, have been residing thereat.9 Respondent and his new wife established
a business known as Paree Catering, located at Barangay Tajao, Municipality of
Pinamungahan, Cebu City.10 To date, all the parties, including their son, Roderigo, are
presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter demanding for support
from respondent. However, respondent refused to receive the letter. 12
Because of the foregoing circumstances, petitioner filed a complaint affidavit with the
Provincial Prosecutor of Cebu City against respondent for violation of Section 5, paragraph
E(2) of R.A. No. 9262 for the latter’s unjust refusal to support his minor child with
petitioner.13 Respondent submitted his counter-affidavit thereto, to which petitioner also
submitted her reply-affidavit.14 Thereafter, the Provincial Prosecutor of Cebu City issued a
Resolution recommending the filing of an information for the crime charged against herein
respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof, states
that:
That sometime in the year 1995 and up to the present, more or less, in the Municipality of
Minglanilla, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did then and there wilfully, unlawfully and deliberately deprive,
refuse and still continue to deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14)
year old minor, of financial support legally due him, resulting in economic abuse to the
victim. CONTRARY TO LAW.15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order
against respondent.16 Consequently, respondent was arrested and, subsequently, posted
bail.17 Petitioner also filed a Motion/Application of Permanent Protection Order to which
respondent filed his Opposition. 18 Pending the resolution thereof, respondent was
arraigned.19 Subsequently, without the RTC-Cebu having resolved the application of the
protection order, respondent filed a Motion to Dismiss on the ground of: (1) lack of
jurisdiction over the offense charged; and (2) prescription of the crime charged. 20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order,21 dismissing the
instant criminal case against respondent on the ground that the facts charged in the
information do not constitute an offense with respect to the respondent who is an alien, the
dispositive part of which states:
WHEREFORE, the Court finds that the facts charged in the information do not constitute an
offense with respect to the accused, he being an alien, and accordingly, orders this case
DISMISSED.
The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional liberty
is hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010. 22
Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating respondent’s
obligation to support their child under Article 19523 of the Family Code, thus, failure to do so
makes him liable under R.A. No. 9262 which "equally applies to all persons in the Philippines
who are obliged to support their minor children regardless of the obligor’s nationality."24
On September 1, 2010, the lower court issued an Order 25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling. Thus:
x x x The arguments therein presented are basically a rehash of those advanced earlier in the
memorandum of the prosecution. Thus, the court hereby reiterates its ruling that since the
accused is a foreign national he is not subject to our national law (The Family Code) in regard
to a parent’s duty and obligation to givesupport to his child. Consequently, he cannot be
charged of violating R.A. 9262 for his alleged failure to support his child. Unless it is
conclusively established that R.A. 9262 applies to a foreigner who fails to give support tohis
child, notwithstanding that he is not bound by our domestic law which mandates a parent to
give such support, it is the considered opinion of the court that no prima faciecase exists
against the accused herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following issues:
1. Whether or not a foreign national has an obligation to support his minor child
under Philippine law; and
2. Whether or not a foreign national can be held criminally liable under R.A. No.
9262 for his unjustified failure to support his minor child. 27
At the outset, let it be emphasized that We are taking cognizance of the instant petition
despite the fact that the same was directly lodged with the Supreme Court, consistent with
the ruling in Republic v. Sunvar Realty Development Corporation,28 which lays down the
instances when a ruling of the trial court may be brought on appeal directly to the Supreme
Court without violating the doctrine of hierarchy of courts, to wit:
x x x Nevertheless, the Rules do not prohibit any of the parties from filing a Rule 45 Petition
with this Court, in case only questions of law are raised or involved. This latter situation was
one that petitioners found themselves in when they filed the instant Petition to raise only
questions of law. In Republic v. Malabanan, the Court clarified the three modes of appeal
from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule
41, whereby judgment was rendered in a civil or criminal action by the RTC in the exercise of
its original jurisdiction; (2) by a petition for review under Rule 42, whereby judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for
review on certiorari before the Supreme Court under Rule 45. "The first mode of appeal is
taken to the [Court of Appeals] on questions of fact or mixed questions of fact and law. The
second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions
of fact and law. The third mode of appealis elevated to the Supreme Court only on questions
of law." (Emphasis supplied)
There is a question of law when the issue does not call for an examination of the probative
value of the evidence presented or of the truth or falsehood of the facts being admitted, and
the doubt concerns the correct application of law and jurisprudence on the matter. The
resolution of the issue must rest solely on what the law provides on the given set of
circumstances.29
Indeed, the issues submitted to us for resolution involve questions of law – the response
thereto concerns the correct application of law and jurisprudence on a given set of facts,
i.e.,whether or not a foreign national has an obligation to support his minor child under
Philippine law; and whether or not he can be held criminally liable under R.A. No. 9262 for
his unjustified failure to do so.
It cannot be negated, moreover, that the instant petition highlights a novel question of law
concerning the liability of a foreign national who allegedly commits acts and omissions
punishable under special criminal laws, specifically in relation to family rights and duties. The
inimitability of the factual milieu of the present case, therefore, deserves a definitive ruling
by this Court, which will eventually serve as a guidepost for future cases. Furthermore,
dismissing the instant petition and remanding the same to the CA would only waste the time,
effort and resources of the courts. Thus, in the present case, considerations of efficiency and
economy in the administration of justice should prevail over the observance of the hierarchy
of courts.
Now, on the matter of the substantive issues, We find the petition meritorious. Nonetheless,
we do not fully agree with petitioner’s contentions.
To determine whether or not a person is criminally liable under R.A. No. 9262, it is
imperative that the legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code, which provides the parent’s obligation to
support his child. Petitioner contends that notwithstanding the existence of a divorce decree
issued in relation to Article 26 of the Family Code,31 respondent is not excused from
complying with his obligation to support his minor child with petitioner.
On the other hand, respondent contends that there is no sufficient and clear basis presented
by petitioner that she, as well as her minor son, are entitled to financial
support.32 Respondent also added that by reason of the Divorce Decree, he is not obligated
topetitioner for any financial support. 33
On this point, we agree with respondent that petitioner cannot rely on Article 195 34 of the
New Civil Code in demanding support from respondent, who is a foreign citizen, since Article
1535 of the New Civil Code stresses the principle of nationality. In other words, insofar as
Philippine laws are concerned, specifically the provisions of the Family Code on support, the
same only applies to Filipino citizens. By analogy, the same principle applies to foreigners
such that they are governed by their national law with respect to family rights and duties. 36
The obligation to give support to a child is a matter that falls under family rights and duties.
Since the respondent is a citizen of Holland or the Netherlands, we agree with the RTC-Cebu
that he is subject to the laws of his country, not to Philippinelaw, as to whether he is obliged
to give support to his child, as well as the consequences of his failure to do so. 37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position to invoke the provisions of the Civil
Code of the Philippines, for that Code cleaves to the principle that family rights and duties
are governed by their personal law, i.e.,the laws of the nation to which they belong even
when staying in a foreign country (cf. Civil Code, Article 15).39
It cannot be gainsaid, therefore, that the respondent is not obliged to support petitioner’s
son under Article195 of the Family Code as a consequence of the Divorce Covenant obtained
in Holland. This does not, however, mean that respondent is not obliged to support
petitioner’s son altogether.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of proving the foreign law. 40 In the present case, respondent hastily
concludes that being a national of the Netherlands, he is governed by such laws on the
matter of provision of and capacity to support. 41 While respondent pleaded the laws of the
Netherlands in advancing his position that he is not obliged to support his son, he never
proved the same.
It is incumbent upon respondent to plead and prove that the national law of the Netherlands
does not impose upon the parents the obligation to support their child (either before, during
or after the issuance of a divorce decree), because Llorente v. Court of Appeals,42 has already
enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to takejudicial notice of them. Like any other fact, they must be alleged and
proved.43
In view of respondent’s failure to prove the national law of the Netherlands in his favor, the
doctrine of processual presumption shall govern. Under this doctrine, if the foreign law
involved is not properly pleaded and proved, our courts will presume that the foreign law is
the same as our local or domestic or internal law.44 Thus, since the law of the Netherlands as
regards the obligation to support has not been properly pleaded and proved in the instant
case, it is presumed to be the same with Philippine law, which enforces the obligation of
parents to support their children and penalizing the non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera,45 the Court held that a divorce obtained in a
foreign land as well as its legal effects may be recognized in the Philippines in view of the
nationality principle on the matter of status of persons, the Divorce Covenant presented by
respondent does not completely show that he is notliable to give support to his son after the
divorce decree was issued. Emphasis is placed on petitioner’s allegation that under the
second page of the aforesaid covenant, respondent’s obligation to support his child is
specifically stated,46 which was not disputed by respondent.
We likewise agree with petitioner that notwithstanding that the national law of respondent
states that parents have no obligation to support their children or that such obligation is not
punishable by law, said law would still not find applicability,in light of the ruling in Bank of
America, NT and SA v. American Realty Corporation,47 to wit:
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in accordance with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales, said foreign law would still not find
applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established
public policy of the forum, the said foreign law, judgment or order shall not be applied.
Additionally, prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country.
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
—
If two or more suits are instituted on the basis of the same cause of action, the filing of one
or a judgment upon the merits in any one is available as a ground for the dismissal of the
others. Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust
negates the fundamental principles of Conflict of Laws. 48
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s
obligation to support his child nor penalize the noncompliance therewith, such obligation is
still duly enforceable in the Philippines because it would be of great injustice to the child to
be denied of financial support when the latter is entitled thereto.
We emphasize, however, that as to petitioner herself, respondent is no longer liable to
support his former wife, in consonance with the ruling in San Luis v. San Luis, 49 to wit:
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no
longerbe considered marriedto the alien spouse. Further, she should not be required to
perform her marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations under
Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The
latter should not continue to be one of her heirs with possible rights to conjugal property.
She should not be discriminated against in her own country if the ends of justice are to be
served. (Emphasis added)50
Based on the foregoing legal precepts, we find that respondent may be made liable under
Section 5(e) and (i) of R.A. No. 9262 for unjustly refusing or failing to give support
topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence
against women and their children is committed through any of the following acts:
xxxx
(e) Attempting to compel or compelling the woman or her child to engage in conduct which
the woman or her child has the right to desist from or desist from conduct which the woman
or her child has the right to engage in, or attempting to restrict or restricting the woman's or
her child's freedom of movement or conduct by force or threat of force, physical or other
harm or threat of physical or other harm, or intimidation directed against the woman or
child. This shall include, butnot limited to, the following acts committed with the purpose or
effect of controlling or restricting the woman's or her child's movement or conduct:
xxxx
(2) Depriving or threatening to deprive the woman or her children of financial support legally
due her or her family, or deliberately providing the woman's children insufficient financial
support; x x x x
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her
child, including, but not limited to, repeated verbal and emotional abuse, and denial of
financial support or custody of minor childrenof access to the woman's child/children. 51
Under the aforesaid special law, the deprivation or denial of financial support to the child is
considered anact of violence against women and children.
In addition, considering that respondent is currently living in the Philippines, we find strength
in petitioner’s claim that the Territoriality Principle in criminal law, in relation to Article 14 of
the New Civil Code, applies to the instant case, which provides that: "[p]enal laws and those
of public security and safety shall be obligatory upon all who live and sojourn in Philippine
territory, subject to the principle of public international law and to treaty stipulations." On
this score, it is indisputable that the alleged continuing acts of respondent in refusing to
support his child with petitioner is committed here in the Philippines as all of the parties
herein are residents of the Province of Cebu City. As such, our courts have territorial
jurisdiction over the offense charged against respondent. It is likewise irrefutable that
jurisdiction over the respondent was acquired upon his arrest.
Finally, we do not agree with respondent’s argument that granting, but not admitting, that
there is a legal basis for charging violation of R.A. No. 9262 in the instant case, the criminal
liability has been extinguished on the ground of prescription of crime 52 under Section 24 of
R.A. No. 9262, which provides that:
SECTION 24. Prescriptive Period. – Acts falling under Sections 5(a) to 5(f) shall prescribe in
twenty (20) years. Acts falling under Sections 5(g) to 5(I) shall prescribe in ten (10) years.
The act of denying support to a child under Section 5(e)(2) and (i) of R.A. No. 9262 is a
continuing offense,53 which started in 1995 but is still ongoing at present. Accordingly, the
crime charged in the instant case has clearly not prescribed.
Given, however, that the issue on whether respondent has provided support to petitioner’s
child calls for an examination of the probative value of the evidence presented, and the truth
and falsehood of facts being admitted, we hereby remand the determination of this issue to
the RTC-Cebu which has jurisdiction over the case.
WHEREFORE, the petition is GRANTED. The Orders dated February 19, 2010 and September
1, 2010, respectively, of the Regional Trial Court of the City of Cebu are hereby REVERSED
and SET ASIDE. The case is REMANDED to the same court to conduct further proceedings
based on the merits of the case.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 76714 June 2, 1994
SALUD TEODORO VDA. DE PEREZ, petitioner,
vs.
HON. ZOTICO A. TOLETE in his capacity as Presiding Judge, Branch 18, RTC,
Bulacan, respondent.
Natividad T. Perez for petitioner.
Benedicto T. Librojo for private respondents.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set aside the
Order dated November 19, 1986 of the Regional Trial Court, Branch 18, Bulacan presided by
respondent Judge Zotico A. Tolete, in Special Proceedings No. 1793-M.
We grant the petition.
II
Dr. Jose F. Cunanan and his wife, Dr. Evelyn Perez-Cunanan, who became American citizens,
established a successful medical practice in New York, U.S.A. The Cunanans lived at No. 2896
Citation Drive, Pompey, Syracuse, New York, with their children, Jocelyn, 18; Jacqueline, 16;
and Josephine, 14.
On August 23, 1979, Dr. Cunanan executed a last will and testament, bequeathing to his wife
"all the remainder" of his real and personal property at the time of his death "wheresoever
situated" (Rollo, p. 35). In the event he would survive his wife, he bequeathed all his property
to his children and grandchildren with Dr. Rafael G. Cunanan, Jr. as trustee. He appointed his
wife as executrix of his last will and testament and Dr. Rafael G. Cunanan, Jr. as substitute
executor. Article VIII of his will states:
If my wife, EVELYN PEREZ-CUNANAN, and I shall die under such
circumstances that there is not sufficient evidence to determine the
order of our deaths, then it shall be presumed that I predeceased
her, and my estate shall be administered and distributed, in all
respects, in accordance with such presumption (Rollo, p. 41).
Four days later, on August 27, Dr. Evelyn P. Cunanan executed her own last will and
testament containing the same provisions as that of the will of her husband. Article VIII of
her will states:
If my husband, JOSE F. CUNANAN, and I shall die under such
circumstances that there is not sufficient evidence to determine the
order of our deaths, then it shall be presumed that he predeceased
me, and my estate shall be administered and distributed in all
respects, in accordance with such presumption. (Rollo, p. 31).
On January 9, 1982, Dr. Cunanan and his entire family perished when they were trapped by
fire that gutted their home. Thereafter, Dr. Rafael G. Cunanan, Jr. as trustee and substitute
executor of the two wills, filed separate proceedings for the probate thereof with the
Surrogate Court of the County of Onondaga, New York. On April 7, these two wills were
admitted to probate and letters testamentary were issued in his favor.
On February 21, 1983, Salud Teodoro Perez, the mother of Dr. Evelyn P. Cunanan, and
petitioner herein, filed with the Regional P. Cunanan, and petitioner herein, filed with the
Regional Trial Court, Malolos, Bulacan a petition for the reprobate of the two bills ancillary to
the probate proceedings in New York. She also asked that she be appointed the special
administratrix of the estate of the deceased couple consisting primarily of a farm land in San
Miguel, Bulacan.
On March 9, the Regional Trial Court, Branch 16, Malolos, Bulacan, presided by Judge
Gualberto J. de la Llana, issued an order, directing the issuance of letters of special
administration in favor of petitioner upon her filing of a P10,000.00 bond. The following day,
petitioner posted the bond and took her oath as special administration.
As her first act of administration, petitioner filed a motion, praying that the Philippine Life
Insurance Company be directed to deliver the proceeds in the amount of P50,000.00 of the
life insurance policy taken by Dr. Jose F. Cunanan with Dr. Evelyn Perez-Cunanan and their
daughter Jocelyn as beneficiaries. The trial court granted the motion.
Counsel for the Philippine American Life Insurance Company then filed a manifestation,
stating that said company then filed a manifestation, stating that said company had delivered
to petitioner the amount of P49,765.85, representing the proceeds of the life insurance
policy of Dr. Jose F. Cunanan.
In a motion dated May 19, 1983, petitioner asked that Dr. Rafael Cunanan, Sr. be ordered to
deliver to her a Philippine Trust Company passbook with P25,594.00 in savings deposit, and
the Family Savings Bank time deposit certificates in the total amount of P12,412.52.
On May 31, Atty. Federico Alday filed a notice of appearance as counsel for the heirs of Dr.
Jose F. Cunanan, namely, Dr. Rafael Cunanan, Sr., Priscilla Cunanan Bautista, Lydia Cunanan
Ignacio, Felipe F. Cunanan and Loreto Cunanan Concepcion (Cunanan heirs). He also
manifested that before receiving petitioner's motion of May 19, 1983, his clients were
unaware of the filing of the testate estate case and therefore, "in the interest of simple fair
play," they should be notified of the proceedings (Records, p. 110). He prayed for deferment
of the hearing on the motions of May 19, 1983.
Petitioner then filed a counter manifestation dated June 13, 1983, asserting: (1) that the
"Cunanan collaterals are neither heirs nor creditors of the late Dr. Jose F. Cunanan" and
therefore, they had "no legal or proprietary interests to protect" and "no right to intervene";
(2) that the wills of Dr. Jose F. Cunanan and Dr. Evelyn Perez-Cunanan, being American
citizens, were executed in accordance with the solemnities and formalities of New York laws,
and produced "effects in this jurisdiction in accordance with Art. 16 in relation to Art. 816 of
the Civil Code"; (3) that under Article VIII of the two wills, it was presumed that the husband
predeceased the wife; and (4) that "the Cunanan collaterals are neither distributees, legatees
or beneficiaries, much less, heirs as heirship is only by institution" under a will or by
operation of the law of New York (Records, pp. 112-113).
On June 23, the probate court granted petitioner's motion of May 19, 1983. However, on July
21, the Cunanan heirs filed a motion to nullify the proceedings and to set aside the
appointment of, or to disqualify, petitioner as special administratrix of the estates of Dr. Jose
F. Cunanan and Dr. Evelyn Perez-Cunanan. The motion stated: (1) that being the "brothers
and sisters and the legal and surviving heirs" of Dr. Jose F. Cunanan, they had been
"deliberately excluded" in the petition for the probate of the separate wills of the Cunanan
spouses thereby misleading the Bulacan court to believe that petitioner was the sole heir of
the spouses; that such "misrepresentation" deprived them of their right to "due process in
violation of Section 4, Rule 76 of the Revised Rules of Court; (2) that Dr. Rafael G. Cunanan,
Jr., the executor of the estate of the Cunanan spouses, was likewise not notified of the
hearings in the Bulacan court; (3) that the "misrepresentation and concealment committed
by" petitioner rendered her unfit to be a special administratrix; (4) that Dr. Rafael G.
Cunanan, Jr. had, by virtue of a verified power of attorney, authorized his father,
Dr. Rafael Cunanan, Sr., to be his attorney-in-fact; and (5) that Dr. Rafael Cunanan, Sr. is
qualified to be a regular administrator "as practically all of the subject estate in the
Philippines belongs to their brother, Dr. Jose F. Cunanan" (Records, pp. 118-122). Hence,
they prayed: (1) that the proceedings in the case be declared null and void; (2) that the
appointment of petitioner as special administratrix be set aside; and (3) that Dr. Rafael
Cunanan, Sr. be appointed the regular administrator of the estate of the deceased spouses.
Thereafter, the Cunanan heirs filed a motion requiring petitioner to submit an inventory or
accounting of all monies received by her in trust for the estate.
In her opposition, petitioner asserted: (1) that she was the "sole and only heir" of her
daughter, Dr. Evelyn Perez-Cunanan to the exclusion of the "Cunanan collaterals"; hence
they were complete strangers to the proceedings and were not entitled to notice; (2) that
she could not have "concealed" the name and address of Dr. Rafael G. Cunanan, Jr. because
his name was prominently mentioned not only in the two wills but also in the decrees of the
American surrogate court; (3) that the rule applicable to the case is Rule 77, not Rule 76,
because it involved the allowance of wills proved outside of the Philippines and that
nowhere in Section 2 of Rule 77 is there a mention of notice being given to the executor
who, by the same provision, should himself file the necessary ancillary proceedings in this
country; (4) that even if the Bulacan estate came from the "capital" of Dr. Jose F. Cunanan,
he had willed all his worldly goods to his wife and nothing to his brothers and sisters; and (5)
that Dr. Rafael G. Cunanan, Jr. had unlawfully disbursed $215,000.00 to the Cunanan heirs,
misappropriated $15,000.00 for himself and irregularly assigned assets of the estates to his
American lawyer (Records, pp. 151-160).
In their reply, the Cunanan heirs stressed that on November 24, 1982, petitioner and the
Cunanan heirs had entered into an agreement in the United States "to settle and divide
equally the estates," and that under Section 2 of Rule 77 the "court shall fix a time and place
for the hearing and cause notice thereof to be given as in case of an original will presented
for allowance" (Records, pp. 184-185).
Petitioner asked that Dr. Rafael G. Cunanan, Jr. be cited for contempt of court for failure to
comply with the Order of June 23, 1983 and for appropriating money of the estate for his
own benefit. She also alleged that she had impugned the agreement of November 24, 1982
before the Surrogate Court of Onondaga, New York which rendered a decision on April 13,
1983, finding that "all assets are payable to Dr. Evelyn P. Cunanan’s executor to be then
distributed pursuant to EPTL4-1.1 subd [a] par [4]" (Rollo, p. 52).
On their part, the Cunanan heirs replied that petitioner was estopped from claiming that
they were heirs by the agreement to divide equally the estates. They asserted that by virtue
of Section 2 of Rule 77 of the Rules of Court, the provisions of Sections 3, 4 and 5 of Rule 76
on the requirement of notice to all heirs, executors, devisees and legatees must be complied
with. They reiterated their prayer: (1) that the proceedings in the case be nullified; (2) that
petitioner be disqualified as special administratrix; (3) that she be ordered to submit an
inventory of all goods, chattels and monies which she had received and to surrender the
same to the court; and (4) that Dr. Rafael Cunanan, Sr. be appointed the regular
administrator.
Petitioner filed a rejoinder, stating that in violation of the April 13, 1983 decision of the
American court Dr. Rafael G. Cunanan, Jr. made "unauthorized disbursements from the
estates as early as July 7, 1982" (Records, p. 231). Thereafter, petitioner moved for the
suspension of the proceedings as she had "to attend to the settlement proceedings" of the
estate of the Cunanan spouses in New York (Records, p. 242). The Cunanans heirs opposed
this motion and filed a manifestation, stating that petitioner had received $215,000.00 "from
the Surrogate’s Court as part of legacy" based on the aforesaid agreement of November 24,
1982 (Records, p. 248).
On February 21, 1984, Judge de la Llana issued an order, disallowing the reprobate of the
two wills, recalling the appointment of petitioner as special administratrix, requiring the
submission of petitioner of an inventory of the property received by her as special
administratrix and declaring all pending incidents moot and academic. Judge de la Llana
reasoned out that petitioner failed to prove the law of New York on procedure and
allowance of wills and the court had no way of telling whether the wills were executed in
accordance with the law of New York. In the absence of such evidence, the presumption is
that the law of succession of the foreign country is the same as the law of the Philippines.
However, he noted, that there were only two witnesses to the wills of the Cunanan spouses
and the Philippine law requires three witnesses and that the wills were not signed on each
and every page, a requirement of the Philippine law.
On August 27, 1985, petitioner filed a motion for reconsideration of the Order dated
February 21, 1984, where she had sufficiently proven the applicable laws of New York
governing the execution of last wills and testaments.
On the same day, Judge de la Llana issued another order, denying the motion of petitioner
for the suspension of the proceedings but gave her 15 days upon arrival in the country within
which to act on the other order issued that same day. Contending that the second portion of
the second order left its finality to the discretion of counsel for petitioner, the Cunanans filed
a motion for the reconsideration of the objectionable portion of the said order so that it
would conform with the pertinent provisions of the Judiciary Reorganization Act of 1980 and
the Interim Rules of Court.
On April 30, 1985, the respondent Judge of Branch 18 of the Regional Trial Court, Malolos, to
which the reprobate case was reassigned, issued an order stating that "(W)hen the last will
and testament . . . was denied probate," the case was terminated and therefore all orders
theretofore issued should be given finality. The same Order amended the February 21, 1984
Order by requiring petitioner to turn over to the estate the inventoried property. It
considered the proceedings for all intents and purposes, closed (Records,
p. 302).
On August 12, petitioner filed a motion to resume proceedings on account of the final
settlement and termination of the probate cases in New York. Three days later, petitioner
filed a motion praying for the reconsideration of the Order of April 30, 1985 on the strength
of the February 21, 1984 Order granting her a period of 15 days upon arrival in the country
within which to act on the denial of probate of the wills of the Cunanan spouses. On August
19, respondent Judge granted the motion and reconsidered the Order of April 30, 1985.
On August 29, counsel for petitioner, who happens to be her daughter, Natividad, filed a
motion praying that since petitioner was ailing in Fort Lee, New Jersey, U.S.A. and therefore
incapacitated to act as special administratrix, she (the counsel) should be named substitute
special administratrix. She also filed a motion for the reconsideration of the Order of
February 21, 1984, denying probate to the wills of the Cunanan spouses, alleging that
respondent Judge "failed to appreciate the significant probative value of the exhibits . . .
which all refer to the offer and admission to probate of the last wills of the Cunanan spouses
including all procedures undertaken and decrees issued in connection with the said probate"
(Records, pp. 313-323).
Thereafter, the Cunanans heirs filed a motion for reconsideration of the Order of August 19,
1985, alleging lack of notice to their counsel.
On March 31, 1986, respondent Judge to which the case was reassigned denied the motion
for reconsideration holding that the documents submitted by petitioner proved "that the
wills of the testator domiciled abroad were properly executed, genuine and sufficient to
possess real and personal property; that letters testamentary were issued; and that
proceedings were held on a foreign tribunal and proofs taken by a competent judge who
inquired into all the facts and circumstances and being satisfied with his findings issued a
decree admitting to probate the wills in question." However, respondent Judge said that the
documents did not establish the law of New York on the procedure and allowance of wills
(Records, p. 381).
On April 9, 1986, petitioner filed a motion to allow her to present further evidence on the
foreign law. After the hearing of the motion on April 25, 1986, respondent Judge issued an
order wherein he conceded that insufficiency of evidence to prove the foreign law was not a
fatal defect and was curable by adducing additional evidence. He granted petitioner 45 days
to submit the evidence to that effect.
However, without waiting for petitioner to adduce the additional evidence, respondent
Judge ruled in his order dated June 20, 1986 that he found "no compelling reason to disturb
its ruling of March 31, 1986" but allowed petitioner to "file anew the appropriate probate
proceedings for each of the testator" (Records, p. 391).
The Order dated June 20, 1986 prompted petitioner to file a second motion for
reconsideration stating that she was "ready to submit further evidence on the law obtaining
in the State of New York" and praying that she be granted "the opportunity to present
evidence on what the law of the State of New York has on the probate and allowance of
wills" (Records, p. 393).
On July 18, respondent Judge denied the motion holding that to allow the probate of two
wills in a single proceeding "would be a departure from the typical and established mode of
probate where one petition takes care of one will." He pointed out that even in New York
"where the wills in question were first submitted for probate, they were dealt with in
separate proceedings" (Records, p. 395).
On August 13, 1986, petitioner filed a motion for the reconsideration of the Order of July 18,
1986, citing Section 3, Rule 2 of the Rules of Court, which provides that no party may
institute more than one suit for a single cause of action. She pointed out that separate
proceedings for the wills of the spouses which contain basically the same provisions as they
even named each other as a beneficiary in their respective wills, would go against "the grain
of inexpensive, just and speedy determination of the proceedings" (Records, pp. 405-407).
On September 11, 1986, petitioner filed a supplement to the motion for reconsideration,
citing Benigno v. De La Peña, 57 Phil. 305 (1932) (Records,
p. 411), but respondent Judge found that this pleading had been filed out of time and that
the adverse party had not been furnished with a copy thereof. In her compliance, petitioner
stated that she had furnished a copy of the motion to the counsel of the Cunanan heirs and
reiterated her motion for a "final ruling on her supplemental motion" (Records, p. 421).
On November 19, respondent Judge issued an order, denying the motion for reconsideration
filed by petitioner on the grounds that "the probate of separate wills of two or more
different persons even if they are husband and wife cannot be undertaken in a single
petition" (Records, pp. 376-378).
Hence, petitioner instituted the instant petition, arguing that the evidence offered at the
hearing of April 11, 1983 sufficiently proved the laws of the State of New York on the
allowance of wills, and that the separate wills of the Cunanan spouses need not be probated
in separate proceedings.
II
Petitioner contends that the following pieces of evidence she had submitted before
respondent Judge are sufficient to warrant the allowance of the wills:
(a) two certificates of authentication of the respective wills of
Evelyn and Jose by the Consulate General of the Philippines (Exhs.
"F" and "G");
(b) two certifications from the Secretary of State of New York and
Custodian of the Great Seal on the facts that Judge Bernard L.
Reagan is the Surrogate of the Country of Onondaga which is a
court of record, that his signature and seal of office are genuine,
and that the Surrogate is duly authorized to grant copy of the
respective wills of Evelyn and Jose
(Exhs. "F-1" and "G-1");
(c) two certificates of Judge Reagan and Chief Clerk Donald E.
Moore stating that they have in their records and files the said wills
which were recorded on April 7, 1982 (Exhs. "F-2" and "G-2");
(d) the respective wills of Evelyn and Jose (Exhs. "F-3", "F-6" and
Exh. "G-3" — "G-6");
(e) certificates of Judge Reagan and the Chief Clerk certifying to the
genuineness and authenticity of the exemplified copies of the two
wills (Exhs. "F-7" and "F-7");
(f) two certificates of authentication from the Consulate General of
the Philippines in New York (Exh. "H" and "F").
(g) certifications from the Secretary of State that Judge Reagan is
duly authorized to grant exemplified copies of the decree of
probate, letters testamentary and all proceedings had and proofs
duly taken
(Exhs. "H-1" and "I-1");
(h) certificates of Judge Reagan and the Chief Clerk that letters
testamentary were issued to Rafael G. Cunanan (Exhs. "H-2" and "I-
2");
(i) certification to the effect that it was during the term of Judge
Reagan that a decree admitting the wills to probate had been
issued and appointing Rafael G. Cunanan as alternate executor
(Exhs. "H-3" and
"I-10");
(j) the decrees on probate of the two wills specifying that
proceedings were held and proofs duly taken (Exhs. "H-4" and "I-
5");
(k) decrees on probate of the two wills stating that they were
properly executed, genuine and valid and that the said instruments
were admitted to probate and established as wills valid to pass real
and personal property (Exhs. "H-5" and "I-5"); and
(l) certificates of Judge Reagan and the Chief Clerk on the
genuineness and authenticity of each other’s signatures in the
exemplified copies of the decrees of probate, letters testamentary
and proceedings held in their court (Exhs. "H-6" and "I-6") (Rollo,
pp. 13-16).
Petitioner adds that the wills had been admitted to probate in the Surrogate Court’s Decision
of April 13, 1983 and that the proceedings were terminated on November 29, 1984.
The respective wills of the Cunanan spouses, who were American citizens, will only be
effective in this country upon compliance with the following provision of the Civil Code of the
Philippines:
Art. 816. The will of an alien who is abroad produces effect in the
Philippines if made with the formalities prescribed by the law of the
place in which he resides, or according to the formalities observed
in his country, or in conformity with those which this Code
prescribes.
Thus, proof that both wills conform with the formalities prescribed by New York laws or by
Philippine laws is imperative.
The evidence necessary for the reprobate or allowance of wills which have been probated
outside of the Philippines are as follows: (1) the due execution of the will in accordance with
the foreign laws; (2) the testator has his domicile in the foreign country and not in the
Philippines; (3) the will has been admitted to probate in such country; (4) the fact that the
foreign tribunal is a probate court, and (5) the laws of a foreign country on procedure and
allowance of wills (III Moran Commentaries on the Rules of Court, 1970 ed., pp. 419-429;
Suntay v. Suntay, 95 Phil. 500 [1954]; Fluemer v. Hix, 54 Phil. 610 [1930]). Except for the first
and last requirements, the petitioner submitted all the needed evidence.
The necessity of presenting evidence on the foreign laws upon which the probate in the
foreign country is based is impelled by the fact that our courts cannot take judicial notice of
them (Philippine Commercial and Industrial Bank v. Escolin, 56 SCRA 266 [1974]).
Petitioner must have perceived this omission as in fact she moved for more time to submit
the pertinent procedural and substantive New York laws but which request respondent
Judge just glossed over. While the probate of a will is a special proceeding wherein courts
should relax the rules on evidence, the goal is to receive the best evidence of which the
matter is susceptible before a purported will is probated or denied probate (Vda. de Ramos
v. Court of Appeals, 81 SCRA 393 [1978]).
There is merit in petitioner’s insistence that the separate wills of the Cunanan spouses
should be probated jointly. Respondent Judge’s view that the Rules on allowance of wills is
couched in singular terms and therefore should be interpreted to mean that there should be
separate probate proceedings for the wills of the Cunanan spouses is too literal and
simplistic an approach. Such view overlooks the provisions of Section 2, Rule 1 of the Revised
Rules of Court, which advise that the rules shall be "liberally construed in order to promote
their object and to assist the parties in obtaining just, speedy, and inexpensive determination
of every action and proceeding."
A literal application of the Rules should be avoided if they would only result in the delay in
the administration of justice (Acain v. Intermediate Appellate Court, 155 SCRA 100 [1987];
Roberts v. Leonidas, 129 SCRA 33 [1984]).
What the law expressly prohibits is the making of joint wills either for the testator’s
reciprocal benefit or for the benefit of a third person (Civil Code of the Philippines, Article
818). In the case at bench, the Cunanan spouses executed separate wills. Since the two wills
contain essentially the same provisions and pertain to property which in all probability are
conjugal in nature, practical considerations dictate their joint probate. As this Court has held
a number of times, it will always strive to settle the entire controversy in a single proceeding
leaving no root or branch to bear the seeds of future litigation (Motoomull v. Dela Paz, 187
SCRA 743 [1990]).
This petition cannot be completely resolved without touching on a very glaring fact —
petitioner has always considered herself the sole heir of
Dr. Evelyn Perez Cunanan and because she does not consider herself an heir of Dr. Jose F.
Cunanan, she noticeably failed to notify his heirs of the filing of the proceedings. Thus, even
in the instant petition, she only impleaded respondent Judge, forgetting that a judge whose
order is being assailed is merely a nominal or formal party (Calderon v. Solicitor General, 215
SCRA 876 [1992]).
The rule that the court having jurisdiction over the reprobate of a will shall "cause notice
thereof to be given as in case of an original will presented for allowance" (Revised Rules of
Court, Rule 27, Section 2) means that with regard to notices, the will probated abroad should
be treated as if it were an "original will" or a will that is presented for probate for the first
time. Accordingly, compliance with Sections 3 and 4 of Rule 76, which require publication
and notice by mail or personally to the "known heirs, legatees, and devisees of the testator
resident in the Philippines" and to the executor, if he is not the petitioner, are required.
The brothers and sisters of Dr. Jose F. Cunanan, contrary to petitioner's claim, are entitled to
notices of the time and place for proving the wills. Under Section 4 of Rule 76 of the Revised
Rules of Court, the "court shall also cause copies of the notice of the time and place fixed for
proving the will to be addressed to the designated or other known heirs, legatees, and
devisees of the testator, . . . "
WHEREFORE, the questioned Order is SET ASIDE. Respondent Judge shall allow petitioner
reasonable time within which to submit evidence needed for the joint probate of the wills of
the Cunanan spouses and see to it that the brothers and sisters of Dr. Jose F. Cunanan are
given all notices and copies of all pleadings pertinent to the probate proceedings.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22595 November 1, 1927
Testate Estate of Joseph G. Brimo, JUAN MICIANO, administrator, petitioner-appellee,
vs.
ANDRE BRIMO, opponent-appellant.
Ross, Lawrence and Selph for appellant.
Camus and Delgado for appellee.
ROMUALDEZ, J.:
The partition of the estate left by the deceased Joseph G. Brimo is in question in this case.
The judicial administrator of this estate filed a scheme of partition. Andre Brimo, one of the
brothers of the deceased, opposed it. The court, however, approved it.
The errors which the oppositor-appellant assigns are:
(1) The approval of said scheme of partition; (2) denial of his participation in the inheritance;
(3) the denial of the motion for reconsideration of the order approving the partition; (4) the
approval of the purchase made by the Pietro Lana of the deceased's business and the deed
of transfer of said business; and (5) the declaration that the Turkish laws are impertinent to
this cause, and the failure not to postpone the approval of the scheme of partition and the
delivery of the deceased's business to Pietro Lanza until the receipt of the depositions
requested in reference to the Turkish laws.
The appellant's opposition is based on the fact that the partition in question puts into effect
the provisions of Joseph G. Brimo's will which are not in accordance with the laws of his
Turkish nationality, for which reason they are void as being in violation or article 10 of the
Civil Code which, among other things, provides the following:
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.
But the fact is that the oppositor did not prove that said testimentary dispositions are not in
accordance with the Turkish laws, inasmuch as he did not present any evidence showing
what the Turkish laws are on the matter, and in the absence of evidence on such laws, they
are presumed to be the same as those of the Philippines. (Lim and Lim vs. Collector of
Customs, 36 Phil., 472.)
It has not been proved in these proceedings what the Turkish laws are. He, himself,
acknowledges it when he desires to be given an opportunity to present evidence on this
point; so much so that he assigns as an error of the court in not having deferred the approval
of the scheme of partition until the receipt of certain testimony requested regarding the
Turkish laws on the matter.
The refusal to give the oppositor another opportunity to prove such laws does not constitute
an error. It is discretionary with the trial court, and, taking into consideration that the
oppositor was granted ample opportunity to introduce competent evidence, we find no
abuse of discretion on the part of the court in this particular. There is, therefore, no evidence
in the record that the national law of the testator Joseph G. Brimo was violated in the
testamentary dispositions in question which, not being contrary to our laws in force, must be
complied with and executed. lawphil.net
Therefore, the approval of the scheme of partition in this respect was not erroneous.
In regard to the first assignment of error which deals with the exclusion of the herein
appellant as a legatee, inasmuch as he is one of the persons designated as such in will, it
must be taken into consideration that such exclusion is based on the last part of the second
clause of the will, which says:
Second. I like desire to state that although by law, I am a Turkish citizen, this
citizenship having been conferred upon me by conquest and not by free choice,
nor by nationality and, on the other hand, having resided for a considerable
length of time in the Philippine Islands where I succeeded in acquiring all of the
property that I now possess, it is my wish that the distribution of my property
and everything in connection with this, my will, be made and disposed of in
accordance with the laws in force in the Philippine islands, requesting all of my
relatives to respect this wish, otherwise, I annul and cancel beforehand
whatever disposition found in this will favorable to the person or persons who
fail to comply with this request.
The institution of legatees in this will is conditional, and the condition is that the instituted
legatees must respect the testator's will to distribute his property, not in accordance with
the laws of his nationality, but in accordance with the laws of the Philippines.
If this condition as it is expressed were legal and valid, any legatee who fails to comply with
it, as the herein oppositor who, by his attitude in these proceedings has not respected the
will of the testator, as expressed, is prevented from receiving his legacy.
The fact is, however, that the said condition is void, being contrary to law, for article 792 of
the civil Code provides the following:
Impossible conditions and those contrary to law or good morals shall be
considered as not imposed and shall not prejudice the heir or legatee in any
manner whatsoever, even should the testator otherwise provide.
And said condition is contrary to law because it expressly ignores the testator's national law
when, according to article 10 of the civil Code above quoted, such national law of the
testator is the one to govern his testamentary dispositions.
Said condition then, in the light of the legal provisions above cited, is considered unwritten,
and the institution of legatees in said will is unconditional and consequently valid and
effective even as to the herein oppositor.
It results from all this that the second clause of the will regarding the law which shall govern
it, and to the condition imposed upon the legatees, is null and void, being contrary to law.
All of the remaining clauses of said will with all their dispositions and requests are perfectly
valid and effective it not appearing that said clauses are contrary to the testator's national
law.
Therefore, the orders appealed from are modified and it is directed that the distribution of
this estate be made in such a manner as to include the herein appellant Andre Brimo as one
of the legatees, and the scheme of partition submitted by the judicial administrator is
approved in all other respects, without any pronouncement as to costs.
So ordered.
Street, Malcolm, Avanceña, Villamor and Ostrand, JJ., concur.
FIRST DIVISION
[G.R. No. 124371. November 23, 2000.]
PAULA T. LLORENTE, Petitioner, v. COURT OF APPEALS and ALICIA F. "(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F.
LLORENTE, Respondents. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, all my real properties
whatsoever and wheresoever located, specifically my real properties located at Barangay
DECISION Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras,
Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines
Sur;chanrob1es virtua1 1aw 1ibrary
PARDO, J.:
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my
children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real
The Case properties located in Quezon City Philippines, and covered by Transfer Certificate of Title No.
188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title
Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal, Philippines;
The case raises a conflict of laws issue.chanrob1es virtua1 1aw 1ibrary
"(4) That their respective shares in the above-mentioned properties, whether real or
What is before us is an appeal from the decision of the Court of Appeals 1 modifying that of personal properties, shall not be disposed of, ceded, sold and conveyed to any other
the Regional Trial Court, Camarines Sur, Branch 35, Iriga City 2 declaring respondent Alicia F. persons, but could only be sold, ceded, conveyed and disposed of by and among themselves;
Llorente (hereinafter referred to as "Alicia"), as co-owners of whatever property she and the
deceased Lorenzo N. Llorente (hereinafter referred to as "Lorenzo") may have acquired "(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and
during the twenty-five (25) years that they lived together as husband and wife. Testament, and in her default or incapacity of the latter to act, any of my children in the
order of age, if of age;
The Facts
"(6) I hereby direct that the executor named herein or her lawful substitute should served
(sic) without bond;
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy
from March 10, 1927 to September 30, 1957. 3 "(7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions
heretofore executed, signed, or published, by me;
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as
"(8) It is my final wish and desire that if I die, no relatives of mine in any degree in the
"Paula") were married before a parish priest, Roman Catholic Church, in Nabua, Camarines
Llorente’s Side should ever bother and disturb in any manner whatsoever my wife Alicia R.
Sur. 4
Fortunato and my children with respect to any real or personal properties I gave and
bequeathed respectively to each one of them by virtue of this Last Will and Testament." 17
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula
stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur. 5
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of petition for the probate and allowance of his last will and testament wherein Lorenzo moved
that Alicia be appointed Special Administratrix of his estate. 18
Naturalization No. 5579816 was issued in his favor by the United States District Court,
Southern District of New York. 6
On January 18, 1984, the trial court denied the motion for the reason that the testator
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted Lorenzo was still alive. 19
an accrued leave by the U. S. Navy, to visit his wife and he visited the Philippines. 7 He
discovered that his wife Paula was pregnant and was "living in" and having an adulterous On January 24, 1984, finding that the will was duly executed, the trial court admitted the will
relationship with his brother, Ceferino Llorente. 8 to probate. 20

On June 11, 1985, before the proceedings could be terminated, Lorenzo died. 21
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of
Nabua as "Crisologo Llorente," with the certificate stating that the child was not legitimate
On September 4, 1985, Paula filed with the same court a petition 22 for letters of
and the line for the father’s name was left blank. 9
administration over Lorenzo’s estate in her favor. Paula contended (1) that she was Lorenzo’s
surviving spouse, (2) that the various property were acquired during their marriage, (3) that
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple
Lorenzo’s will disposed of all his property in favor of Alicia and her children, encroaching on
drew a written agreement to the effect that (1) all the family allowances allotted by the
her legitime and 1/2 share in the conjugal property. 23
United States Navy as part of Lorenzo’s salary and all other obligations for Paula’s daily
maintenance and support would be suspended; (2) they would dissolve their marital union in
accordance with judicial proceedings; (3) they would make a separate agreement regarding On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition
for the issuance of letters testamentary. 24
their conjugal property acquired during their marital life; and (4) Lorenzo would not
prosecute Paula for her adulterous act since she voluntarily admitted her fault and agreed to
separate from Lorenzo peacefully. The agreement was signed by both Lorenzo and Paula and On October 14, 1985, without terminating the testate proceedings, the trial court gave due
course to Paula’s petition in Sp. Proc. No. IR-888.25cralaw:red
was witnessed by Paula’s father and stepmother. The agreement was notarized by Notary
Public Pedro Osabel. 10
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star." 26
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:chanrob1es virtua1
Superior Court of the State of California in and for the County of San Diego. Paula was
1aw 1ibrary
represented by counsel, John Riley, and actively participated in the proceedings. On
November 27, 1951, the Superior Court of the State of California, for the County of San Diego
"Wherefore, considering that this court has so found that the divorce decree granted to the
found all factual allegations to be true and issued an interlocutory judgment of divorce. 11
late Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he
contracted with Alicia Fortunato on January 16, 1958 at Manila is likewise void. This being so
On December 4, 1952, the divorce decree became final. 12
the petition of Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise,
In the meantime, Lorenzo returned to the Philippines.chanrob1es virtua1 1aw 1ibrary she is not entitled to receive any share from the estate even if the will especially said so her
relationship with Lorenzo having gained the status of paramour which is under Art. 739 (1).
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. 13 Apparently, Alicia had
"On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so
no knowledge of the first marriage even if they resided in the same town as Paula, who did
not oppose the marriage or cohabitation. 14 declares the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void
and declares her entitled as conjugal partner and entitled to one-half of their conjugal
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. 15 Their twenty- properties, and as primary compulsory heir, Paula T. Llorente is also entitled to one-third of
the estate and then one-third should go to the illegitimate children, Raul, Luz and Beverly, all
five (25) year union produced three children, Raul, Luz and Beverly, all surnamed Llorente. 16
surname (sic) Llorente, for them to partition in equal shares and also entitled to the
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by remaining free portion in equal shares.
Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco
"Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased,
Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to
Alicia and their three children, to wit:jgc:chanrobles.com.ph Lorenzo Llorente. As such let the corresponding letters of administration issue in her favor
upon her filing a bond in the amount (sic) of P100,000.00 conditioned for her to make a
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and return to the court within three (3) months a true and complete inventory of all goods,
chattels, rights, and credits, and estate which shall at any time come to her possession or to
lot, located at San Francisco, Nabua, Camarines Sur, Philippines, including ALL the personal
the possession of any other person for her, and from the proceeds to pay and discharge all
properties and other movables or belongings that may be found or existing therein;
debts, legacies and charges on the same, or such dividends thereon as shall be decreed or
required by this court; to render a true and just account of her administration to the court First, there is no such thing as one American law. The "national law" indicated in Article 16 of
within one (1) year, and at any other time when required by the court and to perform all the Civil Code cannot possibly apply to general American law. There is no such law governing
orders of this court by her to be performed. the validity of testamentary provisions in the United States. Each State of the union has its
own law applicable to its citizens and in force only within the State. It can therefore refer to
"On the other matters prayed for in respective petitions for want of evidence could not be no other than the law of the State of which the decedent was a resident. 39 Second, there is
granted.chanrob1es virtua1 1aw 1ibrary no showing that the application of the renvoi doctrine is called for or required by New York
State law.chanrob1es virtua1 1aw 1ibrary
"SO ORDERED." 27
The trial court held that the will was intrinsically invalid since it contained dispositions in
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted favor of Alice, who in the trial court’s opinion was a mere paramour. The trial court threw
decision. 28 the will out, leaving Alice, and her two children, Raul and Luz, with nothing.

On September 14, 1987, the trial court denied Alicia’s motion for reconsideration but The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of
modified its earlier decision, stating that Raul and Luz Llorente are not children "legitimate or whatever property she and Lorenzo acquired during their cohabitation, applying Article 144
otherwise" of Lorenzo since they were not legally adopted by him. 29 Amending its decision of the Civil Code of the Philippines.
of May 18, 1987, the trial court declared Beverly Llorente as the only illegitimate child of
Lorenzo, entitling her to one-third (1/3) of the estate and one-third (1/3) of the free portion The hasty application of Philippine law and the complete disregard of the will, already
of the estate. 30 probated as duly executed in accordance with the formalities of Philippine law, is fatal,
especially in light of the factual and legal circumstances here obtaining.
On September 28, 1987, respondent appealed to the Court of Appeals. 31
Validity of the Foreign Divorce
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification
the decision of the trial court in this wise:jgc:chanrobles.com.ph In Van Dorn v. Romillo, Jr. 40 we held that owing to the nationality principle embodied in
Article 15 of the Civil Code, only Philippine nationals are covered by the policy against
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that absolute divorces, the same being considered contrary to our concept of public policy and
Alicia is declared as co-owner of whatever properties she and the deceased may have morality. In the same case, the Court ruled that aliens may obtain divorces abroad, provided
acquired during the twenty-five (25) years of cohabitation. they are valid according to their national law.

"SO ORDERED." 32 Citing this landmark case, the Court held in Quita v. Court of Appeals, 41 that once proven
that respondent was no longer a Filipino citizen when he obtained the divorce from
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration petitioner, the ruling in Van Dorn would become applicable and petitioner could "very well
of the decision. 33 lose her right to inherit" from him.chanrob1es virtua1 1aw 1ibrary

On March 21, 1996, the Court of Appeals, 34 denied the motion for lack of merit. In Pilapil v. Ibay-Somera, 42 we recognized the divorce obtained by the respondent in his
country, the Federal Republic of Germany. There, we stated that divorce and its legal effects
Hence, this petition. 35 may be recognized in the Philippines insofar as respondent is concerned in view of the
nationality principle in our civil law on the status of persons.
The Issue
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. 43
We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid
Stripping the petition of its legalese and sorting through the various arguments raised, 36 the and recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as
issue is simple. Who are entitled to inherit from the late Lorenzo N. Llorente? to the succession to the estate of the decedent) are matters best left to the determination of
the trial court.
We do not agree with the decision of the Court of Appeals. We remand the case to the trial
Validity of the Will
court for ruling on the intrinsic validity of the will of the deceased.

The Applicable Law The Civil Code provides:jgc:chanrobles.com.ph

"ARTICLE 17. The forms and solemnities of contracts, wills, and other public instruments shall
The fact that the late Lorenzo N. Llorente became an American citizen long before and at the
be governed by the laws of the country in which they are executed.
time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4)
death, is duly established, admitted and undisputed.
"When the acts referred to are executed before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the solemnities established by Philippine
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
laws shall be observed in their execution." (Emphasis ours)
The Civil Code clearly provides:jgc:chanrobles.com.ph
The clear intent of Lorenzo to bequeath his property to his second wife and children by her is
"ARTICLE 15. Laws relating to family rights and duties, or to the status, condition and legal glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was
a foreigner, not covered by our laws on "family rights and duties, status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though living
capacity." 44
abroad.chanrob1es virtua1 1aw 1ibrary
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best
"ARTICLE 16. Real property as well as personal property is subject to the law of the country
where it is situated. proved by foreign law which must be pleaded and proved. Whether the will was executed in
accordance with the formalities required is answered by referring to Philippine law. In fact,
the will was duly probated.chanrob1es virtua1 1aw 1ibrary
"However, intestate and testamentary succession, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
As a guide however, the trial court should note that whatever public policy or good customs
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and may be involved in our system of legitimes, Congress did not intend to extend the same to
the succession of foreign nationals. Congress specifically left the amount of successional
regardless of the country wherein said property may be found." (Emphasis ours)
rights to the decedent’s national law. 45
True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other fact, they must be alleged and Having thus ruled, we find it unnecessary to pass upon the other issues raised.
proved. 37
The Fallo
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP
foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine,
where the case was "referred back" to the law of the decedent’s domicile, in this case, No. 17446 promulgated on July 31, 1995 is SET ASIDE.
Philippine law.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES
We note that while the trial court stated that the law of New York was not sufficiently as VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the
Superior Court of the State of California in and for the County of San Diego, made final on
proven, in the same breath it made the categorical, albeit equally unproven statement that
"American law follows the ‘domiciliary theory’ hence, Philippine law applies when December 4, 1952.
determining the validity of Lorenzo’s will. 38
Further, the Court REMANDS the cases to the court of origin for determination of the
intrinsic validity of Lorenzo N. Llorente’s will and determination of the parties’ successional
rights allowing proof of foreign law with instructions that the trial court shall proceed with all
deliberate dispatch to settle the estate of the deceased within the framework of the Rules of
Court.chanrob1es virtua1 1aw 1ibrary
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-29663 August 20, 1990
GREGORIO LLANTINO and BELINDA LLANTINO assisted by husband Napoleon Barba,
plaintiffs-appellants,
vs.
CO LIONG CHONG alias JUAN MOLINA, defendant-appellee.
Delfin de Vera for plaintiffs-appellants.
Antonio G. Sosito for defendant-appellee.
PARAS, J.:
This is an appeal perfected before the effectivity of Republic Act 5440, from the decision * of
the Court of First Instance of Catanduanes in Civil Case No. 611, to quiet title with damages,
entitled Gregorio Llantino, et al. vs. Cong Liong Chong alias Juan Molina, dismissing the
complaint and declaring that the contract of lease entered into between the plaintiffs and
the defendant valid and in accordance with law.
The facts of the case as summarized by the trial court are as follows:
Plaintiffs (petitioners herein) aver that they are the owners of a commercial-residential land
situated in the municipality of Virac, Catanduanes, described in paragraph 2 of the
complaint, which sometime in 1954 they leased to the defendant (private respondent) who
was then a Chinese national and went by the name of Co Liong Chong for a period of thirteen
(13) years for the sum of P6,150.00 for the whole period. The defendant was placed in
possession of the property but knowing that the period of the least would end with the year
1967, petitioners requested private respondent for a conference but the latter did not honor
the request and instead he informed the petitioners that he had already constructed a
commercial building on the land worth P50,000.00; that the lease contract was for a period
of sixty (60) years, counted from 1954; and that he is already a Filipino citizen. The claim of
Chong came as a surprise to the Llantinos because they did not remember having agreed to a
sixty-year lease agreement as that would virtually make Chong the owner of the realty
which, as a Chinese national, he had no right to own and neither could he have acquired such
ownership after naturalization subsequent to 1954. On December 16, 1967, in order to avoid
a court litigation the Llantinos once more invited Chong to a conference about the matter
but again Chong ignored the invitation. (Rollo, p. 48; Appellant's Brief, p. 12)
Hence, on January 10, 1968, the Llantinos filed their complaint to quiet title with damages
before the Court of First Instance of Catanduanes (Rollo, p. 12; Record on Appeal, pp. 1-4).
After Chong has filed an answer to the complaint and the Llantinos their reply, (Rollo, p. 12;
Record on Appeal, pp. 9-10) the trial court set the case for pre-trial and trial for April 2, 1968
(Rollo, p. 12; Record on Appeal, pp. 10-11).
At the pre-trial, both parties agreed upon the identity of the land as described in the
complaint. It was mutually admitted that the defendants original name was Co Liong Chong
who was then a Chinese national in 1954, when he approached the plaintiffs and offered to
lease the land in question. It was also admitted by the counsel for the defendant that prior to
the filing of the case, the plaintiffs have in fact invited the defendant to a conference about
the matter (Rollo, p. 12; Record on Appeal; p. 14).
Chong's counsel produced the carbon original of the contract of lease entered into between
Chong and the Llantinos and the existence of the contract of lease as a public instrument was
admitted (Rollo, p. 12; Record on Appeal, pp. 14-15).
It was also admitted that Chong had in fact constructed a building of strong materials on the
land worth P40,000.00 (Rollo, p. 12; Record on Appeal, p. 15); that Chong has become a
naturalized Filipino citizen in 1961 and that his name is no longer Co Liong Chong but Juan
Molina (Rollo, p. 12; Record on Appeal, p. 15).
On May 17, 1968, the trial court rendered a Decision the dispositive portion of which reads:
WHEREFORE, in view of the foregoing considerations, the Court
finds the contract of lease entered into between the plaintiffs and
the defendant on October 5, 1954, valid and in accordance with law
and the complaint is dismissed with costs against the plaintiffs.
The Court, however, feels that there is no sufficient ground to
award moral damages or attorney's fees as claimed by the
defendant because the Court is fairly convinced that the institution
of the suit sprung from an honest conviction on the part of the
plaintiffs that on account of the period fixed in the contract of lease
and the fact that the defendant was a Chinese national at the time
of its celebration constituted valid grounds for annulment.
SO ORDERED. (Rollo, p. 12; Record on Appeal, p. 24).
From this judgment, plaintiffs appealed directly to this Court on a pure question of law
(Rollo, p. 12; Record on Appeal, pp. 24-25).
The plaintiffs-appellants filed their brief on May 26, 1969 (Rollo, p. 48). The defendant-
appellee filed his corresponding brief on July 22, 1969 (Rollo, p. 59).
The appellants raised the following assignment of errors:
I
THE LOWER COURT ERRED IN DECLARING THE CONTRACT ENTERED INTO BY AND BETWEEN
THE APPELLANTS AND THE DEFENDANTS ON OCTOBER 5, 1954 VALID.
II
THE LOWER COURT ERRED IN REFUSING TO DECLARE THAT CONTRACT NOT A LEASE.
Stripping the case of irrelevant allegations, the pivotal issue in this case is whether or not the
contract of lease entered into by and between the petitioners including Virgilio Llantino now
deceased and private respondent on October 5, 1954 for a period of sixty (60) years is valid.
Petitioners contend that when the contract which is sought to be declared void was entered
into by and between the parties, private respondent was still a Chinese national (Rollo, p. 48;
Appellants' Brief, p. 2). However, petitioners also stated that they do not dispute the right of
private respondent to hold the landholding in dispute under a contract of lease but they
cannot fathom how Congress could have thought of a lease contract which shall be for an
indefinite period and yet say that the period to be valid should not exceed 99 years (Rollo, p.
48; Appellant's Brief, p. 4; Article 1643 of the New Civil Code of the Philippines).
On the other hand, private respondent argued that even though he was still an alien when
he entered into the contract of lease (on October 5, 1954), he was not prohibited by law to
do so. In fact, prior to his becoming a naturalized Filipino citizen in 1961, the appellants did
not question his right to enter into that contract so that the parties are in pari delicto. He
constructed a building on the property worth P40,000.00 and prays that he be awarded
P30,000.00 for moral damages and P2,000.00 for Attorney's fees. (Rollo, p. 48; Appellant's
Brief, p. 2).
The position of private respondent is well taken.
The lower court correctly ruled that the defendant-appellee Chong had at the time of the
execution of the contract, the right to hold by lease the property involved in the case
although at the time of the execution of the contract, he was still a Chinese national (Rollo, p.
59; Appellee's Brief, pp. 10-11).
In the present case, it has been established that there is only one contract and there is no
option to buy the leased property in favor of Chong. There is nothing in the record, either in
the lease contract or in the complaint itself, to indicate any scheme to circumvent the
constitutional prohibition. On the contrary, the Llantinos themselves admit openly that right
from the start and before entering into the contract, Chong had merely asked them for a
lease of the premises to which they agreed. Admittedly under the terms of the contract
there is nothing to prevent the Llantinos from disposing of their title to the land to any
qualified party but subject to the rights of the lessee Chong. Neither is there under the terms
of the said contract to indicate that the ownership of the Llantinos of the leased premises
has been virtually transferred to the lessee (Rollo, p. 59; Appellee's Brief, p. 14).
Under the circumstances, a lease to an alien for a reasonable period is valid. So is an option
giving an alien the right to buy real property on condition that he is granted Philippine
citizenship. Aliens are not completely excluded by the Constitution from use of lands for
residential purposes. Since their residence in the Philippines is temporary, they may be
granted temporary rights such as a lease contract which is not forbidden by the Constitution.
Should they desire to remain here forever and share our fortune and misfortune, Filipino
citizenship is not impossible to acquire (Philippine Banking Corporation vs. Lui She, 21 SCRA
52 [1967], citing Krivenko vs. Register of Deeds, 79 Phil. 461 [1947]).
The only instance where a contract of lease may be considered invalid is, if there are
circumstances attendant to its execution, which are used as a scheme to circumvent the
constitutional prohibition.
If an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of
which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50
years, then it becomes clear that the arrangement is a virtual transfer of ownership whereby
the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus
utendi, jus fruendi, and jus abutendi) — rights, the sum of which make up ownership. It is just
as if today the possession is transferred, tomorrow the use, the next day the disposition, and
so on, until ultimately all the rights of which ownership is made up are consolidated in an
alien (Philippine Banking Corporation vs. Lui She, 21 SCRA 52 [1967]).
Coming back to the case at bar, even assuming, arguendo, that the subject contract is
prohibited, the same can no longer be questioned presently upon the acquisition by the
private respondent of Filipino citizenship. It was held that sale of a residential land to an
alien which is now in the hands of a naturalized Filipino citizen is valid (De Castro vs. Tan, 129
SCRA 85 [1984]).
A contract is the law between the contracting parties, and when there is nothing in it which
is contrary to law, morals, good customs, public policy or public order, the validity of the
contract must be sustained (Marimperio Compania Naviera, S.A. vs. Court of Appeals, 156
SCRA 358 [1987]).
The issue of the nature of the contract in the case at bar was never raised in the basic
pleadings or in the pre-trial (Rollo, p. 59-1; Appellee's Brief, p. 22).
It is too late to raise an issue on appeal in the Supreme Court when it has not been raised in
the lower court (Espadera vs. Court of Appeals, 165 SCRA 364 [1988]).
Moreover, contracts which are not ambiguous are to be interpreted according to their literal
meaning and should not be interpreted beyond their obvious intendment (Plastic Town
Center Corporation vs. NLRC, 172 SCRA 580 [1989]; Herrera vs. Petrophil Corp., 146 SCRA 385
[1986]).
PREMISES CONSIDERED, the decision appealed from is hereby AFFIRMED with costs against
the plaintiffs-appellants.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla and Regalado, JJ., concur.
Sarmiento, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164584 June 22, 2009
PHILIP MATTHEWS, Petitioner,
vs.
BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.
DECISION
NACHURA, J.:
Assailed in this petition for review on certiorari are the Court of Appeals (CA) December 19,
2003 Decision1 and July 14, 2004 Resolution2 in CA-G.R. CV No. 59573. The assailed decision
affirmed and upheld the June 30, 1997 Decision3 of the Regional Trial Court (RTC), Branch 8,
Kalibo, Aklan in Civil Case No. 4632 for Declaration of Nullity of Agreement of Lease with
Damages.
On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British subject, married
Joselyn C. Taylor (Joselyn), a 17-year old Filipina.4 On June 9, 1989, while their marriage was
subsisting, Joselyn bought from Diosa M. Martin a 1,294 square-meter lot (Boracay property)
situated at Manoc-Manoc, Boracay Island, Malay, Aklan, for and in consideration of
₱129,000.00.5 The sale was allegedly financed by Benjamin. 6 Joselyn and Benjamin, also
using the latter’s funds, constructed improvements thereon and eventually converted the
property to a vacation and tourist resort known as the Admiral Ben Bow Inn. 7 All required
permits and licenses for the operation of the resort were obtained in the name of Ginna
Celestino, Joselyn’s sister.8
However, Benjamin and Joselyn had a falling out, and Joselyn ran away with Kim Philippsen.
On June 8, 1992, Joselyn executed a Special Power of Attorney (SPA) in favor of Benjamin,
authorizing the latter to maintain, sell, lease, and sub-lease and otherwise enter into
contract with third parties with respect to their Boracay property.9
On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an
Agreement of Lease10 (Agreement) involving the Boracay property for a period of 25 years,
with an annual rental of ₱12,000.00. The agreement was signed by the parties and executed
before a Notary Public. Petitioner thereafter took possession of the property and renamed
the resort as Music Garden Resort.1avvphi1
Claiming that the Agreement was null and void since it was entered into by Joselyn without
his (Benjamin’s) consent, Benjamin instituted an action for Declaration of Nullity of
Agreement of Lease with Damages11 against Joselyn and the petitioner. Benjamin claimed
that his funds were used in the acquisition and improvement of the Boracay property, and
coupled with the fact that he was Joselyn’s husband, any transaction involving said property
required his consent.
No Answer was filed, hence, the RTC declared Joselyn and the petitioner in defeault. On
March 14, 1994, the RTC rendered judgment by default declaring the Agreement null and
void.12 The decision was, however, set aside by the CA in CA-G.R. SP No. 34054.13 The CA also
ordered the RTC to allow the petitioner to file his Answer, and to conduct further
proceedings.
In his Answer,14 petitioner claimed good faith in transacting with Joselyn. Since Joselyn
appeared to be the owner of the Boracay property, he found it unnecessary to obtain the
consent of Benjamin. Moreover, as appearing in the Agreement, Benjamin signed as a
witness to the contract, indicating his knowledge of the transaction and, impliedly, his
conformity to the agreement entered into by his wife. Benjamin was, therefore, estopped
from questioning the validity of the Agreement.
There being no amicable settlement during the pre-trial, trial on the merits ensued.
On June 30, 1997, the RTC disposed of the case in this manner:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages
(Exhibits "T", "T-1", "T-2", "T-3", "T-4", "T-5", "T-6" and "T-7") entered into by
and between Joselyn C. Taylor and Philip Matthews before Notary Public Lenito
T. Serrano under Doc. No. 390, Page 79, Book I, Series of 1992 is hereby
declared NULL and VOID;
2. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum
of SIXTEEN THOUSAND (₱16,000.00) PESOS as damages representing unrealized
income for the residential building and cottages computed monthly from July
1992 up to the time the property in question is restored to plaintiff; and
3. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum
of TWENTY THOUSAND (₱20,000.00) PESOS, Philippine Currency, for attorney’s
fees and other incidental expenses.
SO ORDERED.15
The RTC considered the Boracay property as community property of Benjamin and Joselyn;
thus, the consent of the spouses was necessary to validate any contract involving the
property. Benjamin’s right over the Boracay property was bolstered by the court’s findings
that the property was purchased and improved through funds provided by Benjamin.
Although the Agreement was evidenced by a public document, the trial court refused to
consider the alleged participation of Benjamin in the questioned transaction primarily
because his signature appeared only on the last page of the document and not on every page
thereof.
On appeal to the CA, petitioner still failed to obtain a favorable decision. In its December 19,
2003 Decision,16 the CA affirmed the conclusions made by the RTC. The appellate court was
of the view that if, indeed, Benjamin was a willing participant in the questioned transaction,
the parties to the Agreement should have used the phrase "with my consent" instead of
"signed in the presence of." The CA noted that Joselyn already prepared an SPA in favor of
Benjamin involving the Boracay property; it was therefore unnecessary for Joselyn to
participate in the execution of the Agreement. Taken together, these circumstances yielded
the inevitable conclusion that the contract was null and void having been entered into by
Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition for review on certiorari
based on the following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT
REQUIRED IN THE AGREEMENT OF LEASE DATED 20 JULY 1992. GRANTING
ARGUENDO THAT HIS CONSENT IS REQUIRED, BENJAMIN TAYLOR IS DEEMED TO
HAVE GIVEN HIS CONSENT WHEN HE AFFIXED HIS SIGNATURE IN THE
AGREEMENT OF LEASE AS WITNESS IN THE LIGHT OF THE RULING OF THE
SUPREME COURT IN THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ, G.R. NO.
141323, JUNE 8, 2005.
4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS THE
EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO CITIZEN, IN THE LIGHT
OF CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUO ERRONEOUSLY APPLIED ARTICLE 96 OF THE FAMILY
CODE OF THE PHILIPPINES WHICH IS A PROVISION REFERRING TO THE
ABSOLUTE COMMUNITY OF PROPERTY. THE PROPERTY REGIME GOVERNING
THE PROPERTY RELATIONS OF BENJAMIN TAYLOR AND JOSELYN TAYLOR IS THE
CONJUGAL PARTNERSHIP OF GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE
1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY CODE. ARTICLE 96 OF
THE FAMILY CODE OF THE PHILIPPINES FINDS NO APPLICATION IN THIS CASE.
4.4. THE HONORABLE COURT OF APPEALS IGNORED THE PRESUMPTION OF
REGULARITY IN THE EXECUTION OF NOTARIAL DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE
COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT WAS NOT
CONTESTED AND DESPITE THE PRESENTATION OF EVIDENCE ESTABLISHING SAID
CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an Agreement of Lease of a parcel of
land entered into by a Filipino wife without the consent of her British husband. In addressing
the matter before us, we are confronted not only with civil law or conflicts of law issues, but
more importantly, with a constitutional question.
It is undisputed that Joselyn acquired the Boracay property in 1989. Said acquisition was
evidenced by a Deed of Sale with Joselyn as the vendee. The property was also declared for
taxation purposes under her name. When Joselyn leased the property to petitioner,
Benjamin sought the nullification of the contract on two grounds: first, that he was the actual
owner of the property since he provided the funds used in purchasing the same; and second,
that Joselyn could not enter into a valid contract involving the subject property without his
consent.
The trial and appellate courts both focused on the property relations of petitioner and
respondent in light of the Civil Code and Family Code provisions. They, however, failed to
observe the applicable constitutional principles, which, in fact, are the more decisive.
Section 7, Article XII of the 1987 Constitution states: 18
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.1avvphi1
Aliens, whether individuals or corporations, have been disqualified from acquiring lands of
the public domain. Hence, by virtue of the aforecited constitutional provision, they are also
disqualified from acquiring private lands. 19 The primary purpose of this constitutional
provision is the conservation of the national patrimony. 20 Our fundamental law cannot be
any clearer. The right to acquire lands of the public domain is reserved only to Filipino
citizens or corporations at least sixty percent of the capital of which is owned by Filipinos. 21
In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the occasion to explain
the constitutional prohibition:
Under Section 1 of Article XIII of the Constitution, "natural resources, with the exception of
public agricultural land, shall not be alienated," and with respect to public agricultural lands,
their alienation is limited to Filipino citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino
citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to
prevent this result that Section 5 is included in Article XIII, and it reads as follows:
"Section 5. Save in cases of hereditary succession, no private agricultural land will be
transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines."
This constitutional provision closes the only remaining avenue through which agricultural
resources may leak into alien’s hands. It would certainly be futile to prohibit the alienation of
public agricultural lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens. x x x
xxxx
If the term "private agricultural lands" is to be construed as not including residential lots or
lands not strictly agricultural, the result would be that "aliens may freely acquire and possess
not only residential lots and houses for themselves but entire subdivisions, and whole towns
and cities," and that "they may validly buy and hold in their names lands of any area for
building homes, factories, industrial plants, fisheries, hatcheries, schools, health and vacation
resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and purposes
that are not, in appellant’s words, strictly agricultural." (Solicitor General’s Brief, p. 6) That
this is obnoxious to the conservative spirit of the Constitution is beyond question. 24
The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private
lands in the Philippines, save only in constitutionally recognized exceptions.25 There is no rule
more settled than this constitutional prohibition, as more and more aliens attempt to
circumvent the provision by trying to own lands through another. In a long line of cases, we
have settled issues that directly or indirectly involve the above constitutional provision. We
had cases where aliens wanted that a particular property be declared as part of their father’s
estate;26 that they be reimbursed the funds used in purchasing a property titled in the name
of another;27 that an implied trust be declared in their (aliens’) favor; 28 and that a contract of
sale be nullified for their lack of consent. 29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a parcel of land,
together with the improvements thereon. Upon his death, his heirs (the petitioners therein)
claimed the properties as part of the estate of their deceased father, and sought the
partition of said properties among themselves. We, however, excluded the land and
improvements thereon from the estate of Felix Ting Ho, precisely because he never became
the owner thereof in light of the above-mentioned constitutional prohibition.
In Muller v. Muller,31 petitioner Elena Buenaventura Muller and respondent Helmut Muller
were married in Germany. During the subsistence of their marriage, respondent purchased a
parcel of land in Antipolo City and constructed a house thereon. The Antipolo property was
registered in the name of the petitioner. They eventually separated, prompting the
respondent to file a petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In deciding the case
in favor of the petitioner, the Court held that respondent was aware that as an alien, he was
prohibited from owning a parcel of land situated in the Philippines. He had, in fact, declared
that when the spouses acquired the Antipolo property, he had it titled in the name of the
petitioner because of said prohibition. Hence, we denied his attempt at subsequently
asserting a right to the said property in the form of a claim for reimbursement. Neither did
the Court declare that an implied trust was created by operation of law in view of
petitioner’s marriage to respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen, was married to Teresita Santos; while
respondent, a Filipina, was married to Klaus Muller. Petitioner and respondent met and later
cohabited in a common-law relationship, during which petitioner acquired real properties;
and since he was disqualified from owning lands in the Philippines, respondent’s name
appeared as the vendee in the deeds of sale. When their relationship turned sour, petitioner
filed an action for the recovery of the real properties registered in the name of respondent,
claiming that he was the real owner. Again, as in the other cases, the Court refused to
declare petitioner as the owner mainly because of the constitutional prohibition. The Court
added that being a party to an illegal contract, he could not come to court and ask to have
his illegal objective carried out. One who loses his money or property by knowingly engaging
in an illegal contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an American citizen) and
Criselda Cheesman acquired a parcel of land that was later registered in the latter’s name.
Criselda subsequently sold the land to a third person without the knowledge of the
petitioner. The petitioner then sought the nullification of the sale as he did not give his
consent thereto. The Court held that assuming that it was his (petitioner’s) intention that the
lot in question be purchased by him and his wife, he acquired no right whatever over the
property by virtue of that purchase; and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as to him
was null and void.
In light of the foregoing jurisprudence, we find and so hold that Benjamin has no right to
nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, is
absolutely prohibited from acquiring private and public lands in the Philippines. Considering
that Joselyn appeared to be the designated "vendee" in the Deed of Sale of said property,
she acquired sole ownership thereto. This is true even if we sustain Benjamin’s claim that he
provided the funds for such acquisition. By entering into such contract knowing that it was
illegal, no implied trust was created in his favor; no reimbursement for his expenses can be
allowed; and no declaration can be made that the subject property was part of the
conjugal/community property of the spouses. In any event, he had and has no capacity or
personality to question the subsequent lease of the Boracay property by his wife on the
theory that in so doing, he was merely exercising the prerogative of a husband in respect of
conjugal property. To sustain such a theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this would accord
the alien husband a substantial interest and right over the land, as he would then have a
decisive vote as to its transfer or disposition. This is a right that the Constitution does not
permit him to have.34
In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be
nullified on the grounds advanced by Benjamin. Thus, we uphold its validity.
With the foregoing disquisition, we find it unnecessary to address the other issues raised by
the petitioner.
WHEREFORE, premises considered, the December 19, 2003 Decision and July 14, 2004
Resolution of the Court of Appeals in CA-G.R. CV No. 59573, are REVERSED and SET ASIDE
and a new one is entered DISMISSING the complaint against petitioner Philip Matthews.
SO ORDERED.
FIRST DIVISION
G.R. No. 140047 July 13, 2004
PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION, petitioner,
vs.
V.P. EUSEBIO CONSTRUCTION, INC.; 3-PLEX INTERNATIONAL, INC.; VICENTE P. EUSEBIO;
SOLEDAD C. EUSEBIO; EDUARDO E. SANTOS; ILUMINADA SANTOS; AND FIRST INTEGRATED
BONDING AND INSURANCE COMPANY, INC., respondents.
DECISION
DAVIDE, JR., C.J.:
This case is an offshoot of a service contract entered into by a Filipino construction firm with
the Iraqi Government for the construction of the Institute of Physical Therapy-Medical
Center, Phase II, in Baghdad, Iraq, at a time when the Iran-Iraq war was ongoing.
In a complaint filed with the Regional Trial Court of Makati City, docketed as Civil Case No.
91-1906 and assigned to Branch 58, petitioner Philippine Export and Foreign Loan Guarantee
Corporation1 (hereinafter Philguarantee) sought reimbursement from the respondents of the
sum of money it paid to Al Ahli Bank of Kuwait pursuant to a guarantee it issued for
respondent V.P. Eusebio Construction, Inc. (VPECI).
The factual and procedural antecedents in this case are as follows:
On 8 November 1980, the State Organization of Buildings (SOB), Ministry of Housing and
Construction, Baghdad, Iraq, awarded the construction of the Institute of Physical Therapy–
Medical Rehabilitation Center, Phase II, in Baghdad, Iraq, (hereinafter the Project) to Ajyal
Trading and Contracting Company (hereinafter Ajyal), a firm duly licensed with the Kuwait
Chamber of Commerce for a total contract price of ID5,416,089/046 (or about
US$18,739,668).2
On 7 March 1981, respondent spouses Eduardo and Iluminada Santos, in behalf of
respondent 3-Plex International, Inc. (hereinafter 3-Plex), a local contractor engaged in
construction business, entered into a joint venture agreement with Ajyal wherein the former
undertook the execution of the entire Project, while the latter would be entitled to a
commission of 4% of the contract price. 3 Later, or on 8 April 1981, respondent 3-Plex, not
being accredited by or registered with the Philippine Overseas Construction Board (POCB),
assigned and transferred all its rights and interests under the joint venture agreement to
VPECI, a construction and engineering firm duly registered with the POCB. 4 However, on 2
May 1981, 3-Plex and VPECI entered into an agreement that the execution of the Project
would be under their joint management.5
The SOB required the contractors to submit (1) a performance bond of ID271,808/610
representing 5% of the total contract price and (2) an advance payment bond of
ID541,608/901 representing 10% of the advance payment to be released upon signing of the
contract.6 To comply with these requirements, respondents 3-Plex and VPECI applied for the
issuance of a guarantee with petitioner Philguarantee, a government financial institution
empowered to issue guarantees for qualified Filipino contractors to secure the performance
of approved service contracts abroad.7
Petitioner Philguarantee approved respondents' application. Subsequently, letters of
guarantee8 were issued by Philguarantee to the Rafidain Bank of Baghdad covering 100% of
the performance and advance payment bonds, but they were not accepted by SOB. What
SOB required was a letter-guarantee from Rafidain Bank, the government bank of Iraq.
Rafidain Bank then issued a performance bond in favor of SOB on the condition that another
foreign bank, not Philguarantee, would issue a counter-guarantee to cover its exposure. Al
Ahli Bank of Kuwait was, therefore, engaged to provide a counter-guarantee to Rafidain
Bank, but it required a similar counter-guarantee in its favor from the petitioner. Thus, three
layers of guarantees had to be arranged.9
Upon the application of respondents 3-Plex and VPECI, petitioner Philguarantee issued in
favor of Al Ahli Bank of Kuwait Letter of Guarantee No. 81-194-F 10 (Performance Bond
Guarantee) in the amount of ID271,808/610 and Letter of Guarantee No. 81-195-
F11 (Advance Payment Guarantee) in the amount of ID541,608/901, both for a term of
eighteen months from 25 May 1981. These letters of guarantee were secured by (1) a Deed
of Undertaking12 executed by respondents VPECI, Spouses Vicente P. Eusebio and Soledad C.
Eusebio, 3-Plex, and Spouses Eduardo E. Santos and Iluminada Santos; and (2) a surety
bond13 issued by respondent First Integrated Bonding and Insurance Company, Inc. (FIBICI).
The Surety Bond was later amended on 23 June 1981 to increase the amount of coverage
from P6.4 million to P6.967 million and to change the bank in whose favor the petitioner's
guarantee was issued, from Rafidain Bank to Al Ahli Bank of Kuwait. 14
On 11 June 1981, SOB and the joint venture VPECI and Ajyal executed the service
contract15 for the construction of the Institute of Physical Therapy – Medical Rehabilitation
Center, Phase II, in Baghdad, Iraq, wherein the joint venture contractor undertook to
complete the Project within a period of 547 days or 18 months. Under the Contract, the Joint
Venture would supply manpower and materials, and SOB would refund to the former 25% of
the project cost in Iraqi Dinar and the 75% in US dollars at the exchange rate of 1 Dinar to
3.37777 US Dollars.16
The construction, which was supposed to start on 2 June 1981, commenced only on the last
week of August 1981. Because of this delay and the slow progress of the construction work
due to some setbacks and difficulties, the Project was not completed on 15 November 1982
as scheduled. But in October 1982, upon foreseeing the impossibility of meeting the deadline
and upon the request of Al Ahli Bank, the joint venture contractor worked for the renewal or
extension of the Performance Bond and Advance Payment Guarantee. Petitioner's Letters of
Guarantee Nos. 81-194-F (Performance Bond) and 81-195-F (Advance Payment Bond) with
expiry date of 25 November 1982 were then renewed or extended to 9 February 1983 and 9
March 1983, respectively.17 The surety bond was also extended for another period of one
year, from 12 May 1982 to 12 May 1983. 18 The Performance Bond was further extended
twelve times with validity of up to 8 December 1986, 19 while the Advance Payment
Guarantee was extended three times more up to 24 May 1984 when the latter was cancelled
after full refund or reimbursement by the joint venture contractor. 20 The surety bond was
likewise extended to 8 May 1987.21
As of March 1986, the status of the Project was 51% accomplished, meaning the structures
were already finished. The remaining 47% consisted in electro-mechanical works and the 2%,
sanitary works, which both required importation of equipment and materials. 22
On 26 October 1986, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full
payment of its performance bond counter-guarantee.
Upon receiving a copy of that telex message on 27 October 1986, respondent VPECI
requested Iraq Trade and Economic Development Minister Mohammad Fadhi Hussein to
recall the telex call on the performance guarantee for being a drastic action in contravention
of its mutual agreement with the latter that (1) the imposition of penalty would be held in
abeyance until the completion of the project; and (2) the time extension would be open,
depending on the developments on the negotiations for a foreign loan to finance the
completion of the project.23 It also wrote SOB protesting the call for lack of factual or legal
basis, since the failure to complete the Project was due to (1) the Iraqi government's lack of
foreign exchange with which to pay its (VPECI's) accomplishments and (2) SOB's
noncompliance for the past several years with the provision in the contract that 75% of the
billings would be paid in US dollars. 24 Subsequently, or on 19 November 1986, respondent
VPECI advised the petitioner not to pay yet Al Ahli Bank because efforts were being exerted
for the amicable settlement of the Project. 25
On 14 April 1987, the petitioner received another telex message from Al Ahli Bank stating
that it had already paid to Rafidain Bank the sum of US$876,564 under its letter of
guarantee, and demanding reimbursement by the petitioner of what it paid to the latter
bank plus interest thereon and related expenses. 26
…
Third, appellant was fully aware that SOB was in fact still obligated to the Joint
Venture and there was still an amount collectible from and still being retained
by the project owner, which amount can be set-off with the sum covered by the
performance guarantee.
…
Fourth, well-apprised of the above conditions obtaining at the Project site and
cognizant of the war situation at the time in Iraq, appellant, though earlier has
made representations with the SOB regarding a possible amicable termination
of the Project as suggested by VPECI, made a complete turn-around and insisted
on acting in favor of the unjustified "call" by the foreign banks. 35

The petitioner then came to this Court via Rule 45 of the Rules of Court claiming that the
Both petitioner Philguarantee and respondent VPECI sought the assistance of some Court of Appeals erred in affirming the trial court's ruling that
government agencies of the Philippines. On 10 August 1987, VPECI requested the Central
Bank to hold in abeyance the payment by the petitioner "to allow the diplomatic machinery
to take its course, for otherwise, the Philippine government , through the Philguarantee and I
the Central Bank, would become instruments of the Iraqi Government in consummating a
clear act of injustice and inequity committed against a Filipino contractor." 27
…RESPONDENTS ARE NOT LIABLE UNDER THE DEED OF UNDERTAKING THEY
EXECUTED IN FAVOR OF PETITIONER IN CONSIDERATION FOR THE ISSUANCE OF
On 27 August 1987, the Central Bank authorized the remittance for its account of the ITS COUNTER-GUARANTEE AND THAT PETITIONER CANNOT PASS ON TO
amount of US$876,564 (equivalent to ID271, 808/610) to Al Ahli Bank representing full RESPONDENTS WHAT IT HAD PAID UNDER THE SAID COUNTER-GUARANTEE.
payment of the performance counter-guarantee for VPECI's project in Iraq. 28
II
On 6 November 1987, Philguarantee informed VPECI that it would remit US$876,564 to Al
Ahli Bank, and reiterated the joint and solidary obligation of the respondents to reimburse
…PETITIONER CANNOT CLAIM SUBROGATION.
the petitioner for the advances made on its counter-guarantee.29

III
The petitioner thus paid the amount of US$876,564 to Al Ahli Bank of Kuwait on 21 January
1988.30 Then, on 6 May 1988, the petitioner paid to Al Ahli Bank of Kuwait US$59,129.83
representing interest and penalty charges demanded by the latter bank. 31 …IT IS INIQUITOUS AND UNJUST FOR PETITIONER TO HOLD RESPONDENTS
LIABLE UNDER THEIR DEED OF UNDERTAKING.36
On 19 June 1991, the petitioner sent to the respondents separate letters demanding full
payment of the amount of P47,872,373.98 plus accruing interest, penalty charges, and 10% The main issue in this case is whether the petitioner is entitled to reimbursement of what it
attorney's fees pursuant to their joint and solidary obligations under the deed of undertaking paid under Letter of Guarantee No. 81-194-F it issued to Al Ahli Bank of Kuwait based on the
and surety bond.32 When the respondents failed to pay, the petitioner filed on 9 July 1991 a deed of undertaking and surety bond from the respondents.
civil case for collection of a sum of money against the respondents before the RTC of Makati
City.
The petitioner asserts that since the guarantee it issued was absolute, unconditional, and
irrevocable the nature and extent of its liability are analogous to those of suretyship. Its
After due trial, the trial court ruled against Philguarantee and held that the latter had no liability accrued upon the failure of the respondents to finish the construction of the Institute
valid cause of action against the respondents. It opined that at the time the call was made on of Physical Therapy Buildings in Baghdad.
the guarantee which was executed for a specific period, the guarantee had already lapsed or
expired. There was no valid renewal or extension of the guarantee for failure of the
petitioner to secure respondents' express consent thereto. The trial court also found that the By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the
joint venture contractor incurred no delay in the execution of the Project. Considering the obligation of the principal debtor in case the latter should fail to do so. If a person binds
Project owner's violations of the contract which rendered impossible the joint venture himself solidarily with the principal debtor, the contract is called suretyship. 37
contractor's performance of its undertaking, no valid call on the guarantee could be made.
Furthermore, the trial court held that no valid notice was first made by the Project owner
Strictly speaking, guaranty and surety are nearly related, and many of the principles are
SOB to the joint venture contractor before the call on the guarantee. Accordingly, it
common to both. In both contracts, there is a promise to answer for the debt or default of
dismissed the complaint, as well as the counterclaims and cross-claim, and ordered the
another. However, in this jurisdiction, they may be distinguished thus:
petitioner to pay attorney's fees of P100,000 to respondents VPECI and Eusebio Spouses
and P100,000 to 3-Plex and the Santos Spouses, plus costs. 33
1. A surety is usually bound with his principal by the same instrument executed
at the same time and on the same consideration. On the other hand, the
In its 14 June 1999 Decision,34 the Court of Appeals affirmed the trial court's decision,
contract of guaranty is the guarantor's own separate undertaking often
ratiocinating as follows:
supported by a consideration separate from that supporting the contract of the
principal; the original contract of his principal is not his contract.
First, appellant cannot deny the fact that it was fully aware of the status of
project implementation as well as the problems besetting the contractors,
2. A surety assumes liability as a regular party to the undertaking; while the
between 1982 to 1985, having sent some of its people to Baghdad during that
liability of a guarantor is conditional depending on the failure of the primary
period. The successive renewals/extensions of the guarantees in fact, was
debtor to pay the obligation.
prompted by delays, not solely attributable to the contractors, and such
extension understandably allowed by the SOB (project owner) which had not
anyway complied with its contractual commitment to tender 75% of payment in 3. The obligation of a surety is primary, while that of a guarantor is secondary.
US Dollars, and which still retained overdue amounts collectible by VPECI.

4. A surety is an original promissor and debtor from the beginning, while a

… guarantor is charged on his own undertaking.

Second, appellant was very much aware of the violations committed by the SOB
of its contractual undertakings with VPECI, principally, the payment of foreign
currency (US$) for 75% of the total contract price, as well as of the
complications and injustice that will result from its payment of the full amount
of the performance guarantee, as evident in PHILGUARANTEE's letter dated 13
May 1987 ….
5. A surety is, ordinarily, held to know every default of his principal; whereas a
guarantor is not bound to take notice of the non-performance of his principal.
6. Usually, a surety will not be discharged either by the mere indulgence of the
creditor to the principal or by want of notice of the default of the principal, no
 matter how much he may be injured thereby. A guarantor is often discharged by
the mere indulgence of the creditor to the principal, and is usually not liable
unless notified of the default of the principal. 38
In determining petitioner's status, it is necessary to read Letter of Guarantee No. 81-194-F,
which provides in part as follows:
In consideration of your issuing the above performance guarantee/counter-
guarantee, we hereby unconditionally and irrevocably guarantee, under our Ref.
No. LG-81-194 F to pay you on your first written or telex demand Iraq Dinars
Two Hundred Seventy One Thousand Eight Hundred Eight and fils six hundred
ten (ID271,808/610) representing 100% of the performance bond required of
V.P. EUSEBIO for the construction of the Physical Therapy Institute, Phase II,
Baghdad, Iraq, plus interest and other incidental expenses related thereto.
In the event of default by V.P. EUSEBIO, we shall pay you 100% of the
obligation unpaid but in no case shall such amount exceed Iraq Dinars (ID)
271,808/610 plus interest and other incidental expenses…. (Emphasis
supplied)39
Guided by the abovementioned distinctions between a surety and a guaranty, as well as the
factual milieu of this case, we find that the Court of Appeals and the trial court were correct
in ruling that the petitioner is a guarantor and not a surety. That the guarantee issued by the
petitioner is unconditional and irrevocable does not make the petitioner a surety. As a
guaranty, it is still characterized by its subsidiary and conditional quality because it does not
take effect until the fulfillment of the condition, namely, that the principal obligor should fail
in his obligation at the time and in the form he bound himself. 40 In other words, an
unconditional guarantee is still subject to the condition that the principal debtor should
default in his obligation first before resort to the guarantor could be had. A conditional
guaranty, as opposed to an unconditional guaranty, is one which depends upon some
extraneous event, beyond the mere default of the principal, and generally upon notice of the
principal's default and reasonable diligence in exhausting proper remedies against the
principal.41
It appearing that Letter of Guarantee No. 81-194-F merely stated that in the event of default
by respondent VPECI the petitioner shall pay, the obligation assumed by the petitioner was
simply that of an unconditional guaranty, not conditional guaranty. But as earlier ruled the
fact that petitioner's guaranty is unconditional does not make it a surety. Besides, surety is
never presumed. A party should not be considered a surety where the contract itself
stipulates that he is acting only as a guarantor. It is only when the guarantor binds himself
solidarily with the principal debtor that the contract becomes one of suretyship.42
Having determined petitioner's liability as guarantor, the next question we have to grapple
with is whether the respondent contractor has defaulted in its obligations that would justify
resort to the guaranty. This is a mixed question of fact and law that is better addressed by
the lower courts, since this Court is not a trier of facts.
It is a fundamental and settled rule that the findings of fact of the trial court and the Court of
Appeals are binding or conclusive upon this Court unless they are not supported by the
evidence or unless strong and cogent reasons dictate otherwise. 43 The factual findings of the
Court of Appeals are normally not reviewable by us under Rule 45 of the Rules of Court
except when they are at variance with those of the trial court. 44 The trial court and the Court
of Appeals were in unison that the respondent contractor cannot be considered to have
defaulted in its obligations because the cause of the delay was not primarily attributable to
it.
A corollary issue is what law should be applied in determining whether the respondent
contractor has defaulted in the performance of its obligations under the service contract.
The question of whether there is a breach of an agreement, which
includes default or mora,45 pertains to the essential or intrinsic validity of a contract. 46
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.47 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. 48
It must be noted that the service contract between SOB and VPECI contains no express
choice of the law that would govern it. In the United States and Europe, the two rules that
now seem to have emerged as "kings of the hill" are (1) the parties may choose the
governing law; and (2) in the absence of such a choice, the applicable law is that of the State
that "has the most significant relationship to the transaction and the parties." 49 Another
authority proposed that all matters relating to the time, place, and manner of performance
and valid excuses for non-performance are determined by the law of the place of
performance or lex loci solutionis, which is useful because it is undoubtedly always
connected to the contract in a significant way. 50
In this case, the laws of Iraq bear substantial connection to the transaction, since one of the
parties is the Iraqi Government and the place of performance is in Iraq. Hence, the issue of
whether respondent VPECI defaulted in its obligations may be determined by the laws of
Iraq. However, since that foreign law was not properly pleaded or proved, the presumption
of identity or similarity, otherwise known as the processual presumption, comes into play.
Where foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that
foreign law is the same as ours.51
Our law, specifically Article 1169, last paragraph, of the Civil Code, provides: "In reciprocal
obligations, neither party incurs in delay if the other party does not comply or is not ready to
comply in a proper manner with what is incumbent upon him."
Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by
reason of a cause imputable to the former. 52 It is the non-fulfillment of an obligation with
respect to time.53
It is undisputed that only 51.7% of the total work had been accomplished. The 48.3%
unfinished portion consisted in the purchase and installation of electro-mechanical
equipment and materials, which were available from foreign suppliers, thus requiring US
Dollars for their importation. The monthly billings and payments made by SOB 54 reveal that
the agreement between the parties was a periodic payment by the Project owner to the
contractor depending on the percentage of accomplishment within the period. 55 The
payments were, in turn, to be used by the contractor to finance the subsequent phase of the
work. 56 However, as explained by VPECI in its letter to the Department of Foreign Affairs
(DFA), the payment by SOB purely in Dinars adversely affected the completion of the project;
thus:
4. Despite protests from the plaintiff, SOB continued paying the accomplishment
billings of the Contractor purely in Iraqi Dinars and which payment came only
after some delays.
5. SOB is fully aware of the following:
…
5.2 That Plaintiff is a foreign contractor in Iraq and as such, would need foreign
currency (US$), to finance the purchase of various equipment, materials,
supplies, tools and to pay for the cost of project management, supervision and
skilled labor not available in Iraq and therefore have to be imported and or
obtained from the Philippines and other sources outside Iraq.
5.3 That the Ministry of Labor and Employment of the Philippines requires the
remittance into the Philippines of 70% of the salaries of Filipino workers working
abroad in US Dollars;
…
5.5 That the Iraqi Dinar is not a freely convertible currency such that the same
cannot be used to purchase equipment, materials, supplies, etc. outside of Iraq;
5.6 That most of the materials specified by SOB in the CONTRACT are not
available in Iraq and therefore have to be imported;
5.7 That the government of Iraq prohibits the bringing of local currency (Iraqui
Dinars) out of Iraq and hence, imported materials, equipment, etc., cannot be
purchased or obtained using Iraqui Dinars as medium of acquisition.
…
8. Following the approved construction program of the CONTRACT, upon
completion of the civil works portion of the installation of equipment for the
building, should immediately follow, however, the CONTRACT specified that
these equipment which are to be installed and to form part of the PROJECT have
to be procured outside Iraq since these are not being locally manufactured.
Copy f the relevant portion of the Technical Specification is hereto attached as
Annex "C" and made an integral part hereof;
…
 10. Due to the lack of Foreign currency in Iraq for this purpose, and if only to
assist the Iraqi government in completing the PROJECT, the Contractor without
any obligation on its part to do so but with the knowledge and consent of SOB
and the Ministry of Housing & Construction of Iraq, offered to arrange on behalf
of SOB, a foreign currency loan, through the facilities of Circle International S.A.,
the Contractor's Sub-contractor and SACE MEDIO CREDITO which will act as the
guarantor for this foreign currency loan.
Arrangements were first made with Banco di Roma. Negotiation started in June
1985. SOB is informed of the developments of this negotiation, attached is a
copy of the draft of the loan Agreement between SOB as the Borrower and
Agent. The Several Banks, as Lender, and counter-guaranteed by Istituto
Centrale Per II Credito A Medio Termine (Mediocredito) Sezione Speciale Per
L'Assicurazione Del Credito All'Exportazione (Sace). Negotiations went on and
continued until it suddenly collapsed due to the reported default by Iraq in the
payment of its obligations with Italian government, copy of the news clipping
dated June 18, 1986 is hereto attached as Annex "D" to form an integral part
hereof;
15. On September 15, 1986, Contractor received information from Circle
International S.A. that because of the news report that Iraq defaulted in its
obligations with European banks, the approval by Banco di Roma of the loan to
SOB shall be deferred indefinitely, a copy of the letter of Circle International
together with the news clippings are hereto attached as Annexes "F" and "F-1",
respectively.57
As found by both the Court of Appeals and the trial court, the delay or the non-completion of
the Project was caused by factors not imputable to the respondent contractor. It was rather
due mainly to the persistent violations by SOB of the terms and conditions of the contract,
particularly its failure to pay 75% of the accomplished work in US Dollars. Indeed, where one
of the parties to a contract does not perform in a proper manner the prestation which he is
bound to perform under the contract, he is not entitled to demand the performance of the
other party. A party does not incur in delay if the other party fails to perform the obligation
incumbent upon him.
The petitioner, however, maintains that the payments by SOB of the monthly billings in
purely Iraqi Dinars did not render impossible the performance of the Project by VPECI. Such
posture is quite contrary to its previous representations. In his 26 March 1987 letter to the
Office of the Middle Eastern and African Affairs (OMEAA), DFA, Manila, petitioner's Executive
Vice-President Jesus M. Tañedo stated that while VPECI had taken every possible measure to
complete the Project, the war situation in Iraq, particularly the lack of foreign exchange, was
proving to be a great obstacle; thus:
VPECI has taken every possible measure for the completion of the project but
the war situation in Iraq particularly the lack of foreign exchange is proving to be
a great obstacle. Our performance counterguarantee was called last 26 October
1986 when the negotiations for a foreign currency loan with the Italian
government through Banco de Roma bogged down following news report that
Iraq has defaulted in its obligation with major European banks. Unless the
situation in Iraq is improved as to allay the bank's apprehension, there is no
assurance that the project will ever be completed. 58
In order that the debtor may be in default it is necessary that the following requisites be
present: (1) that the obligation be demandable and already liquidated; (2) that the debtor
delays performance; and (3) that the creditor requires the performance because it must
appear that the tolerance or benevolence of the creditor must have ended. 59
As stated earlier, SOB cannot yet demand complete performance from VPECI because it has
not yet itself performed its obligation in a proper manner, particularly the payment of the
75% of the cost of the Project in US Dollars. The VPECI cannot yet be said to have incurred in
delay. Even assuming that there was delay and that the delay was attributable to VPECI, still
the effects of that delay ceased upon the renunciation by the creditor, SOB, which could be
implied when the latter granted several extensions of time to the former. 60 Besides, no
demand has yet been made by SOB against the respondent contractor. Demand is generally
necessary even if a period has been fixed in the obligation. And default generally begins from
the moment the creditor demands judicially or extra-judicially the performance of the
obligation. Without such demand, the effects of default will not arise. 61
Moreover, the petitioner as a guarantor is entitled to the benefit of excussion, that is, it
cannot be compelled to pay the creditor SOB unless the property of the debtor VPECI has
been exhausted and all legal remedies against the said debtor have been resorted to by the
creditor.62 It could also set up compensation as regards what the creditor SOB may owe the
principal debtor VPECI.63 In this case, however, the petitioner has clearly waived these rights
and remedies by making the payment of an obligation that was yet to be shown to be
rightfully due the creditor and demandable of the principal debtor.
As found by the Court of Appeals, the petitioner fully knew that the joint venture contractor
had collectibles from SOB which could be set off with the amount covered by the
performance guarantee. In February 1987, the OMEAA transmitted to the petitioner a copy
of a telex dated 10 February 1987 of the Philippine Ambassador in Baghdad, Iraq, informing
it of the note verbale sent by the Iraqi Ministry of Foreign Affairs stating that the past due
obligations of the joint venture contractor from the petitioner would "be deducted from the
dues of the two contractors."64
Also, in the project situationer attached to the letter to the OMEAA dated 26 March 1987,
the petitioner raised as among the arguments to be presented in support of the cancellation
of the counter-guarantee the fact that the amount of ID281,414/066 retained by SOB from
the Project was more than enough to cover the counter-guarantee of ID271,808/610; thus:
6.1 Present the following arguments in cancelling the counterguarantee:
· The Iraqi Government does not have the foreign exchange to fulfill
its contractual obligations of paying 75% of progress billings in US
dollars.
…
· It could also be argued that the amount of ID281,414/066 retained
by SOB from the proposed project is more than the amount of the
outstanding counterguarantee.65
In a nutshell, since the petitioner was aware of the contractor's outstanding receivables from
SOB, it should have set up compensation as was proposed in its project situationer.
Moreover, the petitioner was very much aware of the predicament of the respondents. In
fact, in its 13 May 1987 letter to the OMEAA, DFA, Manila, it stated:
VPECI also maintains that the delay in the completion of the project was mainly
due to SOB's violation of contract terms and as such, call on the guarantee has
no basis.
While PHILGUARANTEE is prepared to honor its commitment under the
guarantee, PHILGUARANTEE does not want to be an instrument in any case of
inequity committed against a Filipino contractor. It is for this reason that we are
constrained to seek your assistance not only in ascertaining the veracity of Al
Ahli Bank's claim that it has paid Rafidain Bank but possibly averting such an
event. As any payment effected by the banks will complicate matters, we cannot
help underscore the urgency of VPECI's bid for government intervention for the
amicable termination of the contract and release of the performance
guarantee. 66
But surprisingly, though fully cognizant of SOB's violations of the service contract and VPECI's
outstanding receivables from SOB, as well as the situation obtaining in the Project site
compounded by the Iran-Iraq war, the petitioner opted to pay the second layer guarantor
not only the full amount of the performance bond counter-guarantee but also interests and
penalty charges.
This brings us to the next question: May the petitioner as a guarantor secure reimbursement
from the respondents for what it has paid under Letter of Guarantee No. 81-194-F?
As a rule, a guarantor who pays for a debtor should be indemnified by the latter 67 and would
be legally subrogated to the rights which the creditor has against the debtor. 68 However, a
person who makes payment without the knowledge or against the will of the debtor has the
right to recover only insofar as the payment has been beneficial to the debtor. 69 If the
obligation was subject to defenses on the part of the debtor, the same defenses which could
have been set up against the creditor can be set up against the paying guarantor. 70
From the findings of the Court of Appeals and the trial court, it is clear that the payment
made by the petitioner guarantor did not in any way benefit the principal debtor, given the
project status and the conditions obtaining at the Project site at that time. Moreover, the
respondent contractor was found to have valid defenses against SOB, which are fully
supported by evidence and which have been meritoriously set up against the paying
guarantor, the petitioner in this case. And even if the deed of undertaking and the surety
bond secured petitioner's guaranty, the petitioner is precluded from enforcing the same by
reason of the petitioner's undue payment on the guaranty. Rights under the deed of
undertaking and the surety bond do not arise because these contracts depend on the validity
of the enforcement of the guaranty.
The petitioner guarantor should have waited for the natural course of guaranty: the debtor
VPECI should have, in the first place, defaulted in its obligation and that the creditor SOB
should have first made a demand from the principal debtor. It is only when the debtor does
not or cannot pay, in whole or in part, that the guarantor should pay. 71 When the petitioner
guarantor in this case paid against the will of the debtor VPECI, the debtor VPECI may set up
against it defenses available against the creditor SOB at the time of payment. This is the hard
lesson that the petitioner must learn.
As the government arm in pursuing its objective of providing "the necessary support and
assistance in order to enable … [Filipino exporters and contractors to operate viably under
the prevailing economic and business conditions," 72 the petitioner should have exercised
prudence and caution under the circumstances. As aptly put by the Court of Appeals, it
would be the height of inequity to allow the petitioner to pass on its losses to the Filipino
contractor VPECI which had sternly warned against paying the Al Ahli Bank and constantly
apprised it of the developments in the Project implementation.
WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit, and the
decision of the Court of appeals in CA-G.R. CV No. 39302 is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Panganiban, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 145587 October 26, 2007
EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 Decision2 of
the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999
Decision3 and September 30, 1999 Resolution4 rendered by the National Labor Relations
Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search
International (ESI), EDI-Staffbuilders International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr
Est. (OAB) jointly and severally to pay Eleazar S. Gran (Gran) the amount of USD 16,150.00 as
unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino
Workers (OFWs).5 ESI is another recruitment agency which collaborated with EDI to process
the documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB,
in Riyadh, Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of
qualified applicants for the position of "Computer Specialist." 7 In a facsimile transmission
dated November 29, 1993, OAB informed EDI that, from the applicants' curricula
vitae submitted to it for evaluation, it selected Gran for the position of "Computer
Specialist." The faxed letter also stated that if Gran agrees to the terms and conditions of
employment contained in it, one of which was a monthly salary of SR (Saudi Riyal) 2,250.00
(USD 600.00), EDI may arrange for Gran's immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an employment contract9 that
granted him a monthly salary of USD 850.00 for a period of two years. Gran was then
deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary—his
employment contract stated USD 850.00; while his Philippine Overseas Employment Agency
(POEA) Information Sheet indicated USD 600.00 only. However, through the assistance of the
EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his employment was terminated
through OAB's July 9, 1994 letter,11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency
primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment
agency[,] vide OAB letter ref. F-5751-93, dated October 3, 1993.12
3. Insubordination or disobedience to Top Management Order and/or
instructions (non-submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his
final pay, and on the same day, he executed a Declaration 13 releasing OAB from any financial
obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against
ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation
with the NLRC, National Capital Region, Quezon City, which was docketed as POEA ADJ (L)
94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14 Labor Arbiter Manuel R. Caday, to whom Gran's case was
assigned, ruled that there was neither underpayment nor illegal dismissal.
The Labor Arbiter reasoned that there was no underpayment of salaries since according to
the POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary was
USD 600.00, and in his Confirmation of Appointment as Computer Specialist, his monthly
basic salary was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim
for unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute
EDI's allegations; namely, (1) that Gran did not submit a single activity report of his daily
activity as dictated by company policy; (2) that he was not qualified for the job as computer
specialist due to his insufficient knowledge in programming and lack of knowledge in ACAD
system; (3) that Gran refused to follow management's instruction for him to gain more
knowledge of the job to prove his worth as computer specialist; (4) that Gran's employment
contract had never been substituted; (5) and that Gran was paid a monthly salary of USD
850.00, and USD 350.00 monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due to
insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third Division. However, it
appears from the records that Gran failed to furnish EDI with a copy of his Appeal
Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor Code. This
scheme constituted misrepresentation through the conspiracy between EDI and ESI in
misleading Gran and even POEA of the actual terms and conditions of the OFW's
employment. In addition, it was found that Gran did not commit any act that constituted a
legal ground for dismissal. The alleged non-compliance with contractual stipulations relating
to Gran's salary and contract duration, and the absence of pre-qualification requirements
cannot be attributed to Gran but to EDI, which dealt directly with OAB. In addition, the
charge of insubordination was not substantiated, and Gran was not even afforded the
required notice and investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the
dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise Search
International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali Bin Bechr
Est. (OAB) are hereby ordered jointly and severally liable to pay the complainant
Eleazar Gran the Philippine peso equivalent at the time of actual payment of
 SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16,150.00)
representing his salaries for the unexpired portion of his contract.
SO ORDERED.16
Gran then filed a Motion for Execution of Judgment17 on March 29, 1999 with the NLRC and
petitioner receiving a copy of this motion on the same date. 18
To prevent the execution, petitioner filed an Opposition19 to Gran's motion arguing that the
Writ of Execution cannot issue because it was not notified of the appellate proceedings
before the NLRC and was not given a copy of the memorandum of appeal nor any
opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition,
petitioner filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision after
receiving a copy of the Decision on August 16, 1999. 20
The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration,
ratiocinating that the issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there was "no cogent
reason or patent or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA.
Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in giving
due course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition.
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of his
appeal memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a
jurisdictional defect which would justify the dismissal of his appeal." 22 The court also held
that petitioner EDI failed to prove that private respondent was terminated for a valid cause
and in accordance with due process; and that Gran's Declaration releasing OAB from any
monetary obligation had no force and effect. The appellate court ratiocinated that EDI had
the burden of proving Gran's incompetence; however, other than the termination letter, no
evidence was presented to show how and why Gran was considered to be incompetent. The
court held that since the law requires the recruitment agencies to subject OFWs to trade
tests before deployment, Gran must have been competent and qualified; otherwise, he
would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a
"Daily Activity Report," the appellate court found that EDI failed to show that the submission
of the "Daily Activity Report" was a part of Gran's duty or the company's policy. The court
also held that even if Gran was guilty of insubordination, he should have just been
suspended or reprimanded, but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide by
the twin notice requirement. The court found that Gran was terminated on the same day he
received the termination letter, without having been apprised of the bases of his dismissal or
afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding
benefits to which he was entitled. The appellate court found that the Declaration was in the
form of a quitclaim, and as such is frowned upon as contrary to public policy especially where
the monetary consideration given in the Declaration was very much less than what he was
legally entitled to—his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition to
set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL
MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL
DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE PROCESS AS
WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS. NLRC RULING,
AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION
OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal
Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the
Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum
constitutes a jurisdictional defect and a deprivation of due process that would warrant a
rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to
the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission,24 this Court set aside the order of the
NLRC which dismissed an appeal on the sole ground that the appellant did not furnish the
appellee a memorandum of appeal contrary to the requirements of Article 223 of the New
Labor Code and Section 9, Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an appeal
to the NLRC based on the ground that "there is no showing whatsoever that a copy of the
appeal was served by the appellant on the appellee"25 was annulled. The Court ratiocinated
as follows:
The failure to give a copy of the appeal to the adverse party was a mere formal
lapse, an excusable neglect. Time and again We have acted on petitions to
review decisions of the Court of Appeals even in the absence of proof of service
of a copy thereof to the Court of Appeals as required by Section 1 of Rule 45,
Rules of Court. We act on the petitions and simply require the petitioners to
comply with the rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW
v. National Labor Relations Commission,27 Pagdonsalan v. NLRC,28 and in Sunrise Manning
Agency, Inc. v. NLRC.29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party
with a copy of the appeal is treated only as a formal lapse, an excusable neglect, and hence,
not a jurisdictional defect. Accordingly, in such a situation, the appeal should not be
dismissed; however, it should not be given due course either. As enunciated in J.D.
Magpayo, the duty that is imposed on the NLRC, in such a case, is to require the appellant
to comply with the rule that the opposing party should be provided with a copy of the
appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable, the
abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum
constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the
Appeal Memorandum. The NLRC then ordered Gran to present proof of service. In
compliance with the order, Gran submitted a copy of Camp Crame Post Office's list of
mail/parcels sent on April 7, 1998.30 The post office's list shows that private respondent Gran
sent two pieces of mail on the same date: one addressed to a certain Dan O. de Guzman of
Legaspi Village, Makati; and the other appears to be addressed to Neil B. Garcia (or
Gran),31 of Ermita, Manila—both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the
Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of
service in proceedings before the NLRC:
Section 5.32 Proof and completeness of service.—The return is prima facie proof
of the facts indicated therein. Service by registered mail is complete upon
receipt by the addressee or his agent; but if the addressee fails to claim his mail
from the post office within five (5) days from the date of first notice of the
postmaster, service shall take effect after such time. (Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when the
addressee or his agent received the mail or after five (5) days from the date of first notice of
the postmaster. However, the NLRC Rules do not state what would constitute proper proof
of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:
Section 13. Proof of service.—Proof of personal service shall consist of a written
admission of the party served or the official return of the server, or the affidavit
of the party serving, containing a full statement of the date, place and manner
of service. If the service is by ordinary mail, proof thereof shall consist of an
affidavit of the person mailing of facts showing compliance with section 7 of this
Rule. If service is made by registered mail, proof shall be made by such
affidavit and registry receipt issued by the mailing office. The registry return
card shall be filed immediately upon its receipt by the sender, or in lieu
thereof the unclaimed letter together with the certified or sworn copy of the
notice given by the postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not
conclusive proof that he had served a copy of his appeal memorandum to EDI, nor is it
conclusive proof that EDI received its copy of the Appeal Memorandum. He should have
submitted an affidavit proving that he mailed the Appeal Memorandum together with the
registry receipt issued by the post office; afterwards, Gran should have immediately filed the
registry return card.
Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not have
simply accepted the post office's list of mail and parcels sent; but it should have required
Gran to properly furnish the opposing parties with copies of his Appeal Memorandum as
prescribed in J.D. Magpayo and the other cases. The NLRC should not have proceeded with
the adjudication of the case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy
of the Appeal Memorandum before rendering judgment reversing the dismissal of Gran's
complaint constitutes an evasion of the pertinent NLRC Rules and established jurisprudence.
Worse, this failure deprived EDI of procedural due process guaranteed by the Constitution
which can serve as basis for the nullification of proceedings in the appeal before the NLRC.
One can only surmise the shock and dismay that OAB, EDI, and ESI experienced when they
thought that the dismissal of Gran's complaint became final, only to receive a copy of Gran's
Motion for Execution of Judgment which also informed them that Gran had obtained a
favorable NLRC Decision. This is not level playing field and absolutely unfair and
discriminatory against the employer and the job recruiters. The rights of the employers to
procedural due process cannot be cavalierly disregarded for they too have rights assured
under the Constitution.
However, instead of annulling the dispositions of the NLRC and remanding the case for
further proceedings we will resolve the petition based on the records before us to avoid a
protracted litigation.33
The second and third issues have a common matter—whether there was just cause for
Gran's dismissal—hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable by reason of
incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the local
recruiter/agent, and the foreign employer/principal are governed by the employment
contract. A contract freely entered into is considered law between the parties; and hence,
should be respected. In formulating the contract, the parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public policy. 34
In the present case, the employment contract signed by Gran specifically states that Saudi
Labor Laws will govern matters not provided for in the contract (e.g. specific causes for
termination, termination procedures, etc.). Being the law intended by the parties (lex loci
intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to
the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of proving the foreign law. The foreign law is treated as a question of fact to
be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a
foreign law. He is presumed to know only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus,
the International Law doctrine of presumed-identity approach or processual
presumption comes into play.36 Where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the same as ours. 37 Thus, we apply Philippine
labor laws in determining the issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence
and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the
employer should prove that the dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code 38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the workers to contest
the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that
the termination was for a valid or authorized cause shall rest on the employer.
xxx
In many cases, it has been held that in termination disputes or illegal dismissal cases, the
employer has the burden of proving that the dismissal is for just and valid causes; and failure
to do so would necessarily mean that the dismissal was not justified and therefore
illegal.40 Taking into account the character of the charges and the penalty meted to an
employee, the employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal. 41 This is consistent with the principle
of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of
the Labor Code of the Philippines.42
In the instant case, petitioner claims that private respondent Gran was validly dismissed for
just cause, due to incompetence and insubordination or disobedience. To prove its
allegations, EDI submitted two letters as evidence. The first is the July 9, 1994 termination
letter,43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second
is an unsigned April 11, 1995 letter44 from OAB addressed to EDI and ESI, which outlined the
reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because he
had "insufficient knowledge in programming and zero knowledge of [the] ACAD
system."45 Petitioner also claims that Gran was justifiably dismissed due to insubordination
or disobedience because he continually failed to submit the required "Daily Activity
Reports."46 However, other than the abovementioned letters, no other evidence was
presented to show how and why Gran was considered incompetent, insubordinate, or
disobedient. Petitioner EDI had clearly failed to overcome the burden of proving that Gran
was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient
knowledge in programming and zero knowledge of the ACAD system" based only on the
above mentioned letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be
shown by weighing it against a standard, benchmark, or criterion. However, EDI failed to
establish any such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful
disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the following twin
elements must concur: (1) the employee's assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2) the
order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to
discharge.47
EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience.
As indicated by the second requirement provided for in Micro Sales Operation Network, in
order to justify willful disobedience, we must determine whether the order violated by the
employee is reasonable, lawful, made known to the employee, and pertains to the duties
which he had been engaged to discharge. In the case at bar, petitioner failed to show that
the order of the company which was violated—the submission of "Daily Activity Reports"—
was part of Gran's duties as a Computer Specialist. Before the Labor Arbiter, EDI should have
provided a copy of the company policy, Gran's job description, or any other document that
would show that the "Daily Activity Reports" were required for submission by the
employees, more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies and
not the foreign employer, they should have adduced additional evidence to convincingly
show that Gran's employment was validly and legally terminated. The burden devolves not
only upon the foreign-based employer but also on the employment or recruitment agency
for the latter is not only an agent of the former, but is also solidarily liable with the foreign
principal for any claims or liabilities arising from the dismissal of the worker. 48
Thus, petitioner failed to prove that Gran was justifiably dismissed due to incompetence,
insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision, is not
applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the petitioners
were subjected to trade tests required by law to be conducted by the recruiting agency to
insure employment of only technically qualified workers for the foreign principal." 50 The CA,
using the ruling in the said case, ruled that Gran must have passed the test; otherwise, he
would not have been hired. Therefore, EDI was at fault when it deployed Gran who was
allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was not
qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out
incompetent applicants from the pool of available workers. It is supposed to reveal
applicants with false educational backgrounds, and expose bogus qualifications. Since EDI
deployed Gran to Riyadh, it can be presumed that Gran had passed the required trade test
and that Gran is qualified for the job. Even if there was no objective trade test done by EDI, it
was still EDI's responsibility to subject Gran to a trade test; and its failure to do so only
weakened its position but should not in any way prejudice Gran. In any case, the issue is
rendered moot and academic because Gran's incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and
regulations shall govern the relationship between Gran and EDI. Thus, our laws and rules on
the requisites of due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was
allowed to work and improve his capabilities for five months prior to his termination. 51 EDI
also claims that the requirements of due process, as enunciated in Santos, Jr. v.
NLRC,52 and Malaya Shipping Services, Inc. v. NLRC,53 cited by the CA in its Decision, were
properly observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30
days prior to the effectivity of his separation.
Under the twin notice requirement, the employees must be given two (2) notices before
their employment could be terminated: (1) a first notice to apprise the employees of their
fault, and (2) a second notice to communicate to the employees that their employment is
being terminated. In between the first and second notice, the employees should be given a
hearing or opportunity to defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing Gran
fell short of the two notice requirement. While it furnished Gran the written notice informing
him of his dismissal, it failed to furnish Gran the written notice apprising him of the charges
against him, as prescribed by the Labor Code. 56 Consequently, he was denied the opportunity
to respond to said notice. In addition, OAB did not schedule a hearing or conference with
Gran to defend himself and adduce evidence in support of his defenses. Moreover, the July
9, 1994 termination letter was effective on the same day. This shows that OAB had already
condemned Gran to dismissal, even before Gran was furnished the termination letter. It
should also be pointed out that OAB failed to give Gran the chance to be heard and to
defend himself with the assistance of a representative in accordance with Article 277 of the
Labor Code. Clearly, there was no intention to provide Gran with due process. Summing up,
Gran was notified and his employment arbitrarily terminated on the same day, through the
same letter, and for unjustified grounds. Obviously, Gran was not afforded due process.
Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay nominal
damages as indemnity for violating the employee's right to statutory due process. Since OAB
was in breach of the due process requirements under the Labor Code and its regulations,
OAB, ESI, and EDI, jointly and solidarily, are liable to Gran in the amount of PhP 30,000.00 as
indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of employment,
in cases arising before the effectivity of R.A. No. 8042 58 (Migrant Workers and Overseas
Filipinos Act) on August 25, 1995, that when the contract is for a fixed term and the
employees are dismissed without just cause, they are entitled to the payment of their
salaries corresponding to the unexpired portion of their contract. 59 On the other hand, for
cases arising after the effectivity of R.A. No. 8042, when the termination of employment is
without just, valid or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent (12%)
per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term whichever is less. 60
In the present case, the employment contract provides that the employment contract shall
be valid for a period of two (2) years from the date the employee starts to work with the
employer.61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7,
1994;62 hence, his employment contract is until February 7, 1996. Since he was illegally
dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to
backwages corresponding to the unexpired portion of his contract, which was equivalent to
USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran. The
relevant portions of the Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL
SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I
RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY
FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.
 I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN
WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY
SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more
particularly those executed by employees. This requirement was clearly articulated by Chief
Justice Artemio V. Panganiban in Land and Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or contracts
in favor of workers should be strictly scrutinized to protect the weak and the
disadvantaged. The waivers should be carefully examined, in regard not only
to the words and terms used, but also the factual circumstances under which
they have been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v.
NLRC,64 the parameters for valid compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind. It is only where there is clear proof that the waiver
was wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he was doing, and
the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is
unreasonably low. As correctly pointed out by the court a quo, the payment of SR 2,948.00 is
even lower than his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is also very
much less than the USD 16,150.00 which is the amount Gran is legally entitled to get from
petitioner EDI as backwages.
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for Gran's
salary for the services he rendered to OAB as Computer Specialist. If the Declaration is a
quitclaim, then the consideration should be much much more than the monthly salary of SR
3,190.00 (USD 850.00)—although possibly less than the estimated Gran's salaries for the
remaining duration of his contract and other benefits as employee of OAB. A quitclaim will
understandably be lower than the sum total of the amounts and benefits that can possibly
be awarded to employees or to be earned for the remainder of the contract period since it is
a compromise where the employees will have to forfeit a certain portion of the amounts
they are claiming in exchange for the early payment of a compromise amount. The court may
however step in when such amount is unconscionably low or unreasonable although the
employee voluntarily agreed to it. In the case of the Declaration, the amount is unreasonably
small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show that
Gran did not voluntarily and freely execute the document. Consider the following chronology
of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to
pay his plane ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and
constrained to receive the amount of SR 2,948.00 even if it was against his will—since he was
told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but to sign the
Declaration as he needed the amount of SR 2,948.00 for the payment of his ticket. He could
have entertained some apprehensions as to the status of his stay or safety in Saudi Arabia if
he would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion which
should be construed against the employer, OAB. An adhesion contract is contrary to public
policy as it leaves the weaker party—the employee—in a "take-it-or-leave-it" situation.
Certainly, the employer is being unjust to the employee as there is no meaningful choice on
the part of the employee while the terms are unreasonably favorable to the employer. 66
Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under
Philippine laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement;
2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English, Filipino,
or in the dialect known to the employees—that by signing the waiver or quitclaim, they are
forfeiting or relinquishing their right to receive the benefits which are due them under the
law; and
4. A statement that the employees signed and executed the document voluntarily, and had
fully understood the contents of the document and that their consent was freely given
without any threat, violence, duress, intimidation, or undue influence exerted on their
person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known to
the employee. There should be two (2) witnesses to the execution of the quitclaim who must
also sign the quitclaim. The document should be subscribed and sworn to under oath
preferably before any administering official of the Department of Labor and Employment or
its regional office, the Bureau of Labor Relations, the NLRC or a labor attaché in a foreign
country. Such official shall assist the parties regarding the execution of the quitclaim and
waiver.67 This compromise settlement becomes final and binding under Article 227 of the
Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance of the
Bureau of Labor Relations or the regional office of the DOLE, shall be final and
binding upon the parties and the NLRC or any court "shall not assume
jurisdiction over issues involved therein except in case of non-compliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor
contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to
govern said contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP No. 56120
of the Court of Appeals affirming the January 15, 1999 Decision and September 30, 1999
Resolution of the NLRC
is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International, Inc.
shall pay the amount of PhP 30,000.00 to respondent Gran as nominal damages for non-
compliance with statutory due process.
No costs.
SO ORDERED.
THIRD DIVISION
G.R. Nos. 178382-83, September 23, 2015
CONTINENTAL MICRONESIA, INC., Petitioner, v. JOSEPH BASSO, Respondent.
DECISION
JARDELEZA, J.:
This is a Petition for Review on Certiorari1
under Rule 45 of the levised Rules of Court
assailing the Decision2 dated May 23, 2006 and Resolution3 dated June 19, 2007 of the Court
of Appeals in the consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281. These
assailed Decision and Resolution set aside the Decision 4 dated November 28, 2003 of the
National Labor Relations Commission (NLRC) declaring Joseph Basso's (Basso) dismissal
illegal, and ordering the payment of separation pay as alternative to reinstatement and full
backwages until the date of the Decision.
The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation organized and existing
under the laws of and domiciled in the United States of America (US). It is licensed to do
business in the Philippines.5 Basso, a US citizen, resided in the Philippines prior to his death.6
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden), Managing Director-Asia
of Continental Airlines, Inc. (Continental), offered Basso the position of General Manager of
the Philippine Branch of Continental. Basso accepted the offer.7
It was not until much later that Mr. Braden, who had since returned to the US, sent Basso the
employment contract8 dated February 1, 1991, which Mr. Braden had already signed. Basso
then signed the employment contract and returned it to Mr. Braden as instructed.
On November 7, 1992, CMI took over the Philippine operations of Continental, with Basso
retaining his position as General Manager. 9
On December 20, 1995, Basso received a letter from Mr. Ralph Schulz (Mr. Schulz), who was
then CMI's Vice President of Marketing and Sales, informing Basso that he has agreed to
work in CMI as a consultant on an "as needed basis" effective February 1, 1996 to July 31,
1996. The letter also informed Basso that: (1) he will not receive any monetary
compensation but will continue being covered by the insurance provided by CMI; (2) he will
enjoy travel privileges; and (3) CMI will advance Php1,140,000.00 for the payment of housing
lease for 12 months.10
On January 11, 1996, Basso wrote a counter-proposal11 to Mr. Schulz regarding his
employment status in CMI. On March 14, 1996, Basso wrote another letter addressed to Ms.
Marty Woodward (Ms. Woodward) of CMI's Human Resources Department inquiring about
the status of his employment.12 On the same day, Ms. Woodward responded that pursuant
to the employment contract dated February 1, 1991, Basso could be terminated at will upon
a thirty-day notice. This notice was allegedly the letter Basso received from Mr. Schulz on
December 20, 1995. Ms. Woodward also reminded Basso of the telephone conversation
between him, Mr. Schulz and Ms. Woodward on December 19, 1995, where they informed
him of the company's decision to relieve him as General Manager. Basso, instead, was
offered the position of consultant to CMI. Ms. Woodward also informed Basso that CMI
rejected his counter-proposal and, thus, terminated his employment effective January 31,
1996. CMI offered Basso a severance pay, in consideration of the Php1,140,000.00 housing
advance that CMI promised him.13
Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages against CMI
on December 19, 1996.14 Alleging the presence of foreign elements, CMI filed a Motion to
Dismiss15 dated February 10, 1997 on the ground of lack of jurisdiction over the person of
CMI and the subject matter of the controversy. In an Order 16 dated August 27, 1997, the
Labor Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci contractus, the
Labor Arbiter held that the terms and provisions of the employment contract show that the
parties did not intend to apply our Labor Code (Presidential Decree No. 442). The Labor
Arbiter also held that no employer-employee relationship existed between Basso and the
branch office of CMI in the Philippines, but between Basso and the foreign corporation itself.
On appeal, the NLRC remanded the case to the Labor Arbiter for the determination of certain
facts to settle the issue on jurisdiction. NLRC ruled that the issue on whether the principle
of lex loci contractus or lex loci celebrationis should apply has to be further threshed out. 17
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his Decision18 dated September 24, 1999 dismissed the
case for lack of merit and jurisdiction.
The Labor Arbiter agreed with CMI that the employment contract was xecuted in the US
"since the letter-offer was under the Texas letterhead and the acceptance of Complainant
was returned there."19 Thus, applying the doctrine of lex loci celebrationis, US laws apply.
Also, applying lex loci contractus, the Labor Arbiter ruled that the parties did not intend to
apply Philippine laws, thus:
Although the contract does not state what law shall apply, it is obvious that Philippine laws
were not written into it. More specifically, the Philippine law on taxes and the Labor Code
were not intended by the parties to apply, otherwise Par. 7 on the payment by Complainant
U.S. Federal and Home State income taxes, and Pars. 22/23 on termination by 30-day prior
notice, will not be there. The contract was prepared in contemplation of Texas or U.S. laws
where Par. 7 is required and Pars. 22/23 is allowed. 20
The Labor Arbiter also ruled that Basso was terminated for a valid cause based on the
allegations of CMI that Basso committed a series of acts that constitute breach of trust and
loss of confidence.21
The Labor Arbiter, however, found CMI to have voluntarily submitted to his office's
jurisdiction. CMI participated in the proceedings, submitted evidence on the merits of the
case, and sought affirmative relief through a motion to dismiss.22
NLRC's Ruling
On appeal, the NLRC Third Division promulgated its Decision23 dated November 28, 2003, the
decretal portion of which reads:
WHEREFORE, the decision dated 24 September 1999 is VACATED and SET ASIDE. Respondent
CMI is ordered to pay complainant the amount of US$5,416.00 for failure to comply with the
due notice requirement. The other claims are dismissed.
SO ORDERED.24
The NLRC did not agree with the pronouncement of the Labor Arbiter that his office has no
jurisdiction over the controversy. It ruled that the Labor Arbiter acquired jurisdiction over the
case when CMI voluntarily submitted to his office's jurisdiction by presenting evidence,
advancing arguments in support of the legality of its acts, and praying for reliefs on the
merits of the case.25cralawred
On the merits, the NLRC agreed with the Labor Arbiter that Basso was dismissed for just and
valid causes on the ground of breach of trust and loss of confidence. The NLRC ruled that
under the applicable rules on loss of trust and confidence of a managerial employee, such as
Basso, mere existence of a basis for believing that such employee has breached the trust of
his employer suffices. However, the NLRC found that CMI denied Basso the required due
process notice in his dismissal.26
Both CMI and Basso filed their respective Motions for Reconsideration dated January 15,
200427 and January 8, 2004.28 Both motions were dismissed in separate Resolutions dated
March 15, 200429 and February 27, 2004,30 respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with the Court of Appeals docketed
as CA-G.R. SP No. 83938.31 Basso imputed grave abuse of discretion on the part of the NLRC
in ruling that he was validiy dismissed. CMI filed its own Petition for Certiorari dated May 13,
2004 docketed as CA-G.R. SP No. 84281,32 alleging that the NLRC gravely abused its
discretion when it assumed jurisdiction over the person of CMI and the subject matter of the
case.
In its Resolution dated October 7, 2004, the Court of Appeals consolidated the two
cases33 and ordered the parties to file their respective Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed Decision 34 dated May 23, 2006, the
relevant dispositive portion of which reads:
WHEREFORE, the petition of Continental docketed as CA-G.R. SP No. 84281 is DENIED DUE
COURSE and DISMISSED.
On the other hand the petition of Basso docketed as CA-G.R. SP No. 83938 is GIVEN DUE
COURSE and GRANTED, and accordingly, the assailed Decision dated November 28, 2003 and
Resolution dated February 27, 2004 of the NLRC are SET ASIDE and VACATED. Instead
judgment is rendered hereby declaring the dismissal of Basso illegal and ordering Continental
to pay him separation pay equivalent to one (1) month pay for every year of service as an
alternative to reinstatement. Further, ordering Continental to pay Basso his full backwages
from the date of his said illegal dismissal until date of this decision. The claim for moral and
exemplary damages as well as attorney's fees are dismissed.35
The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the
subject matter of the case and over the parties. The Court of Appeals explained that
jurisdiction over the subject matter of the action is determined by the allegations of the
complaint and the law. Since the case filed by Basso is a termination dispute that is
"undoubtedly cognizable by the labor tribunals", the Labor Arbiter and the NLRC had
jurisdiction to rule on the merits of the case. On the issue of jurisdiction over he person of
the parties, who are foreigners, the Court of Appeals ruled that jurisdiction over the person
of Basso was acquired when he filed the complaint for illegal dismissal, while jurisdiction
over the person of CMI was acquired through coercive process of service of summons to its
agent in the Philippines. The Court of Appeals also agreed that the active participation of CMI
in the case rendered moot the issue on jurisdiction.
On the merits of the case, the Court of Appeals declared that CMI illegally dismissed Basso.
The Court of Appeals found that CMI's allegations of loss of trust and confidence were not
established. CMI "failed to prove its claim of the incidents which were its alleged bases for
loss of trust or confidence."36 While managerial employees can be dismissed for loss of trust
and confidence, there must be a basis for such loss, beyond mere whim or caprice.
After the parties filed their Motions for Reconsideration, 37 the Court of Appeals promulgated
Resolution38 dated June 19, 2007 denying CMI's motion, while partially granting Basso's as to
the computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING THE FACTUAL FINDINGS
OF THE NLRC INSTEAD OF LIMITING ITS INQUIRY INTO WHETHER OR NOT THE NLRC
COMMITTED GRAVE ABUSE OF DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE LABOR ARBITER
AND THE NLRC HAD JURISDICTION TO HEAR AND TRY THE ILLEGAL DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT BASSO WAS NOT
VALIDLY DISMISSED ON THE GROUND OF LOSS OF TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the Labor Arbiter and the NLRC in the
illegal dismissal case. The first and third issues will be discussed jointly.
The labor tribunals had jurisdiction over the parties and the subject matter of the case.
CMI maintains that there is a conflict-of-laws issue that must be settled to determine proper
jurisdiction over the parties and the subject matter of the case. It also alleges that the
existence of foreign elements calls or the application of US laws and the doctrines of lex loci
celebrationis (the law of the place of the ceremony), lex loci contractus (law of the place
where a contract is executed), and lex loci intentionis (the intention of the parties as to the
law that should govern their agreement). CMI also invokes the application of the rule
of forum non conveniens to determine the propriety of the assumption of jurisdiction by the
labor tribunals.
We agree with CMI that there is a conflict-of-laws issue that needs to be resolved first.
Where the facts establish the existence of foreign elements, he case presents a conflict-of-
laws issue.39 The foreign element in a case nay appear in different forms, such as in this case,
where one of the parties s an alien and the other is domiciled in another state.
In Hasegawa v. Kitamura,40 we stated that in the judicial resolution of conflict-of-laws
problems, three consecutive phases are involved: jurisdiction, choice of law, and recognition
and enforcement of judgments. In resolving the conflicts problem, courts should ask the
following questions:
1. "Under the law, do I have jurisdiction over the subject matter and the parties to this case?
assume jurisdiction if it chooses to do so, provided, that the following requisites are met: (1)
that the Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts;
and (3) that the Philippine Court has or is likely to have power to enforce its decision. 46 All
these requisites are present here.
Basso may conveniently resort to our labor tribunals as he and CMI lad physical presence in
the Philippines during the duration of the trial. CMI has a Philippine branch, while Basso,
before his death, was residing here. Thus, it could be reasonably expected that no
extraordinary measures were needed for the parties to make arrangements in advocating
their respective cases.
The labor tribunals can make an intelligent decision as to the law and facts. The incident
subject of this case (i.e. dismissal of Basso) happened in the Philippines, the surrounding
circumstances of which can be ascertained without having to leave the Philippines. The acts
that allegedly led to loss of trust and confidence and Basso's eventual dismissal were
committed in the Philippines. As to the law, we hold that Philippine law is the proper law of
he forum, as we shall discuss shortly. Also, the labor tribunals have the power to enforce
their judgments because they acquired jurisdiction over the persons of both parties.
Our labor tribunals being the convenient fora, the next question is what law should apply in
resolving this case.
The choice-of-law issue in a conflict-of-laws case seeks to answer the following important
questions: (1) What legal system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what extent should the chosen
legal system regulate the situation.47 These questions are entirely different from the
question of jurisdiction that only seeks to answer whether the courts of a state where the
case is initiated have jurisdiction to enter a judgment. 48 As such, the power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum law. 49
CMI insists that US law is the applicable choice-of-law under the principles of lex loci
celebrationis and lex loci contractus. It argues that the contract of employment originated
from and was returned to the US after Basso signed it, and hence, was perfected there. CMI
further claims that the references to US law in the employment contract show the parties'
intention to apply US law and not ours. These references are:

2. "If the answer is yes, is this a convenient forum to the parties, in light of the facts? a. Foreign station allowance of forty percent (40%) using the "U.S. State
Department Index, the base being Washington, D.C."
3. "If the answer is yes, what is the conflicts rule for this particular problem?
b. Tax equalization that made Basso responsible for "federal and any home state
4. "If the conflicts rule points to a foreign law, has said law been properly pleaded and income taxes."
proved by the one invoking it?

5. "If so, is the application or enforcement of the foreign law in the forum one of the basic c. Hardship allowance of fifteen percent (15%) of base pay based upon the "U.S.
exceptions to the application of foreign law? In short, is there any strong policy or vital Department of State Indexes of living costs abroad."
interest of the forum that is at stake in this case and which should preclude the application
of foreign law?41 d. The employment arrangement is "one at will, terminable by either party without
Jurisdiction is defined as the power and authority of the courts to hear, try and decide cases. any further liability on thirty days prior written notice."50
Jurisdiction over the subject matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not the plaintiff is entitled to
recover all or some of the claims or reliefs sought therein. 42 It cannot be acquired through a CMI asserts that the US law on labor relations particularly, the US Railway Labor Act
waiver or enlarged by the omission of the parties or conferred by the acquiescence of the sanctions termination-at-will provisions in an employment contract. Thus, CMI concludes
court.43 That the employment contract of Basso was replete with references to US laws, and that if such laws were applied, there would have been no illegal dismissal to speak of
that it originated from and was returned to the US, do not automatically preclude our labor because the termination-at-will provision in Basso's employment contract would have been
tribunals from exercising jurisdiction to hear and try this case. perfectly valid.

This case stemmed from an illegal dismissal complaint. The Labor Code, under Article 217, We disagree.
clearly vests original and exclusive jurisdiction to hear and decide cases involving termination
disputes to the Labor Arbiter. Hence, the Labor Arbiter and the NLRC have jurisdiction over In Saudi Arabian Airlines v. Court of Appeals,51 we emphasized that an essential element of
the subject matter of the case. 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)
As regards jurisdiction over the parties, we agree with the Court of Appeals that the Labor and a connecting fact or point of contact, such as the situs of the res, the place of
Arbiter acquired jurisdiction over the person of Basso, notwithstanding his citizenship, when celebration, the place of performance, or the place of wrongdoing. Pursuant to Saudi
he filed his complaint against CMI. On the other hand, jurisdiction over the person of CMI Arabian Airlines, we hold that the "test factors," "points of contact" or "connecting factors"
was acquired through the coercive process of service of summons. We note that CMI never in this case are the following:chanRoblesvirtualLawlibrary
denied that it was served with summons. CMI has, in fact, voluntarily appeared and
participated in the proceedings before the courts. Though a foreign corporation, CMI is (1) The nationality, domicile or residence of Basso;ChanRoblesVirtualawlibrary
licensed to do business in the Philippines and has a local business address here. The purpose
of the law in requiring that foreign corporations doing business in the country be licensed to (2) The seat of CMI;ChanRoblesVirtualawlibrary
do so, is to subject the foreign corporations to the jurisdiction of our courts. 44
(3) The place where the employment contract has been made, the locus
Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and the actus;ChanRoblesVirtualawlibrary
subject matter of this case, these tribunals may proceed to try the case even if the rules of
conflict-of-laws or the convenience of the parties point to a foreign forum, this being an (4) The place where the act is intended to come into effect, e.g., the place of performance of
exercise of sovereign prerogative of the country where the case is filed.45 contractual duties;ChanRoblesVirtualawlibrary

The next question is whether the local forum is the convenient forum in light of the facts of (5) The intention of the contracting parties as to the law that should govern their agreement,
the case. CMI contends that a Philippine court is an inconvenient forum. the lex loci intentionis; and

We disagree. (6) The place where judicial or administrative proceedings are instituted or done. 52

Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may Applying the foregoing in this case, we conclude that Philippine law the applicable law.
Basso, though a US citizen, was a resident here from he time he was hired by CMI until his
death during the pendency of the case. CMI, while a foreign corporation, has a license to do
business in the Philippines and maintains a branch here, where Basso was hired to work. The
contract of employment was negotiated in the Philippines. A purely consensual contract, it
was also perfected in the Philippines when Basso accepted the terms and conditions of his
employment as offered by CMI. The place of performance relative to Biasso's contractual
duties was in the Philippines. The alleged prohibited acts of Basso that warranted his
dismissal were committed in the Philippines.
Clearly, the Philippines is the state with the most significant relationship to the problem.
Thus, we hold that CMI and Basso intended Philippine law to govern, notwithstanding some
references made to US laws and the fact that this intention was not expressly stated in the
contract. We explained in Philippine Export and Foreign Loan Guarantee Corporation v. V. P.
Eusebio Construction, Inc.53 that the law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or domicile of the
parties.54 We cautioned, however, that while Philippine courts would do well to adopt the
first and most basic rule in most legal systems, namely, to allow the parties to select the law
applicable to their contract, the selection is subject to the limitation that it is not against the
law, morals, or public policy of the forum. 55
Similarly, in Bank of America, NT&SA v. American Realty Corporation,56 we ruled that a
foreign law, judgment or contract contrary to a sound and established public policy of the
forum shall not be applied. Thus:
Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important
function of law; hence, a law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 57
Termination-at-will is anathema to the public policies on labor protection espoused by our
laws and Constitution, which dictates that no worker shall be dismissed except for just and
authorized causes provided by law and after due process having been complied
with.58 Hence, the US Railway Labor Act, which sanctions termination-at-will, should not be
applied in this case.
Additionally, the rule is that there is no judicial notice of any foreign law. As any other fact, it
must be alleged and proved.59 If the foreign law is not properly pleaded or proved, the
presumption of identity or similarity of the foreign law to our own laws, otherwise known
as processual presumption, applies. Here, US law may have been properly pleaded but it was
not proved in the labor tribunals.
Having disposed of the issue on jurisdiction, we now rule on the first and third issues.
The Court of Appeals may review the factual findings of the NLRC in a Rule 65 petition.
CMI submits that the Court of Appeals overstepped the boundaries of the limited scope of
its certiorari jurisdiction when instead of ruling on the existence of grave abuse of discretion,
it proceeded to pass upon the legality and propriety of Basso's dismissal. Moreover, CMI
asserts that it was error on the part of the Court of Appeals to re-evaluate the evidence and
circumstances surrounding the dismissal of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions via a Petition
for Certiorari under Rule 65 of the Revised Rules of Court was settled in our decision in St.
Martin Funeral Home v. NLRC.60 The general rule is that certiorari does not lie to review
errors of judgment of the trial court, as well as that of a quasi-judicial tribunal.
In certiorari proceedings, judicial review does not go as far as to examine and assess the
evidence of the parties and to weigh their probative value. 61 However, this rule admits of
exceptions. In Globe Telecom, Inc. v. Florendo-Flores,62 we stated:
In the review of an NLRC decision through a special civil action for certiorari, resolution is
confined only to issues of jurisdiction and grave abuse of discretion on the part of the labor
tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the
Court is constrained to delve into factual matters where, as in the instant case, the findings
of the NLRC contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the records
of the case and re-examine the questioned findings. As a corollary, this Court is clothed with
ample authority to review matters, even if they are not assigned as errors in their appeal, if it
finds that their consideration is necessary to arrive at a just decision of the case. The same
principles are now necessarily adhered to and are applied by the Court of Appeals in its
expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see
no error on its part when it made anew a factual determination of the matters and on that
basis reversed the ruling of the NLRC.63 (Citations omitted.)
Thus, the Court of Appeals may grant the petition when the factual hidings complained of are
not supported by the evidence on record; when its necessary to prevent a substantial wrong
or to do substantial justice; when the findings of the NLRC contradict those of the Labor
Arbiter; and when necessary to arrive at a just decision of the case. 64 To make these findings,
the Court of Appeals necessarily has to look at the evidence and make its own factual
determination.65
Since the findings of the Labor Arbiter differ with that of the NLRC, we find that the Court of
Appeals correctly exercised its power to review the evidence and the records of the illegal
dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of CMI Managerial employees
enjoy security of tenure and the right of the management to dismiss must be balanced
against the managerial employee's right to security of tenure, which is not one of the
guaranties he gives up.66
In Apo Cement Corporation v. Baptisma,67 we ruled that for an employer to validly dismiss an
employee on the ground of loss of trust and confidence under Article 282 (c) of the Labor
Code, the employer must observe the following guidelines: 1) loss of confidence should not
be simulated; 2) it should not be used as subterfuge for causes which are improper, illegal or
unjustified; 3) it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and 4) it must be genuine, not a mere afterthought to justify earlier action taken in
bad faith. More importantly, it must be based on a willful breach of trust and founded on
clearly established facts.
We agree with the Court of Appeals that the dismissal of Basso was not founded on clearly
established facts and evidence sufficient to warrant dismissal from employment. While proof
beyond reasonable doubt is not required to establish loss of trust and confidence, substantial
evidence is required and on the employer rests the burden to establish it. 68 There must be
some basis for the loss of trust, or that the employer has reasonable ground to believe that
the employee is responsible for misconduct, which renders him unworthy of the trust and
confidence demanded by his position. 69
CMI alleges that Basso committed the following:chanRoblesvirtualLawlibrary
(1) Basso delegated too much responsibility to the General Sales Agent and relied heavily
on its judgments.70
(2) Basso excessively issued promotional tickets to his friends who had no direct business
with CMI.71
(3) The advertising agency that CMI contracted had to deal directly with Guam because
Basso was hardly available.72 Mr. Schulz discovered that Basso exceeded the advertising
budget by $76,000.00 in 1994 and by $20,000.00 in 1995. 73
(4) Basso spent more time and attention to his personal businesses and was reputed to own
nightclubs in the Philippines.74
(5) Basso used free tickets and advertising money to promote his personal business, 75 such
as a brochure that jointly advertised one of Basso's nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the above acts. CMI merely
submitted affidavits of its officers, without any other corroborating evidence. Basso, on the
other hand, had adequately explained his side. On the advertising agency and budget issues
raised by CMI, he explained that these were blatant lies as the advertising needs of CMI were
centralized in its Guam office and the Philippine office was not authorized to deal with CMI's
advertising agency, except on minor issues. 76 Basso further stated that under CMI's existing
policy, ninety percent (90%) of the advertising decisions were delegated to the advertising
firm of McCann-Ericsson in Japan and only ten percent (10%) were left to the Philippine
office.77 Basso also denied the allegations of owning nightclubs and promoting his personal
businesses and explained that it was illegal for foreigners in the Philippines to engage in
retail trade in the first place.
Apart from these accusations, CMI likewise presented the findings of the audit team headed
by Mr. Stephen D. Goepfert, showing that "for the period of 1995 and 1996, personal passes
for Continental and other airline employees were noted (sic) to be issued for which no
service charge was collected."78 The audit cited the trip pass log of a total of 10 months. The
trip log does not show, however, that Basso caused all the ticket issuances. More, half of the
trips in the log occurred from March to July of 1996, 79 a period beyond the tenure of Basso.
Basso was terminated effectively on January 31, 1996 as indicated in the letter of Ms.
Woodward.80
CMI also accused Basso of making "questionable overseas phone calls". Basso, however,
adequately explained in his Reply81 that the phone calls to Italy and Portland, USA were
made for the purpose of looking for a technical maintenance personnel with US Federal
Aviation Authority qualifications, which CMI needed at that time. The calls to the US were
also made in connection with his functions as General Manager, such as inquiries on his tax
returns filed in Nevada. Biasso also explained that the phone lines 82 were open direct lines
that all personnel were free to use to make direct long distance calls. 83
Finally, CMI alleged that Basso approved the disbursement of Php80,000.00 to cover the
transfer fee of the Manila Polo Club share from Mr. Kenneth Glover, the previous General
Manager, to him. CMI claimed that "nowhere in the said contract was it likewise indicated
that the Manila Polo Club share was part of the compensation package given by CMI to
Basso."84 CMI's claims are not credible. Basso explained that the Manila Polo Club share was
offered to him as a bonus to entice him to leave his then employer, United Airlines. A letter
from Mr. Paul J. Casey, former president of Continental, supports Basso. 85 In the letter, Mr.
Casey explained:
As a signing bonus, and a perk to attract Mr. Basso to join Continental Airlines, he was given
the Manila Polo Club share and authorized to have the share re-issued in his name. In
addition to giving Mr. Basso the Manila Polo Club share, Continental agreed to pay the dues
for a period of three years and this was embodied in his contract with Continental. This was
all clone with my knowledge and approval. 86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual dues for membership in a club in SO ORDERED.chanroblesvirtuallawlibrary
Manila that your immediate supervisor and I agree is of at least that value to Continental
through you in your role as our General Manager for the Philippines. 87 Velasco, Jr., (Chairperson), Peralta, Villarama, Jr., and Perez,*JJ., concur.
Taken together, the above pieces of evidence suggest that the Manila Polo Club share was
part of Basso's compensation package and thus he validly used company funds to pay for the
transfer fees. If doubts exist between the evidence presented by the employer and the FIRST DIVISION
employee, the scales of justice must be tilted in favor of the latter. 88
[G.R. No. 72494. August 11, 1989.]
Finally, CMI violated procedural due process in terminating Basso. In King of Kings Transport,
Inc. v. Mamac89 we detailed the procedural due process steps in termination of employment: HONGKONG AND SHANGHAI BANKING CORPORATION, Petitioner, v. JACK ROBERT
To clarify, the following should be considered in terminating the services of SHERMAN, DEODATO RELOJ AND THE INTERMEDIATE APPELLATE COURT, Respondents.
employees:chanRoblesvirtualLawlibrary
Quiason, Makalintal, Barot & Torres for Petitioner.
(1) The first written notice to be served on the employees should contain the specific causes
or grounds for termination against them, and a directive that the employees are given the Alejandro, Aranzaso & Associates for Private Respondents.
opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This SYLLABUS
should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
1. REMEDIAL LAW; ACTIONS; VENUE; STIPULATIONS AS TO VENUE BETWEEN PARTIES DOES
against the complaint. Moreover, in order to enable the employees to intelligently prepare
NOT PRECLUDE FILING OF SUITS IN THE RESIDENCE OF PLAINTIFF OR DEFENDANT. — A
their explanation and defenses, the notice should contain a detailed narration of the facts
stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or
and circumstances that will serve as basis for the charge against the employees. A general
defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or
description of the charge will not suffice. Lastly, the notice should specifically mention which
restrictive word a in the agreement which would indicate that the place named is the only
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
venue agreed upon by the parties. (Polytrade Corporation v. Blanco, G.R. No. L-27033,
charged against the employees.
December 31, 1969 and other cases cited)
(2) After serving the first notice, the employers should schedule and conduct
2. INTERNATIONAL LAW; JURISDICTION, DEFINED. — In International Law, jurisdiction is
a hearing or conference wherein the employees will be given the opportunity to: (1) explain
often defined as the right of a State to exercise authority over persons and things within its
and clarify their defenses to the charge against them; (2) present evidence in support of their
boundaries subject to certain exceptions.
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
3. ID.; SOVEREIGNTY; CONCEPT, CONSTRUED. — A State does not assume jurisdiction over
personally, with the assistance of a representative or counsel of their choice. Moreover, this
traveling sovereigns, ambassadors and diplomatic representatives of other States, and
conference or hearing could be used by the parties as an opportunity to come to an amicable
foreign military units stationed in or marching through State territory with the permission of
settlement.
the latter’s authorities. This authority, which finds its source in the concept of sovereignty, is
exclusive within and throughout the domain of the State. A State is competent to take hold
(3) After determining that termination of employment is justified, the employers shall serve
of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all
the employees a written notice of termination indicating that: (1) all circumstances involving
kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment. (Emphasis in original.)
4. ID.; JURISDICTION; PRINCIPLE OF FORUM NON CONVENIENS; APPLICATION OF PRINCIPLE
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19, 1995 and March 14,
ADDRESSED TO THE SOUND DISCRETION OF THE COURT. — Whether a suit should be
1996, respectively, are not one of the valid twin notices. Neither identified the alleged acts
entertained or dismissed on the basis of the principle of forum non conveniens depends
that CMI now claims as bases for Basso's termination. Ms. Woodward's letter even stressed
largely upon the facts of the particular case and is addressed to the, sound discretion of the
that the original plan was to remove Basso as General Manager but with an offer to make
trial court (J. Salonga, Private International Law, 1981, p. 49).
him consultant. It was inconsistent of CMI to declare Basso as unworthy of its trust and
confidence and, in the same breath, offer him the position of consultant. As the Court of
5. REMEDIAL LAW; ACTIONS; APPEAL, A DEFENDANT CANNOT PLEAD ANY DEFENSE NOT
Appeals pointed out:
INTERPOSED IN THE COURT BELOW. — Lastly, private respondents allege that neither the
But mark well that Basso was clearly notified that the sole ground for his dismissal was the
petitioner based at Hongkong nor its Philippine branch is involved in the transaction sued
exercise of the termination at will clause in the employment contract. The alleged loss of
upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch
trust and confidence claimed by Continental appears to be a mere afterthought belatedly
as well-known is the rule that a defendant cannot plead any defense that has not been
trotted out to save the day.90
interposed in the court below.

Basso is entitled to separation pay and full backwages.

Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall DECISION
be entitled to reinstatement without loss of eniority rights and other privileges, and to his
full backwages, inclusive of allowances and to his other benefits or their monetary
equivalent omputed from the time his compensation was withheld up to the time of actual MEDIALDEA, J.:
reinstatement.

Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) This is a petition for review on certiorari of the decision of the Intermediate Appellate Court
month salary for every year of service should be awarded as an alternative. The payment of (now Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial
separation pay is in addition to payment of backwages. 91 In the case of Basso, reinstatement Court dated February 28, 1985 denying the Motion to Dismiss filed by private respondents
is no longer possible since he has already passed away. Thus, Basso's separation pay with full Jack Robert Sherman and Deodato Reloj.chanrobles virtualawlibrary
backwages shall be paid to his heirs. chanrobles.com:chanrobles.com.ph

As to the computation of backwages, we agree with CMI that Basso was entitled to
backwages only up to the time he reached 65 years old, the compulsory retirement age
under the law.92 This is our consistent ruling.93 When Basso was illegally dismissed on January
31, 1996, he was already 58 years old.94 He turned 65 years old on October 2, 2002. Since
backwages are granted on grounds of equity for earnings lost by an employee due to his
illegal dismissal,95 Basso was entitled to backwages only for the period he could have worked
had he not been illegally dismissed, i.e. from January 31, 1996 to October 2, 2002.
WHEREFORE, premises considered, the Decision of the Court of Appeals dated May 23, 2006
and Resolution dated June 19, 2007 in the consolidated cases CA-G.R. SP No. 83938 and CA-
G.R. SP No. 84281 are AFFIRMED, with MODIFICATION as to the award of backwages.
Petitioner Continental Micronesia, Inc. is hereby ordered to pay Respondent Joseph Basso's
heirs: 1) separation pay equivalent to one (1) month pay for every year of service, and 2) full
backwages from January 31, 1996, the date of his illegal dismissal, to October 2, 2002, the
date of his compulsory retirement age.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner
Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK)
against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case
No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred
to as COMPANY), a company incorporated in Singapore applied with, and was granted by,
the’ Singapore branch of petitioner BANK an overdraft facility in the maximum amount of
Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollar
375,000.00) with interest at 3% over petitioner BANK’s prime rate, payable monthly, on
amounts due under said overdraft facility; as a security for the repayment by the COMPANY
of sum advanced by petitioner BANK to it through the aforesaid overdraft facility, on October
7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were
directors of the COMPANY at such time, executed a Joint and Several Guarantee (p. 53,
Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay,
jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under
the a forestated overdraft facility. was granted by the Singapore Branch of Hongkong and Shanghai Banking Corporation. The
Joint and Several Guarantee was also concluded in Singapore. The loan was in Singaporean
The Joint and Several Guarantee provides, inter alia, that:jgc:chanrobles.com.ph dollars and the repayment thereof also is the same currency. The transaction, to say the
least, took place in Singaporean setting in which the law of that country is the measure by
"This guarantee and all rights, obligations and liabilities arising hereunder shall be construed which that relationship of the panties will be governed.
and determined under and may be enforced in accordance with the laws of the Republic of
Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction overall
x x x
disputes arising under this guarantee . . ." (p. 33-A, Rollo).

The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the "Contrary to the position taken by respondents, the guarantee agreement commands that
obligation from private respondents, conformably with the provisions of the Joint and
any litigation will be before the courts of Singapore and that the rights and obligations of the
Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK
parties shall be constructed and determined in accordance with the laws of the Republic of
filed the abovementioned complaint.
Singapore. A closer examination of paragraph 14 of the Guarantee Agreement upon which
the motion to dismiss is based, employs in clear and unmistakable (sic) terms the word ‘shall’
On December 14, 1984, private respondents filed a motion to dismiss (pp. 54-56, Rollo)
which under statutory construction is mandatory.
which was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial
court issued an order dated February 28, 1985 (pp. 6465, Rollo), which read as
"Thus, it was ruled that:chanrob1es virtual 1aw library
follows:jgc:chanrobles.com.ph
‘. . . the word ‘shall’ is imperative, operating to impose a duty which may be enforced’ (Dizon
"In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the
v. Encarnacion, 9 SCRA 714).
complaint on two grounds, namely:jgc:chanrobles.com.ph
"There is nothing more imperative and restrictive than what the agreement categorically
"1. That the court has no jurisdiction over the subject matter of the complaint; and commands that ‘all rights, obligations, and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the Republic of
"2. That the court has no jurisdiction over the persons of the defendants.
Singapore."cralaw virtua1aw library
"In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the
While it is true that "the transaction took place in Singaporean setting" and that the Joint
motion. and Several Guarantee contains a choice-of-forum clause, the very essence of due process
dictates that the stipulation that" [t]his guarantee and all rights, obligations and liabilities
"On the first ground, defendants claim that by virtue of the provision in the Guarantee (the
arising hereunder shall be construed and determined under and may be enforced in
actionable document) which reads — accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in
Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally
"This guarantee and all rights, obligations and liabilities arising hereunder shall be construed construed. One basic principle underlies all rules of jurisdiction in International Law: a State
and determined under and may be enforced in accordance with the laws of the Republic of
does not have jurisdiction in the absence of some reasonable basis for exercising it, whether
Singapore. We hereby agree that the courts in Singapore shall have jurisdiction over all the proceedings are in rem, quasi in rem or in personam. To be reasonable, the jurisdiction
disputes arising under this guarantee,’
must be based on some minimum contacts that will not offend traditional notions of fair play
and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-
the Court has no jurisdiction over the subject matter of the case. The Court finds and out by petitioner BANK at the outset, the instant case presents a very odd situation. In the
concludes otherwise. There is nothing in the Guarantee which says that the courts of ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with
Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations.
more reason as a defendant. However, in this case, private respondents are Philippine
Also, it has long been established in law and jurisprudence that jurisdiction of courts is fixed residents (a fact which was not disputed by them) who would rather face a complaint against
by law; it cannot be conferred by the will, submission or consent of the parties. them before a foreign court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case. Private respondents’
"On the second ground, it is asserted that defendant Robert Sherman is not a citizen nor a
stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay,
resident of the Philippines. This argument holds no water. Jurisdiction over the persons of
the payment of a just obligation.chanrobles law library
defendants is acquired by service of summons and copy of the complaint on them. There has
been a valid service of summons on both defendants and in fact the same is admitted when The defense of private respondents that the complaint should have been filed in Singapore is
said defendants filed a ‘Motion for Extension of Time to File Responsive Pleading’ on
based merely on technicality. They did not even claim, much less prove, that the filing of the
December 5, 1984.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
action here will cause them any unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK filed the action here just to harass private
"WHEREFORE, the Motion to Dismiss is hereby DENIED. respondents.
"SO ORDERED."cralaw virtua1aw library
In the case of Polytrade Corporation v. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA
187, it was ruled:jgc:chanrobles.com.ph
A motion for reconsideration of the said order was filed by private respondents which was,
however, denied (p. 66, Rollo). Private respondents then filed before the respondent
". . . An accurate reading, however, of the stipulation, "The parties agree to sue and be sued
Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with in the Courts of Manila,’ does not preclude the filing of suits in the residence of plaintiff or
preliminary injunction and/or prayer for a restraining order (pp. 39-48, Rollo). On August 2,
defendant. The plain meaning is that the parties merely consented to be sued in Manila.
1985, the respondent Court rendered a decision (p. 37, Rollo), the dispositive portion of
Qualifying or restrictive words which would indicate that Manila and Manila alone is the
which reads:jgc:chanrobles.com.ph
venue are totally absent therefrom. We cannot read into that clause that plaintiff and
defendant bound themselves to file suits with respect to the last two transactions in
"WHEREFORE, the petition for prohibition with preliminary injunction is hereby GRANTED. question only or exclusively in Manila. For, that agreement did not change or transfer venue.
The respondent Court is enjoined a taking from further cognizance of the case and to dismiss
It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to
the same for filing with the proper court of Singapore which is the proper forum. No costs.
which they may resort. They did not waive their right to pursue remedy in the courts
specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur."cralaw
SO ORDERED."cralaw virtua1aw library
virtua1aw library
The motion for reconsideration was denied (p. 38, Rollo),hence, the present petition.
This ruling was reiterated in the case of Neville Y. Lamis Ents., Et. Al. v. Lagamon, etc., Et Al.,
G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was" (i)n case of
The main issue is whether or not Philippine courts have jurisdiction over the suit.
litigation, jurisdiction shall be vested in the Court of Davao City." We
held:jgc:chanrobles.com.ph
The controversy stems from the interpretation of a provision in the Joint and Several
Guarantee, to wit:jgc:chanrobles.com.ph "Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a
stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or
"(14) This guarantee and all rights, obligations and liabilities arising hereunder shall be
defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or
construed and determined under and may be enforced in accordance with the laws of the restrictive word a in the agreement which would indicate that the place named is the only
Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction
venue agreed upon by the parties."cralaw virtua1aw library
over all disputes arising under this guarantee . . ." (p. 53-A, Rollo)
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the
In rendering the decision in favor of private respondents, the Court of Appeals made the
courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in
following observations (pp. 35-36, Rollo):jgc:chanrobles.com.ph question operate to divest Philippine courts of jurisdiction, In International Law, jurisdiction
is often defined as the right of a State to exercise authority over persons and things within its
"There are significant aspects of the case to which our attention is invited. The loan was
boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over
obtained by Eastern Book Service PTE, Ltd., a company, incorporated in Singapore. The loan
traveling sovereigns, ambassadors and diplomatic representatives of other States, and
foreign military units stationed in or marching through State territory with the permission of
the latter’s authorities. This authority, which finds its source in the concept of sovereignty, is
exclusive within and throughout the domain of the State. A State is competent to take hold
of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all
kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).
As regards the issue on improper venue, petitioner BANK avers that the objection to
improper venue has been waived. However, We agree with the ruling of the respondent
Court that:jgc:chanrobles.com.ph
"While in the main, the motion to dismiss fails to categorically use with exactitude the words
‘improper venue’ it can be perceived from the general thrust and context of the motion that
what is meant is improper venue. The use of the word ‘jurisdiction’ was merely an attempt
to copy-cat the same word employed in the guarantee agreement but conveys the concept
of `venue.’ Brushing aside all technicalities, it would appear that jurisdiction was used loosely
as to be synonymous with venue. It is in this spirit that this Court must view the motion to
dismiss. . . ." (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was properly
laid for the same reasons discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):jgc:chanrobles.com.ph
". . .In a convict problem, a court will simply refuse to entertain the case if it is not authorized
by law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain
the case by applying the principle of forum non conveniens. . . ."cralaw virtua1aw library
However, whether a suit should be entertained or dismissed on the basis of the principle of
forum non conveniens depends largely upon the facts of the particular case and is addressed
to the, sound discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49).
Thus, the respondent Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of
adhesion and that consequently, it cannot be permitted to take a stand contrary to the
stipulations of the contract, substantial bases exist for petitioner BANK’s choice of forum, as
discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its
Philippine branch is involved in the transaction sued upon. This is a vain attempt on their
part to further thwart the proceedings below inasmuch as well-known is the rule that a
defendant cannot plead any defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of
the Regional Trial Court is REINSTATED, with costs against private respondents. This decision
is immediately executory.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.
FIRST DIVISION
G.R. No. 153031 December 14, 2006
PCL SHIPPING PHILIPPINES, INC. and U-MING MARINE TRANSPORT
CORPORATION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and STEVE RUSEL, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the Decision1 of the Court of Appeals (CA) dated December 18, 2001 in CA-G.R. SP
No. 59976, which affirmed the Decision of the National Labor Relations Commission (NLRC)
dated March 22, 2000 in NLRC NCR CA No. 018120-99; and the Resolution of the CA dated
April 10, 2002, denying petitioners' motion for reconsideration. 2
The facts of the case, as found by the CA, are as follows:
In April 1996, Rusel was employed as GP/AB seaman by manning agency, PCL
Shipping Philippines, Inc. (PCL Shipping) for and in behalf of its foreign principal,
U-Ming Marine Transport Corporation (U-Ming Marine). Rusel thereby joined
the vessel MV Cemtex General (MV Cemtex) for the contract period of twelve
(12) months with a basic monthly salary of US$400.00, living allowance of
US$140.00, fixed overtime rate of US$120.00 per month, vacation leave with
pay of US$40.00 per month and special allowance of US$175.00.
On July 16, 1996, while Rusel was cleaning the vessel's kitchen, he slipped, and
as a consequence thereof, he suffered a broken and/or sprained ankle on his left
foot. A request for medical examination was flatly denied by the captain of the
vessel. On August 13, 1996, feeling an unbearable pain in his ankle, Rusel
jumped off the vessel using a life jacket and swam to shore. He was brought to a
hospital where he was confined for eight (8) days.
On August 22, 1996, a vessel's agent fetched Rusel from the hospital and was
required to board a plane bound for the Philippines.
On September 26, 1996, Rusel filed a complaint for illegal dismissal, non-
payment of wages, overtime pay, claim for medical benefits, sick leave pay and
damages against PCL Shipping and U-Ming Marine before the arbitration branch
of the NLRC. In their answer, the latter alleged that Rusel deserted his
employment by jumping off the vessel.
On July 21, 1998, the labor arbiter rendered his decision, the dispositive portion
of which reads as follows:
Wherefore, above premises duly considered we find the
respondent liable for unjust repatriation of the complainant.
Accordingly, the following award is hereby adjudged against the
respondent:
1. The amount of $2,625.00 or its peso equivalent at the time of
payment representing three (3) months salary of the complainant
due to his illegal dismissal.
2. The amount of $1,600.00 or its peso equivalent, representing sick
wage benefits.
3. The amount of $550.00 or its peso equivalent, representing living
allowance, overtime pay and special allowance for two (2) months.
4. The amount of $641.66 or its peso equivalent, representing
unpaid wages from August 11 to 22, 1996.
5. Attorney's fees equivalent to 10% of the total monetary award.
The rest of the claims are dismissed for lack of merit.
SO ORDERED.3
Aggrieved by the Decision of the Labor Arbiter, herein petitioners appealed to the NLRC. In
its Decision dated March 22, 2000, the NLRC affirmed the findings of the Labor Arbiter but
modified the appealed Decision, disposing as follows:
WHEREFORE, premises considered, the assailed decision is as it is hereby
ordered MODIFIED in that the amount representing three months salary of the
complainant due to his illegal dismissal is reduced to US$1,620.00. Further the
award of sick wage benefit is deleted.
All other dispositions are AFFIRMED.
SO ORDERED.4
Petitioners filed a Motion for Reconsideration but the NLRC denied the same in its Decision
of May 3, 2000.5
Petitioners filed a petition for certiorari with the CA.6 In its Decision dated December 18,
2001, the CA dismissed the petition and affirmed the NLRC Decision. 7
Petitioners filed a Motion for Reconsideration but it was denied by the CA in its Resolution
dated April 10, 2002.8
Hence, the instant petition with the following assignment of errors:
I. The Court of Appeals erred in ruling that private respondent was illegally
dismissed from employment.
xxxx
II. Likewise, the Court of Appeals erred in not upholding petitioners' right to pre-
terminate private respondent's employment.
xxxx
III. The private respondent is not entitled to other money claims, particularly as
to the award of attorney's fees.9
As to their first assigned error, petitioners contend that the CA erred in affirming the findings
of the NLRC that Rusel's act of jumping ship does not establish any intent on his part to
abandon his job and never return. Petitioners argue that Rusel's very act of jumping from the
vessel and swimming to shore is evidence of highest degree that he has no intention of
returning to his job. Petitioners further contend that if Rusel was indeed suffering from
unbearable and unmitigated pain, it is unlikely that he is able to swim two (2) nautical miles,
which is the distance between their ship and the shore, considering that he needed to use
his limbs in swimming. Petitioners further assert that it is error on the part of the CA to
disregard the entries contained in the logbook and in the Marine Note Protest evidencing
Rusels' offense of desertion because while these pieces of evidence were belatedly
presented, the settled rule is that additional evidence may be admitted on appeal in labor
cases. Petitioners also contend that Rusel's act of desertion is a grave and serious offense
and considering the nature and situs of employment as well as the nationality of the
employer, the twin requirements of notice and hearing before an employee can be validly
terminated may be dispensed with.
As to their second assigned error, petitioners contend that assuming, for the sake of
argument, that Rusel is not guilty of desertion, they invoked the alternative defense that the
termination of his employment was validly made pursuant to petitioners' right to exercise
their prerogative to pre-terminate such employment in accordance with Section 19(C) of the
Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board
Ocean-Going Vessels, which provision was incorporated in Rusel's Contract of Employment
with petitioners. Petitioners assert that despite the fact that this issue was raised before the
CA, the appellate court failed to resolve the same.
Anent the last assigned error, petitioners argue that it is error on the part of the CA to affirm
the award of living allowance, overtime pay, vacation pay and special allowance for two
months because Rusel failed to submit substantial evidence to prove that he is entitled to
these awards. Petitioners further argue that these money claims, particularly the claim for
living allowance, should not be granted because they partake of the nature of earned
benefits for services rendered by a seafarer. Petitioners also contend that the balance of
Rusel's wages from August 11-22, 1996 should be applied for the payment of the costs of his
repatriation, considering that under Section 19(E) of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels, when a
seafarer is discharged for any just cause, the employer shall have the right to recover the
costs of his replacement and repatriation from the seafarer's wages and other earnings.
Lastly, petitioners argue that the award of attorney's fees should be deleted because there is
nothing in the decision of the Labor Arbiter or the NLRC which states the reason why
attorney's fees are being awarded.
In his Comment, private respondent contends that petitioners are raising issues of fact which
have already been resolved by the Labor Arbiter, NLRC and the CA. Private respondent
argues that, aside from the fact that the issues raised were already decided by three
tribunals against petitioners' favor, it is a settled rule that only questions of law may be
raised in a petition for review on certiorari under Rule 45 of the Rules of Court. While there
are exceptions to this rule, private respondent contends that the instant case does not fall
under any of these exceptions. Private respondent asserts that petitioners failed to
substantiate their claim that the former is guilty of desertion. Private respondent further
contends that the right to due process is available to local and overseas workers alike,
pursuant to the provisions of the Constitution on labor and equal protection as well as the
declared policy contained in the Labor Code. Private respondent argues that petitioners' act
of invoking the provisions of Section 19(C) of the POEA Contract as an alternative defense is
misplaced and is inconsistent with their primary defense that private respondent was
dismissed on the ground of desertion. As to the award of attorney's fees, private respondent
contends that since petitioners' act compelled the former to incur expenses to protect his
interest and enforce his lawful claims, and because petitioners acted in gross and evident
bad faith in refusing to satisfy private respondent's lawful claims, it is only proper that
attorney's fees be awarded in favor of the latter. Anent the other monetary awards, private
respondent argues that these awards are all premised on the findings of the Labor Arbiter,
NLRC and the CA that private respondent's dismissal was improper and illegal.
The Court finds the petition without merit.
Anent the first assigned error, it is a settled rule that under Rule 45 of the Rules of Court,
only questions of law may be raised in this Court. 10 Judicial review by this Court does not
extend to a re-evaluation of the sufficiency of the evidence upon which the proper labor
tribunal has based its determination.11 Firm is the doctrine that this Court is not a trier of
facts, and this applies with greater force in labor cases. 12 Factual issues may be considered
and resolved only when the findings of facts and conclusions of law of the Labor Arbiter are
inconsistent with those of the NLRC and the CA. 13 The reason for this is that the quasi-judicial
agencies, like the Arbitration Board and the NLRC, have acquired a unique expertise because
their jurisdiction are confined to specific matters. 14 In the present case, the question of
whether private respondent is guilty of desertion is factual. The Labor Arbiter, NLRC and the
CA are unanimous in their findings that private respondent is not guilty of desertion and that
he has been illegally terminated from his employment. After a review of the records of the
instant case, this Court finds no cogent reason to depart from the findings of these tribunals.
Petitioners assert that the entries in the logbook of MV Cemtex General15 and in the Marine
Note Protest16 which they submitted to the NLRC confirm the fact that private respondent
abandoned the vessel in which he was assigned. However, the genuineness of the Marine
Note Protest as well as the entries in the logbook are put in doubt because aside from the
fact that they were presented only during petitioners' Motion for Reconsideration filed with
the NLRC, both the Marine Note Protest and the entry in the logbook which were prepared
by the officers of the vessel were neither notarized nor authenticated by the proper
authorities. Moreover, a reading of these entries simply shows that private respondent was
presumed to have deserted his post on the sole basis that he was found missing while
the MV Cemtex General was anchored at the port of Takehara, Japan. Hence, without any
corroborative evidence, these documents cannot be used as bases for concluding that
private respondent was guilty of desertion.
Petitioners also question the findings and conclusion of the Labor Arbiter and the NLRC that
what caused private respondent in jumping overboard was the unmitigated pain he was
suffering which was compounded by the inattention of the vessel's captain to provide him
with the necessary treatment inspite of the fact that the ship was moored for about two
weeks at the anchorage of Takehara, Japan; and, that private respondent's act was a
desperate move to protect himself and to seek relief for his physical suffering. Petitioners
contend that the findings and conclusions of the Labor Arbiter and the NLRC which were
affirmed by the CA are based on conjecture because there is no evidence to prove that, at
the time he jumped ship, private respondent was really suffering from an ankle injury.
It is true that no substantial evidence was presented to prove that the cause of private
respondent's confinement in a hospital in Takehara, Japan was his ankle injury. The Court
may not rely on the letter marked as Annex "B" and attached to private respondent's
Position Paper because it was unsigned and it was not established who executed the
same.17 However, the result of the x-ray examination conducted by the LLN Medical Services,
Inc. on August 26, 1996, right after private respondent was repatriated to the Philippines,
clearly showed that there is a soft-tissue swelling around his ankle joint. 18 This evidence is
consistent with private respondent's claim that he was then suffering from an ankle injury
which caused him to jump off the ship.
As to petitioners' contention that private respondent could not have traversed the distance
between the ship and the shore if he was indeed suffering from unbearable pain by reason of
his ankle injury, suffice it to say that private respondent is an able-bodied seaman and that
with the full use of both his arms and the help of a life jacket, was able to reach the shore.
As correctly defined by petitioners, desertion, in maritime law is:
The act by which a seaman deserts and abandons a ship or vessel, in which he
had engaged to perform a voyage, before the expiration of his time, and without
leave. By desertion, in maritime law, is meant, not a mere unauthorized absence
from the ship, without leave, but an unauthorized absence from the ship with
an intention not to return to her service; or as it is often expressed, animo non
revertendi, that is, with an intention to desert.19 (emphasis supplied)
Hence, for a seaman to be considered as guilty of desertion, it is essential that there be
evidence to prove that if he leaves the ship or vessel in which he had engaged to perform a
voyage, he has the clear intention of abandoning his duty and of not returning to the ship or
vessel. In the present case, however, petitioners failed to present clear and convincing proof
to show that when private respondent jumped ship, he no longer had the intention of
returning. The fact alone that he jumped off the ship where he was stationed, swam to shore
and sought medical assistance for the injury he sustained is not a sufficient basis for
petitioners to conclude that he had the intention of deserting his post. Settled is the rule that
in termination cases, the burden of proof rests upon the employer to show that the dismissal
is for a just and valid cause.20 The case of the employer must stand or fall on its own merits
and not on the weakness of the employee's defense. 21 In the present case, since petitioners
failed to discharge their burden of proving that private respondent is guilty of desertion, the
Court finds no reason to depart from the conclusion of the Labor Arbiter, NLRC and the CA
that private respondent's dismissal is illegal.
In their second assigned error, petitioners cite Section 19(C) of POEA Memorandum Circular
No. 055-9622 known as the Revised Standard Employment Terms and Conditions Governing
the Employment of Filipino Seafarers On Board Ocean-Going Vessels as their alternative basis
in terminating the employment of private respondent. Said Section provides as follows:
Section 19. REPATRIATION
xxxx
C. If the vessel arrives at a convenient port within a period of three months
before the expiration of his contract, the master/ employer may repatriate the
seafarer from such port provided that the seafarer shall be paid all his earned
wages. In addition, the seafarer shall also be paid his leave pay for the entire
contract period plus a termination pay equivalent to one (1) month of his basic
pay, provided, however, that this mode of termination may only be exercised by
the master/employer if the original contract period of the seafarer is at least ten
(10) months; provided, further, that the conditions for this mode of termination
shall not apply to dismissal for cause.
The Court is not persuaded. POEA Memorandum Circular No. 055-96 took effect on January
1, 1997 while the contract of employment entered into by and between private respondent
and petitioners was executed on April 10, 1996. Hence, it is wrong for petitioners to cite this
particular Memorandum because at the time of petitioners' and private respondent's
execution of their contract of employment Memorandum Circular No. 055-96 was not yet
effective.
What was in effect at the time private respondent's Contract of Employment was executed
was POEA Memorandum Circular No. 41, Series of 1989. It is clearly provided under the
second paragraph of private respondent's Contract of Employment that the terms and
conditions provided under Memorandum Circular No. 41, Series of 1989 shall be strictly and
faithfully observed. Hence, it is Memorandum Circular No. 41, Series of 1989 which governs
private respondent's contract of employment.
Section H (6), Part I of Memorandum Circular No. 41, which has almost identical provisions
with Section 19 (C) of Memorandum Circular No. 055-96, provides as follows:
SECTION H. TERMINATION OF EMPLOYMENT
xxxx
6. If the vessel arrives at a convenient port within a period of three (3) months
before the expiration of the Contract, the master/employer may repatriate the
seaman from such port provided that the seaman shall be paid all his earned
wages. In addition, the seaman shall also be paid his leave pay for the entire
contract period plus a termination pay equivalent to one (1) month of his basic
pay, provided, however, that this mode of termination may only be exercised by
the master/employer if the original contact period of the seaman is at least ten
(10) months; provided, further, that the conditions for this mode of termination
shall not apply to dismissal for cause.
The Court agrees with private respondent's contention that petitioners' arguments are
misplaced. Petitioners may not use the above-quoted provision as basis for terminating
private respondent's employment because it is incongruent with their primary defense that
the latter's dismissal from employment was for cause. Petitioners may not claim that they
ended private respondent's services because he is guilty of desertion and at the same time
argue that they exercised their option to prematurely terminate his employment, even
without cause, simply because they have the right to do so under their contract. These
grounds for termination are inconsistent with each other such that the use of one necessarily
negates resort to the other. Besides, it appears from the records that petitioners' alternative
defense was pleaded merely as an afterthought because it was only in their appeal with the
NLRC that they raised this defense. The only defense raised by petitioners in their Answer
with Counterclaim filed with the office of the Labor Arbiter is that private respondent was
dismissed from employment by reason of desertion. 23 Under the Rules of Court,24 which is
applicable in a suppletory character in labor cases before the Labor Arbiter or the NLRC
pursuant to Section 3, Rule I of the New Rules of Procedure of the NLRC 25, defenses which
are not raised either in a motion to dismiss or in the answer are deemed waived. 26
Granting, for the sake of argument, that petitioners may use Section H (6), Part I of
Memorandum Circular No. 41 or Section 19(C) of Memorandum Circular No. 055-96 as basis
for terminating private respondent's employment, it is clear that one of the conditions
before any of these provisions becomes applicable is when the vessel arrives at a convenient
port within a period of three (3) months before the expiration of the contract of
employment. In the present case, private respondent's contract was executed on April 10,
1996 for a duration of twelve months. He was deployed aboard MV Cemtex General on June
25, 1996 and repatriated to the Philippines on August 22, 1996. Hence, it is clear that
petitioners did not meet this condition because private respondent's termination was not
within a period of three months before the expiration of his contract of employment.
Moreover, the Court finds nothing in the records to show that petitioners complied with the
other conditions enumerated therein, such as the payment of all of private respondent's
earned wages together with his leave pay for the entire contract period as well as
termination pay equivalent to his one month salary.
Petitioners admit that they did not inform private respondent in writing of the charges
against him and that they failed to conduct a formal investigation to give him opportunity to
air his side. However, petitioners contend that the twin requirements of notice and hearing
applies strictly only when the employment is within the Philippines and that these need not
be strictly observed in cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which
afford protection to labor apply to Filipino employees whether working within the
Philippines or abroad. Moreover, the principle of lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. 27 In the present case, it is not
disputed that the Contract of Employment entered into by and between petitioners and
private respondent was executed here in the Philippines with the approval of the Philippine
Overseas Employment Administration (POEA). Hence, the Labor Code together with its
implementing rules and regulations and other laws affecting labor apply in this
case.28 Accordingly, as to the requirement of notice and hearing in the case of a seafarer, the
Court has already ruled in a number of cases that before a seaman can be dismissed and
discharged from the vessel, it is required that he be given a written notice regarding the
charges against him and that he be afforded a formal investigation where he could defend
himself personally or through a representative. 29 Hence, the employer should strictly comply
with the twin requirements of notice and hearing without regard to the nature and situs of
employment or the nationality of the employer. Petitioners failed to comply with these twin
requirements.
Petitioners also contend that the wages of private respondent from August 11-22, 1996 were
applied to the costs of his repatriation. Petitioners argue that the off-setting of the costs of
his repatriation against his wages for the aforementioned period is allowed under the
provisions of Section 19(E) of Memorandum Circular No. 055-96 which provides that when
the seafarer is discharged for any just cause, the employer shall have the right to recover the
costs of his replacement and repatriation from the seafarer's wages and other earnings.
The Court does not agree. Section 19(E) of Memorandum Circular No. 055-96 has its
counterpart provision under Section H (2), Part II of Memorandum Circular No. 41, to wit:
SECTION H. REPATRIATION
xxxx
2. When the seaman is discharged for disciplinary reasons, the employer shall
have the right to recover the costs of maintenance and repatriation from the
seaman's balance of wages and other earnings.
xxxx
It is clear under the above-quoted provision that the employer shall have the right to recover
the cost of repatriation from the seaman's wages and other earnings only if the concerned
seaman is validly discharged for disciplinary measures. In the present case, since petitioners
failed to prove that private respondent was validly terminated from employment on the
ground of desertion, it only follows that they do not have the right to deduct the costs of
private respondent's repatriation from his wages and other earnings.
Lastly, the Court is not persuaded by petitioners' contention that the private respondent is
not entitled to his money claims representing his living allowance, overtime pay, vacation
pay and special allowance as well as attorney's fees because he failed to present any proof to
show that he is entitled to these awards.
However, the Court finds that the monetary award representing private respondent's three
months salary as well as the award representing his living allowance, overtime pay, vacation
pay and special allowance should be modified.
The Court finds no basis in the NLRC's act of including private respondent's living allowance
as part of the three months salary to which he is entitled under Section 10 of Republic Act
(RA) No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of
1995." The pertinent provisions of the said Act 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
It is clear from the above-quoted provision that what is included in the computation of the
amount due to the overseas worker are only his salaries. Allowances are excluded. In the
present case, since private respondent received a basic monthly salary of US$400.00, he is,
therefore, entitled to receive a sum of US$1200.00, representing three months of said salary.
As to the awards of living allowance, overtime pay, vacation pay and special allowance, it is
clearly provided under private respondent's Contract of Employment that he is entitled to
these benefits as follows: living allowance of US$140.00/month; vacation leave with pay
equivalent to US$40.00/month; overtime rate of US$120.00/month; and, special allowance
of US$175.00/month.30
With respect, however, to the award of overtime pay, the correct criterion in determining
whether or not sailors are entitled to overtime pay is not whether they were on board and
can not leave ship beyond the regular eight working hours a day, but whether they actually
rendered service in excess of said number of hours.31 In the present case, the Court finds that
private respondent is not entitled to overtime pay because he failed to present any evidence
to prove that he rendered service in excess of the regular eight working hours a day.
On the basis of the foregoing, the remaining benefits to which the private respondent is
entitled is the living allowance of US$140.00/month, which was removed in the computation
of private respondent's salary, special allowance of US$175.00/month and vacation leave
with pay amounting to US$40.00/month. Since private respondent rendered service for two
months these benefits should be doubled, giving a total of US$710.00.
As to the award of attorney's fees, this Court ruled in Reyes v. Court of Appeals,32 as follows:
x x x [T]here are two commonly accepted concepts of attorney's fees, the so-
called ordinary and extraordinary. In its ordinary concept, an attorney's fee is
the reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client. In its extraordinary concept,
attorney's fees are deemed indemnity for damages ordered by the court to be
paid by the losing party in a litigation. The instances where these may be
awarded are those enumerated in Article 2208 of the Civil Code, specifically par.
7 thereof which pertains to actions for recovery of wages, and is payable not to
the lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof. The
extraordinary concept of attorney's fees is the one contemplated in Article 111
of the Labor Code, which provides:
Art. 111. Attorney's fees. – (a) In cases of unlawful withholding of
wages, the culpable party may be assessed attorney's fees
equivalent to ten percent of the amount of wages recovered x x x
The afore-quoted Article 111 is an exception to the declared policy of strict
construction in the awarding of attorney's fees. Although an express finding of
facts and law is still necessary to prove the merit of the award, there need not
be any showing that the employer acted maliciously or in bad faith when it
withheld the wages. There need only be a showing that the lawful wages were
not paid accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the employee's welfare should be the primordial and
paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as provided in
Article 4 of the Labor Code which states that "[a]ll doubts in the implementation
and interpretation of the provisions of [the Labor] Code including its
implementing rules and regulations, shall be resolved in favor of labor", and
Article 1702 of the Civil Code which provides that "[i]n case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer."33 (Emphasis supplied)
In the present case, it is true that the Labor Arbiter and the NLRC failed to state the reasons
why attorney's fees are being awarded. However, it is clear that private respondent was
illegally terminated from his employment and that his wages and other benefits were
withheld from him without any valid and legal basis. As a consequence, he is compelled to
file an action for the recovery of his lawful wages and other benefits and, in the process,
incurred expenses. On these bases, the Court finds that he is entitled to attorney's fees.
WHEREFORE, the petition is PARTLY GRANTED. The Court of Appeals' Decision dated
December 18, 2001 and Resolution dated April 10, 2002
are AFFIRMED with MODIFICATION to the effect that the award of US$1620.00 representing
private respondent's three months salary is reduced to US$1200.00. The award of US$550.00
representing private respondent's living allowance, overtime pay, vacation pay and special
allowance for two months is deleted and in lieu thereof, an award of US$710.00 is granted
representing private respondent's living allowance, special allowance and vacation leave
with pay for the same period.
No costs.
SO ORDERED.
Ynares-Santiago, (Working Chairperson), Callejo Sr., and Chico-Nazario JJ., concur.
Panganiban, C.J., Retired as of December 7, 2006.
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, v. 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
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 118869, which modified the
November 30, 2010 Decision2 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 be the ESA, or the Ontario labor law, that should be applied in Arriola's employment
unexpired portion of his contract, amounting to, more or less, One Million Sixty-Two contract. No temporary restraining order, however, was issued by the CA.
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 The Execution Proceedings
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. 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.
Employer's Position
The petitioners appealed the execution order to the NLRC. In its Decision,20 dated May 31,
The petitioners denied the charge of illegal dismissal against them. They claimed that SNC- 2012, the NLRC corrected the decretal portion of its November 30, 2010 decision. It
Lavalin was greatly affected by the global financial crises during the latter part of 2008. The decreased the award of backpay in the amount of CA$26,880.00 or equivalent only to three
economy of Madagascar, where SNC-Lavalin had business sites, also slowed down. As proof (3) months and three (3) weeks pay based on 70-hours per week workload. The NLRC found
of its looming financial standing, SNC-Lavalin presented a copy of a news item in the that when Arriola was dismissed on September 9, 2009, he only had three (3) months and
Financial Post,10 dated March 5, 2009, showing the decline of the value of its stocks. Thus, it three (3) weeks or until December 31, 2009 remaining under his employment contract.
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 Still not satisfied with the decreased award, IPAMS filed a separate petition
affected.11 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
The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC12 (EDI-Staffbuilders), three (3) weeks.
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 Unperturbed, IPAMS appealed before the Court and the case was docketed as G.R. No.
the present case, as all of Arriola's employment documents were processed in Canada, not to 212031. The appeal, however, was dismissed outright by the Court in its resolution, dated
mention that SNC-Lavalin's office was in Ontario, the principle of lex loci celebrationis was August 8, 2014, because it was belatedly filed and it did not comply with Sections 4 and 5 of
applicable. Thus, the petitioners insisted that Canadian laws governed the contract. 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
The petitioners continued that the pre-termination of Arriola's contract was valid for being his pay.
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 The CA Ruling
requirement was the written notice of termination. Even assuming that Philippine laws
should apply, Arriola would still be validly dismissed because domestic law recognized Returning to the principal case of illegal dismissal, in its assailed January 24, 2013 decision,
retrenchment and redundancy as legal grounds for termination. 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
In their Rejoinder,13 the petitioners presented a copy of the Employment Standards Act (ESA) foreign law automatically applied in this case. Although parties were free to establish
of Ontario, which was duly authenticated by the Canadian authorities and certified by the stipulations in their contracts, the same must remain consistent with law, morals, good
Philippine Embassy. 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
The LA Ruling 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
In a Decision,14 dated May 31, 2010, the LA dismissed Arriola's complaint for lack of merit. should find application.
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 As the petitioners neither complied with the twin notice-rule nor offered any just or
contract pursuant to the EDI-Staffbuilders case. Thus, the provisions on termination of authorized cause for his termination under the Labor Code, the CA held that Arriola's
employment found in the ESA, a foreign law which governed Arriola's employment contract, dismissal was illegal. Accordingly, it pronounced that Arriola was entitled to his salary for the
were applied. Given that SNC-Lavalin was able to produce the duly authenticated ESA, the LA unexpired portion of his contract which is three (3) months and three (3) weeks salary. It,
opined that there was no other conclusion but to uphold the validity of Arriola's dismissal however, decreased the award of backpay to Arriola because the NLRC made a wrong
based on Canadian law. The fallo of the LA decision reads: calculation. Based on his employment contract, the backpay of Arriola should only be
chanRoblesvirtualLawlibrary 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:
chanRoblesvirtualLawlibrary
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered WHEREFORE, in view of the foregoing premises, the petition is PARTIALLY GRANTED. The
dismissing the complaint for lack of merit. 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
SO ORDERED.15ChanRoblesVirtualawlibrary to a monetary judgment equivalent to his unpaid salaries in the amount of CA$19,200.00 or
Aggrieved, Arriola elevated the LA decision before the NLRC. its Philippine Peso equivalent.

The NLRC Ruling SO ORDERED.21ChanRoblesVirtualawlibrary

Hence, this petition, anchored on the following
In its decision, dated November 30, 2010, the NLRC reversed the LA decision and ruled that ISSUES
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 I
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 WHETHER OR NOT RESPONDENT ARRIOLA WAS VALIDLY DISMISSED PURSUANT TO THE
the Migrant Workers Act, as amended, should be applied. Moreover, the NLRC added that EMPLOYMENT CONTRACT.
the overseas employment contract of Arriola was processed in the POEA.
II
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 GRANTING THAT THERE WAS ILLEGAL DISMISSAL IN THE CASE AT BAR, WHETHER OR NOT
ground of financial losses by SNC-Lavalin was not supported by sufficient and credible THE SIX-WEEK ON, TWO-WEEK OFF SCHEDULE SHOULD BE USED IN THE COMPUTATION OF
evidence. The NLRC concluded that, for being illegally dismissed, Arriola should be awarded ANY MONETARY AWARD.
CA$81,920.00 representing sixteen (16) months of Arriola's purported unpaid salary,
pursuant to the Serrano v. Gallant17 doctrine. The decretal portion of the NLRC decision
III
states:
chanRoblesvirtualLawlibrary
GRANTING THAT THERE WAS ILLEGAL DISMISSAL, WHETHER OR NOT THE AMOUNT BEING
WHEREFORE, premises considered, judgment is hereby rendered finding complainant-
CLAIMED BY RESPONDENTS HAD ALREADY BEEN SATISFIED, OR AT THE VERY LEAST,
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 WHETHER OR NOT THE AMOUNT OF CA$2,636.80 SHOULD BE DEDUCTED FROM THE
MONETARY AWARD.22ChanRoblesVirtualawlibrary
prevailing at the time of payment. Accordingly, the decision of the Labor Arbiter dated May
The petitioners argue that the rights and obligations of the OFW, the local recruiter, and the
31, 2010 is hereby VACATED and SET ASIDE.
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,
SO ORDERED.18ChanRoblesVirtualawlibrary
Ambatovy Project - Site, Long Term, hence, the laws of Canada must be applied; that the
The petitioners moved for reconsideration, but their motion was denied by the NLRC in its
ESA, or the Ontario labor law, does not require any ground for the early termination of
resolution, dated February 2, 2011.
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
Undaunted, the petitioners filed a petition for certiorari before the CA arguing that it should
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:
chanRoblesvirtualLawlibrary
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, 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 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 x31
[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,34 though not
an illegal termination case, elucidated on the effect of foreign laws on 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. Echin35 (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. NLRC37 (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:
chanRoblesvirtualLawlibrary
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 Constitution51 and the Labor Code52 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 way of reimbursement. Both defendants appealed to the Court of Appeals which affirmed in
valid and proper based on the employment contract of Arriola. Also, the issue of whether the toto the decision of the trial court. The shipping company interposed the present petition for
petitioners had made partial payments on the backpay is a matter best addressed during the review.
execution process.chanrobleslaw
Anent the liability of petitioner relative to the damage caused to the goods in question, the
WHEREFORE, the petition is DENIED. The January 24, 2013 Decision of the Court of Appeals Court of Appeals made the following comment: "At the outset, it may be well to state that
in CA-G.R. SP No. 118869 is AFFIRMED in toto. the party primarily liable to plaintiff is appellant American President Lines, Ltd., the carrier
whose duty it was to deliver the cargo in good order to the consignee. Articles 1734, 1736,
SO ORDERED. Civil code; Articles 355, 363, Code of Commerce. This appellant does not question the finding
below that the damage to plaintiff’s goods was due to negligence."cralaw virtua1aw library

FIRST DIVISION To this we agree. And we may add that, regardless of its negligence, the shipping company’s
liability would attach because being a common carrier its responsibility is extraordinary and
[G.R. No. L-15671. November 29, 1960.] lasts from the time the goods are placed in its possession until they are delivered, actually or
constructively, to the consignee or to the person who has a right to receive them (Article
AMERICAN PRESIDENT LINES, LTD., Petitioner, v. RICHARD A. KLEPPER, ET 1736, Idem.) It can only be exempt therefrom for causes enumerated in Article 1734.
AL., Respondents.
But, while petitioner does not dispute its liability as common carrier, it however contends
Ross, Selph & Carrascoso for Petitioner. that the same cannot exceed $500.00 invoking in its favor the bill of lading Exhibit A and
Section 4(5) of the Carriage of Goods by Sea Act (Commonwealth Act No. 65).
Ozaeta, Gibbs & Ozaeta for Respondent.
The pertinent provision of the bill of lading alluded to is clause 17 which in part
J. A. Wolfson as amicus curiae. provides:jgc:chanrobles.com.ph

SYLLABUS
1. COMMON CARRIERS; NATURE AND EXTENT OF RESPONSIBILITY. — The responsibility of a
common carrier is extraordinary and lasts from the time the goods are placed in its
possession until they are delivered, actually or constructively, to the consignee or to the
person who has a right to receive them. It can only be exempt therefrom for causes
enumerated in Article 1734 of the New Civil Code.
2. ID.; BILL OF LADING; WHEN BINDING UPON CONSIGNEE ALTHOUGH NOT SIGNED BY HIM
OR BY HIS AGENT. — Where the bill of lading provides that a shipper or consignee who
accepts the bill becomes bound by all the stipulations contained therein, the said shipper or
consignee cannot elude its provisions simply because they prejudice him and take advantage
of those that are beneficial to him. In the case at bar, the fact that the shipper and consignee
paid the corresponding freight on his goods, shows that he impliedly accepted the bill of
lading which was issued in connection with his shipment. Hence, the same is binding upon
him as if it had been actually signed by him or by any person in his behalf.
3. ID.; ID PROVISION IN CARRIAGE OF GOODS BY SEA ACT LIMITING CARRIER’S LIABILITY TO
$500.00. — Article 1753 of the Civil Code provides that the law of the country to which the
goods are to be transported shall govern the liability of the common carrier in case of loss,
destruction or deterioration. This means the law of the Philippines, or the Civil Code. Under
Article 1766, "In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws," and in the Civil
Code there are provisions that govern said rights and obligations (Articles 1736, 1737 and
1738). Therefore, although Section 4 (5) of the Carriage of Goods by Sea Act states that the
carrier shall not be liable in an amount exceeding $500.00 per package unless the value of
the goods had been declared by the shipper and inserted in the bill of lading, said section is
merely suppletory to the provisions of the Civil Code.
DECISION
BAUTISTA ANGELO, J.:
Richard A. Klepper brought this action before the Court of First Instance of Manila to recover
the sum of P6,729.50 as damages allegedly sustained by his goods contained in a lift van
which fell to the ground while being unloaded from a ship owned and operated by the
American President Lines, Ltd. to the pier, plus the sum of P2,000.00 as sentimental value of
the damaged goods and attorney’s fees.
It appears that on February 17, 1955, Klepper shipped on board the S.S. President Cleveland
at Yokohama, Japan one life van under bill of lading No, 82, containing personal and
household effects. The ship arrived in the port of Manila on February 22, 1995 and while the
lift van was being unloaded by the Gantry crane operated by Delgado Brothers, Inc., it fell on
the pier and its contents were spilled and scattered. A survey was made and the result was
that Klepper suffered damages totalling P6,729.50 arising out of the breakage, denting and
smashing of the goods.
The trial court, on November 5, 1957, rendered decision ordering the shipping company to
pay plaintiff the sum of P6,729.50, value of the goods damaged, plus P500.00 as their
sentimental value, with legal interest from the filing of the complaint, and the sum of
P1,000.00 as attorney’s fees. The court ordered that, once the judgment is satisfied, co-
defendant Delgado Brothers, Inc. should pay the shipping company the same amounts by
"17. In case of any loss or damage to or in connection with goods exceeding in actual value
$500 lawful money of the United States, per package, . . . the value of the goods shall be
deemed to be $500 per package . . . on which basis the freight is adjusted and the Carrier’s
liability, if any, shall be determined on the basis of a value of $500 per package . . . or pro
rata in case of partial loss or damage, unless the nature of the goods and a valuation higher
than $500 shall have been declared in writing by the shipper upon delivery to the Carrier and
inserted in this bill of lading and extra freight paid if required and in such case if the actual
value of the goods per package . . . shall exceed such declared value, the value shall
nevertheless be deemed to be the declared value and the Carrier’s liability, if any, shall not
exceed the declared value and any partial loss or damage shall be adjusted pro rata on the
basis of such declared value."cralaw virtua1aw library
While it is apparent from the above that the carrier has expressly agreed that in case of any
loss or damage to the goods in question exceeding the sum of $500.00 per package the
extent of its liability shall be deemed to be merely $500.00 per package, and not more, the
Court of Appeals ruled out the above stipulation, holding that the same is not binding upon
the shipper. Its reasoning follows: "Neither plaintiff nor any agent of his signed the bill of
lading; neither has agreed to the two clauses just recited. In fact, plaintiff received the bill of
lading only after he had arrived at Manila. In this posture and lifting from the decision of the
Supreme Court in Mirasol v. Robert Dollar Co., 53 Phil., 124, 128, we hold that plaintiff ‘was
not legally bound by the clause which purports to limit defendants’ liability’." Petitioner now
assigns this finding as an error.
We are inclined to agree to this contention. Firstly, we cannot but take note of the following
clause printed in red ink that appears on the very face of the bill of lading: "IN ACCEPTING
THIS BILL OF LADING the shipper, consignee and owner of the goods agree to be bound by all
its stipulations, exceptions, and conditions whether written, printed, or stamped on the front
or back hereof, any local customs or privileges to the contrary notwithstanding." This clause
is very revealing. It says that a shipper or consignee who accepts the bill of lading becomes
bound by all stipulations contained therein whether on the front or back thereof.
Respondent cannot elude its provisions simply because they prejudice him and take
advantage of those that are beneficial. Secondly, the fact that respondent shipped his goods
on board the ship of petitioner and paid the corresponding freight thereon shows that he
impliedly accepted the bill of lading which was issued in connection with the shipment in
question, and so it may be said that the same is binding upon him as if it has been actually
signed by him or by any other person in his behalf. This is more so where respondent is both
the shipper and the consignee of the goods in question. These circumstances take this case
out of our ruling in the Mirasol case (invoked by the Court of Appeals) and places it within
our doctrine in the case of Mendoza v. Philippines Air Lines, Inc., (90 Phil., 836), where we
said:jgc:chanrobles.com.ph
". . . Later, as already said, he says that he was never a party to the contract of transportation
and was a complete stranger to it, and that he is now suing on a tort or a violation of his
rights as a stranger (culpa aquiliana). If he does not invoke the contract of carriage entered
into with the defendant company, then he would hardly have any leg to stand on. His right to
prompt delivery of the can of film at the Pili Air Port stems and is derived from the contract
of carriage under which contract, the PAL undertook to carry the can of film safely and to
deliver it to him promptly. Take away or ignore that contract and the obligation to carry and
to deliver the right to prompt delivery disappear. Common carriers are not obligated by law
to carry and to deliver merchandise, and persons are not vested with the right to prompt
delivery, unless such common carriers previously assume the obligation. Said rights and
obligations are created by a specific contract entered into by the parties.
x x x
"Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier
contains the stipulations of delivery to Mendoza as consignee. His demand for the delivery of
the can of film to him at the Pili Air Port may be regarded as a notice of his acceptance of the
stipulation of the delivery in his favor contained in the contract of carriage, such demand jurisdiction. Citing the above-quoted article, it contended that the complaint could be
being one for the fulfillment of the contract of carriage and delivery. In this case he also instituted only in the territory of one of the High Contracting Parties, before:
made himself a party to the contract, or at least has come to court to enforce it. His cause of
action must necessarily be founded on its breach."cralaw virtua1aw library
1. the court of the domicile of the carrier;
With regard to the contention that the Carriage of Goods by Sea Act should also control this
case, the same is of no moment. Article 1753 1 provides that the law of the country to which 2. the court of its principal place of business;
the goods are to be transported shall govern the liability of the common carrier in case of
loss, destruction or deterioration. This means the law of the Philippines, or our new Civil
Code. Under Article 1766, "In all matters not regulated by this Code, the rights and 3. the court where it has a place of business through which the
obligations of common carriers shall be governed by the Code of Commerce and by special contract had been made;
laws," and here we have provisions that govern said rights and obligations (Articles 1736,
1737, and 1738). Therefore, although Section 4(5) of the Carriage of Goods by Sea Act states
4. the court of the place of destination.
that the carrier shall not be liable in an amount exceeding $500.00 per package unless the
value of the goods had been declared by the shipper and inserted in the bill of lading, said
section is merely suppletory to the provisions of the Civil Code. In this respect, we agree to The private respondent contended that the Philippines was not its domicile nor was this its
the opinion of the Court of Appeals. principal place of business. Neither was the petitioner's ticket issued in this country nor was
his destination Manila but San Francisco in the United States.
On the strength of the opinion we have above expressed, we are constrained to rule that the
liability of the carrier with regard to the damage of the goods should only be limited to
$500.00 contrary to the conclusion reached by the Court of Appeals. On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The
petitioner appealed to the Court of Appeals, which affirmed the decision of the lower
Wherefore, with the modification that petitioner shipping company should only pay to court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same
respondent the sum of $500.00 as value of the goods damaged, the decision appealed from was denied. 4 The petitioner then came to this Court, raising substantially the same issues it
should be affirmed in all other respects, without pronouncement as to costs. submitted in the Court of Appeals.

Paras, C.J., Bengzon, Padilla, Labrador, Barrera, Gutierrez David, Paredes and Dizon, JJ.,
The assignment of errors may be grouped into two major issues, viz:
concur.

(1) the constitutionality of Article 28(1) of the Warsaw Convention; and

Republic of the Philippines

SUPREME COURT (2) the jurisdiction of Philippine courts over the case.
Manila
The petitioner also invokes Article 24 of the Civil Code on the protection of minors.
EN BANC
I

THE ISSUE OF CONSTITUTIONALITY

G.R. No. 101538 June 23, 1992
A. The petitioner claims that the lower court erred in not ruling that
AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian, Augusto Article 28(1) of the Warsaw Convention violates the constitutional
Benedicto Santos, petitioner, guarantees of due process and equal protection.
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.
The Republic of the Philippines is a party to the Convention for the Unification of Certain
Rules Relating to International Transportation by Air, otherwise known as the Warsaw
Convention. It took effect on February 13, 1933. The Convention was concurred in by the
Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of
accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited
CRUZ, J.: with the Polish government on November 9, 1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued
Proclamation No. 201, declaring our formal adherence thereto. "to the end that the same
This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention,
and every article and clause thereof may be observed and fulfilled in good faith by the
reading as follows:
Republic of the Philippines and the citizens thereof." 5

Art. 28. (1) An action for damage must be brought at the option of
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
the plaintiff, in the territory of one of the High Contracting Parties,
government and, as such, has the force and effect of law in this country.
either before the court of the domicile of the carrier or of his
principal place of business, or where he has a place of business
through which the contract has been made, or before the court at The petitioner contends that Article 28(1) cannot be applied in the present case because it is
the place of destination. unconstitutional. He argues that there is no substantial distinction between a person who
purchases a ticket in Manila and a person who purchases his ticket in San Francisco. The
classification of the places in which actions for damages may be brought is arbitrary and
The petitioner is a minor and a resident of the Philippines. Private respondent Northwest
irrational and thus violates the due process and equal protection clauses.
Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and
licensed to do business and maintain a branch office in the Philippines.
It is well-settled that courts will assume jurisdiction over a constitutional question only if it is
shown that the essential requisites of a judicial inquiry into such a question are first satisfied.
On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San
Thus, there must be an actual case or controversy involving a conflict of legal rights
Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The
susceptible of judicial determination; the constitutional question must have been
scheduled departure date from Tokyo was December 20, 1986. No date was specified for his
opportunely raised by the proper party; and the resolution of the question is unavoidably
return to San Francisco. 1
necessary to the decision of the case itself. 6

On December 19, 1986, the petitioner checked in at the NOA counter in the San Francisco
Courts generally avoid having to decide a constitutional question. This attitude is based on
airport for his scheduled departure to Manila. Despite a previous confirmation and re-
the doctrine of separation of powers, which enjoins upon the departments of the
confirmation, he was informed that he had no reservation for his flight from Tokyo to
government a becoming respect for each other's acts.
Manila. He therefore had to be wait-listed.

The treaty which is the subject matter of this petition was a joint legislative-executive act.
On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of
The presumption is that it was first carefully studied and determined to be constitutional
Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack of
before it was adopted and given the force of law in this country.
The petitioner's allegations are not convincing enough to overcome this presumption.
Apparently, the Convention considered the four places designated in Article 28 the most
convenient forums for the litigation of any claim that may arise between the airline and its
passenger, as distinguished from all other places. At any rate, we agree with the respondent
court that this case can be decided on other grounds without the necessity of resolving the
constitutional issue.
B. The petitioner claims that the lower court erred in not ruling that
Art. 28(1) of the Warsaw Convention is inapplicable because of a
fundamental change in the circumstances that served as its basis.
The petitioner goes at great lengths to show that the provisions in the Convention were
intended to protect airline companies under "the conditions prevailing then and which have
long ceased to exist." He argues that in view of the significant developments in the airline
industry through the years, the treaty has become irrelevant. Hence, to the extent that it has
lost its basis for approval, it has become unconstitutional.
The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this
doctrine constitutes an attempt to formulate a legal principle which would justify non-
performance of a treaty obligation if the conditions with relation to which the parties
contracted have changed so materially and so unexpectedly as to create a situation in which
the exaction of performance would be unreasonable." 7 The key element of this doctrine is
the vital change in the condition of the contracting parties that they could not have foreseen
at the time the treaty was concluded.
The Court notes in this connection the following observation made in Day v. Trans World
Airlines, Inc.: 8
The Warsaw drafters wished to create a system of liability rules that
would cover all the hazards of air travel . . . The Warsaw delegates
knew that, in the years to come, civil aviation would change in ways
that they could not foresee. They wished to design a system of air
law that would be both durable and flexible enough to keep pace
with these changes . . . The ever-changing needs of the system of
civil aviation can be served within the framework they created.
It is true that at the time the Warsaw Convention was drafted, the airline industry was still in
its infancy. However, that circumstance alone is not sufficient justification for the rejection of
the treaty at this time. The changes recited by the petitioner were, realistically, not entirely
unforeseen although they were expected in a general sense only. In fact, the Convention
itself, anticipating such developments, contains the following significant provision:
Article 41. Any High Contracting Party shall be entitled not earlier
than two years after the coming into force of this convention to call
for the assembling of a new international conference in order to
consider any improvements which may be made in this convention.
To this end, it will communicate with the Government of the French
Republic which will take the necessary measures to make
preparations for such conference.
But the more important consideration is that the treaty has not been rejected by the
Philippine government. The doctrine of rebus sic stantibus does not operate automatically to
render the treaty inoperative. There is a necessity for a formal act of rejection, usually made
by the head of State, with a statement of the reasons why compliance with the treaty is no
longer required.
In lieu thereof, the treaty may be denounced even without an expressed justification for this
action. Such denunciation is authorized under its Article 39, viz:
Article 39. (1) Any one of the High Contracting Parties may
denounce this convention by a notification addressed to the
Government of the Republic of Poland, which shall at once inform
the Government of each of the High Contracting Parties.
(2) Denunciation shall take effect six months after the notification
of denunciation, and shall operate only as regards the party which
shall have proceeded to denunciation.
Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or pursuant
to Article 39, is not a function of the courts but of the other branches of government. This is
a political act. The conclusion and renunciation of treaties is the prerogative of the political
departments and may not be usurped by the judiciary. The courts are concerned only with
the interpretation and application of laws and treaties in force and not with their wisdom or
efficacy.
C. The petitioner claims that the lower court erred in ruling that the
plaintiff must sue in the United States, because this would deny him
the right to access to our courts.
The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the
United States would constitute a constructive denial of his right to access to our courts for
the protection of his rights. He would consequently be deprived of this vital guaranty as
embodied in the Bill of Rights.
Obviously, the constitutional guaranty of access to courts refers only to courts with
appropriate jurisdiction as defined by law. It does not mean that a person can go
to any court for redress of his grievances regardless of the nature or value of his claim. If the
petitioner is barred from filing his complaint before our courts, it is because they are not
vested with the appropriate jurisdiction under the Warsaw Convention, which is part of the
law of our land.
II
THE ISSUE OF JURISDICTION.
A. The petitioner claims that the lower court erred in not ruling that
Article 28(1) of the Warsaw Convention is a rule merely of venue
and was waived by defendant when it did not move to dismiss on
the ground of improper venue.
By its own terms, the Convention applies to all international transportation of persons
performed by aircraft for hire.
International transportation is defined in paragraph (2) of Article 1 as follows:
(2) For the purposes of this convention, the expression
"international transportation" shall mean any transportation in
which, according to the contract made by the parties, the place of
departure and the place of destination, whether or not there be a
break in the transportation or a transshipment, are situated [either]
within the territories of two High Contracting Parties . . .
Whether the transportation is "international" is determined by the contract of the parties,
which in the case of passengers is the ticket. When the contract of carriage provides for the
transportation of the passenger between certain designated terminals "within the territories
of two High Contracting Parties," the provisions of the Convention automatically apply and
exclusively govern the rights and liabilities of the airline and its passenger.
Since the flight involved in the case at bar is international, the same being from the United
States to the Philippines and back to the United States, it is subject to the provisions of the
Warsaw Convention, including Article 28(1), which enumerates the four places where an
action for damages may be brought.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that Article
28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the private
respondent supporting the conclusion that the provision is jurisdictional. 10
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise would have no jurisdiction over the subject-
matter of an action; but the venue of an action as fixed by statute may be changed by the
consent of the parties and an objection that the plaintiff brought his suit in the wrong county
may be waived by the failure of the defendant to make a timely objection. In either case, the
court may render a valid judgment. Rules as to jurisdiction can never be left to the consent
or agreement of the parties, whether or not a prohibition exists against their alteration. 11
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction
and not a venue provision. First, the wording of Article 32, which indicates the places where
the action for damages "must" be brought, underscores the mandatory nature of Article
28(1). Second, this characterization is consistent with one of the objectives of the
Convention, which is to "regulate in a uniform manner the conditions of international
transportation by air." Third, the Convention does not contain any provision prescribing rules
of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction"
used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32
specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as
such, cannot be left to the will of the parties regardless of the time when the damage
occurred.
This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways,
Ltd., 12 where it was held:
 . . . Of more, but still incomplete, assistance is the wording of
Article 28(2), especially when considered in the light of Article 32.
Article 28(2) provides that "questions of procedure shall be
governed by the law of the court to which the case is submitted"
(Emphasis supplied). Section (2) thus may be read to leave for
domestic decision questions regarding the suitability and location
of a particular Warsaw Convention case.
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes
on a dual concept. Jurisdiction in the international sense must be established in accordance
with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular
court must be established pursuant to the applicable domestic law. Only after the question
of which court has jurisdiction is determined will the issue of venue be taken up. This second
question shall be governed by the law of the court to which the case is submitted.
The petitioner submits that since Article 32 states that the parties are precluded "before the
damages occurred" from amending the rules of Article 28(1) as to the place where the action
may be brought, it would follow that the Warsaw Convention was not intended to preclude
them from doing so "after the damages occurred."
Article 32 provides:
Art. 32. Any clause contained in the contract and all special
agreements entered into before the damage occurred by which the
parties purport to infringe the rules laid down by this convention,
whether by deciding the law to be applied, or by altering the rules
as to jurisdiction, shall be null and void. Nevertheless for the
transportation of goods, arbitration clauses shall be allowed,
subject to this convention, if the arbitration is to take place within
one of the jurisdictions referred to in the first paragraph of Article
28.
His point is that since the requirements of Article 28(1) can be waived "after the damages
(shall have) occurred," the article should be regarded as possessing the character of a
"venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss on the ground of
lack of jurisdiction, the private respondent has waived improper venue as a ground to
dismiss.
The foregoing examination of Article 28(1) in relation to Article 32 does not support this
conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a venue
and not a jurisdictional provision, dismissal of the case was still in order. The respondent
court was correct in affirming the ruling of the trial court on this matter, thus:
Santos' claim that NOA waived venue as a ground of its motion to
dismiss is not correct. True it is that NOA averred in its MOTION TO
DISMISS that the ground thereof is "the Court has no subject
matter jurisdiction to entertain the Complaint" which SANTOS
considers as equivalent to "lack of jurisdiction over the subject
matter . . ." However, the gist of NOA's argument in its motion is
that the Philippines is not the proper place where SANTOS could file
the action — meaning that the venue of the action is improperly
laid. Even assuming then that the specified ground of the motion is
erroneous, the fact is the proper ground of the motion — improper
venue — has been discussed therein.
Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of non-waiver
if there are special circumstances justifying this conclusion, as in the petition at bar. As we
observed in Javier vs. Intermediate Court of Appeals: 13
Legally, of course, the lack of proper venue was deemed waived by
the petitioners when they failed to invoke it in their original motion
to dismiss. Even so, the motivation of the private respondent
should have been taken into account by both the trial judge and the
respondent court in arriving at their decisions.
The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of
Appeals, where it was held that Article 28(1) is a venue provision. However, the private
respondent avers that this was in effect reversed by the case of Aranas v. United
Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision. Neither
of these cases is binding on this Court, of course, nor was either of them appealed to us.
Nevertheless, we here express our own preference for the later case of Aranas insofar as its
pronouncements on jurisdiction conform to the judgment we now make in this petition.
B. The petitioner claims that the lower court erred in not ruling that
under Article 28(1) of the Warsaw Convention, this case was
properly filed in the Philippines, because Manila was the destination
of the plaintiff.
The Petitioner contends that the facts of this case are analogous to those in Aanestad v. Air
Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal to Los
Angeles and back to Montreal. The date and time of departure were specified but not of the
return flight. The plane crashed while on route from Montreal to Los Angeles, killing Mrs.
Silverberg. Her administratrix filed an action for damages against Air Canada in the U.S.
District Court of California. The defendant moved to dismiss for lack of jurisdiction but the
motion was denied thus:
. . . It is evident that the contract entered into between Air Canada
and Mrs. Silverberg as evidenced by the ticket booklets and the
Flight Coupon No. 1, was a contract for Air Canada to carry Mrs.
Silverberg to Los Angeles on a certain flight, a certain time and a
certain class, but that the time for her to return remained
completely in her power. Coupon No. 2 was only a continuing offer
by Air Canada to give her a ticket to return to Montreal between
certain dates. . . .
The only conclusion that can be reached then, is that "the place of
destination" as used in the Warsaw Convention is considered by
both the Canadian C.T.C. and the United States C.A.B. to describe at
least two "places of destination," viz., the "place of destination" of
a particular flight either an "outward destination" from the "point
of origin" or from the "outward point of destination" to any place in
Canada.
Thus the place of destination under Art. 28 and Art. 1 of the
Warsaw Convention of the flight on which Mrs. Silverberg was
killed, was Los Angeles according to the ticket, which was the
contract between the parties and the suit is properly filed in this
Court which has jurisdiction.
The Petitioner avers that the present case falls squarely under the above ruling because the
date and time of his return flight to San Francisco were, as in the Aanestad case, also left
open. Consequently, Manila and not San Francisco should be considered the petitioner's
destination.
The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where the
United States District Court (Eastern District of Pennsylvania) said:
. . . Although the authorities which addressed this precise issue are
not extensive, both the cases and the commentators are almost
unanimous in concluding that the "place of destination" referred to
in the Warsaw Convention "in a trip consisting of several parts . . . is
the ultimate destination that is accorded treaty jurisdiction." . . .
But apart from that distinguishing feature, I cannot agree with the
Court's analysis in Aanestad; whether the return portion of the
ticket is characterized as an option or a contract, the carrier was
legally bound to transport the passenger back to the place of origin
within the prescribed time and. the passenger for her part agreed
to pay the fare and, in fact, did pay the fare. Thus there was
mutuality of obligation and a binding contract of carriage, The fact
that the passenger could forego her rights under the contract does
not make it any less a binding contract. Certainly, if the parties did
not contemplate the return leg of the journey, the passenger would
not have paid for it and the carrier would not have issued a round
trip ticket.
We agree with the latter case. The place of destination, within the meaning of the Warsaw
Convention, is determined by the terms of the contract of carriage or, specifically in this
case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket
shows that his ultimate destination is San Francisco. Although the date of the return flight
was left open, the contract of carriage between the parties indicates that NOA was bound to
transport the petitioner to San Francisco from Manila. Manila should therefore be
considered merely an agreed stopping place and not the destination.
The petitioner submits that the Butz case could not have overruled the Aanestad case
because these decisions are from different jurisdictions. But that is neither here nor there. In
fact, neither of these cases is controlling on this Court. If we have preferred the Butz case, it
is because, exercising our own freedom of choice, we have decided that it represents the
better, and correct, interpretation of Article 28(1).
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place."
It is the "destination" and not an "agreed stopping place" that controls for purposes of
ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure and
ending with the ultimate destination. The use of the singular in this expression indicates the
understanding of the parties to the Convention that every contract of carriage has one place
of departure and one place of destination. An intermediate place where the carriage may be
broken is not regarded as a "place of destination."
C. The petitioner claims that the lower court erred in not ruling that
under Art. 28(1) of the Warsaw Convention, this case was properly
filed in the Philippines because the defendant has its domicile in the
Philippines.
The petitioner argues that the Warsaw Convention was originally written in French and that
in interpreting its provisions, American courts have taken the broad view that the French
legal meaning must govern. 18 In French, he says, the "domicile" of the carrier means every
place where it has a branch office.
The private respondent notes, however, that in Compagnie Nationale Air France vs.
Giliberto, 19 it was held:
The plaintiffs' first contention is that Air France is domiciled in the
United States. They say that the domicile of a corporation includes
any country where the airline carries on its business on "a regular
and substantial basis," and that the United States qualifies under
such definition. The meaning of domicile cannot, however, be so
extended. The domicile of a corporation is customarily regarded as
the place where it is incorporated, and the courts have given the
meaning to the term as it is used in article 28(1) of the Convention.
(See Smith v. Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d
798, 802; Nudo v. Societe Anonyme Belge d' Exploitation de la
Navigation Aerienne Sabena Belgian World Airlines (E.D. pa. 1962).
207 F. Supp, 191; Karfunkel v. Compagnie Nationale Air France
(S.D.N.Y. 1977), 427 F. Suppl. 971, 974). Moreover, the structure of
article 28(1), viewed as a whole, is also incompatible with the
plaintiffs' claim. The article, in stating that places of business are
among the bases of the jurisdiction, sets out two places where an
action for damages may be brought; the country where the carrier's
principal place of business is located, and the country in which it
has a place of business through which the particular contract in
question was made, that is, where the ticket was bought, Adopting
the plaintiffs' theory would at a minimum blur these carefully
drawn distinctions by creating a third intermediate category. It
would obviously introduce uncertainty into litigation under the
article because of the necessity of having to determine, and
without standards or criteria, whether the amount of business done
by a carrier in a particular country was "regular" and "substantial."
The plaintiff's request to adopt this basis of jurisdiction is in effect a
request to create a new jurisdictional standard for the Convention.
Furthermore, it was argued in another case 20 that:
. . . In arriving at an interpretation of a treaty whose sole official
language is French, are we bound to apply French law? . . . We think
this question and the underlying choice of law issue warrant some
discussion
. . . We do not think this statement can be regarded as a conclusion
that internal French law is to be "applied" in the choice of law
sense, to determine the meaning and scope of the Convention's
terms. Of course, French legal usage must be considered in arriving
at an accurate English translation of the French. But when an
accurate English translation is made and agreed upon, as here, the
inquiry into meaning does not then revert to a quest for a past or
present French law to be "applied" for revelation of the proper
scope of the terms. It does not follow from the fact that the treaty
is written in French that in interpreting it, we are forever chained to
French law, either as it existed when the treaty was written or in its
present state of development. There is no suggestion in the treaty
that French law was intended to govern the meaning of Warsaw's
terms, nor have we found any indication to this effect in its
legislative history or from our study of its application and
interpretation by other courts. Indeed, analysis of the cases
indicates that the courts, in interpreting and applying the Warsaw
Convention, have, not considered themselves bound to apply
French law simply because the Convention is written in French. . . .
We agree with these rulings.
Notably, the domicile of the carrier is only one of the places where the complaint is allowed
to be filed under Article 28(1). By specifying the three other places, to wit, the principal place
of business of the carrier, its place of business where the contract was made, and the place
of destination, the article clearly meant that these three other places were not
comprehended in the term "domicile."
D. The petitioner claims that the lower court erred in not ruling that
Art. 28(1) of the Warsaw Convention does not apply to actions
based on tort.
The petitioner alleges that the gravamen of the complaint is that private respondent acted
arbitrarily and in bad faith, discriminated against the petitioner, and committed a willful
misconduct because it canceled his confirmed reservation and gave his reserved seat to
someone who had no better right to it. In short. the private respondent committed a tort.
Such allegation, he submits, removes the present case from the coverage of the Warsaw
Convention. He argues that in at least two American cases, 21 it was held that Article 28(1) of
the Warsaw Convention does not apply if the action is based on tort.
This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article in
question was interpreted thus:
. . . Assuming for the present that plaintiff's claim is "covered" by
Article 17, Article 24 clearly excludes any relief not provided for in
the Convention as modified by the Montreal Agreement. It does
not, however, limit the kind of cause of action on which the relief
may be founded; rather it provides that any action based on the
injuries specified in Article 17 "however founded," i.e., regardless of
the type of action on which relief is founded, can only be brought
subject to the conditions and limitations established by the Warsaw
System. Presumably, the reason for the use of the phrase "however
founded," in two-fold: to accommodate all of the multifarious bases
on which a claim might be founded in different countries, whether
under code law or common law, whether under contract or tort,
etc.; and to include all bases on which a claim seeking relief for an
injury might be founded in any one country. In other words, if the
injury occurs as described in Article 17, any relief available is
subject to the conditions and limitations established by the Warsaw
System, regardless of the particular cause of action which forms the
basis on which a plaintiff could seek
relief . . .
The private respondent correctly contends that the allegation of willful misconduct resulting
in a tort is insufficient to exclude the case from the comprehension of the Warsaw
Convention. The petitioner has apparently misconstrued the import of Article 25(l) of the
Convention, which reads as follows:
Art. 25 (1). The carrier shall not be entitled to avail himself of the
provisions of this Convention which exclude or limit his liability. if
the damage is caused by his willful misconduct or by such default
on his part as, in accordance with the law of the court to which the
case is submitted, is considered to be equivalent to willful
misconduct.
It is understood under this article that the court called upon to determine the applicability of
the limitation provision must first be vested with the appropriate jurisdiction. Article 28(1) is
the provision in the Convention which defines that jurisdiction. Article 22 23 merely fixes the
monetary ceiling for the liability of the carrier in cases covered by the Convention. If the
carrier is indeed guilty of willful misconduct, it can avail itself of the limitations set forth in
this article. But this can be done only if the action has first been commenced properly under
the rules on jurisdiction set forth in Article 28(1).
III
THE ISSUE OF PROTECTION TO MINORS
The petitioner calls our attention to Article 24 of the Civil Code, which states:
Art. 24. In all contractual property or other relations, when one of
the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or
other handicap, the courts must be vigilant for his protection.
Application of this article to the present case is misplaced. The above provision assumes that
the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As already
explained, such jurisdiction is absent in the case at bar.
CONCLUSION
A number of countries have signified their concern over the problem of citizens being denied
access to their own courts because of the restrictive provision of Article 28(1) of the Warsaw
Convention. Among these is the United States, which has proposed an amendment that
would enable the passenger to sue in his own domicile if the carrier does business in that
jurisdiction. The reason for this proposal is explained thus:
In the event a US citizen temporarily residing abroad purchases a
Rome to New York to Rome ticket on a foreign air carrier which is
generally subject to the jurisdiction of the US, Article 28 would
prevent that person from suing the carrier in the US in a "Warsaw
Case" even though such a suit could be brought in the absence of
the Convention.
The proposal was incorporated in the Guatemala Protocol amending the Warsaw
Convention, which was adopted at Guatemala City on March 8,
1971. 24 But it is still ineffective because it has not yet been ratified by the required
minimum number of contracting parties. Pending such ratification, the petitioner will still
have to file his complaint only in any of the four places designated by Article 28(1) of the
Warsaw Convention.
The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily
have the right to sue in his own courts simply because the defendant airline has a place of
business in his country.
The Court can only sympathize with the petitioner, who must prosecute his claims in the
United States rather than in his own country at least inconvenience. But we are unable to
grant him the relief he seeks because we are limited by the provisions of the Warsaw
Convention which continues to bind us. It may not be amiss to observe at this point that the
mere fact that he will have to litigate in the American courts does not necessarily mean he
will litigate in vain. The judicial system of that country in known for its sense of fairness and,
generally, its strict adherence to the rule of law.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
Narvasa, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea,
Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in
his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN
MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.
FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign
corporation licensed to do business in the Philippines, executed in Manila two (2) separate
contracts of employment, one with private respondent Ethelynne B. Farrales and the other
with private respondent Ma. M.C. Mamasig. 1 The contracts, which became effective on 9
January 1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be
extended by the mutual consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA
reserves the right to terminate this agreement at any time by giving
the EMPLOYEE notice in writing in advance one month before the
intended termination or in lieu thereof, by paying the EMPLOYEE
wages equivalent to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the
laws of Pakistan, and only the Courts of Karachi, Pakistan shall have
the jurisdiction to consider any matter arising out of or under this
agreement.
Respondents then commenced training in Pakistan. After their training period, they began
discharging their job functions as flight attendants, with base station in Manila and flying
assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the
contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the local
branch of PIA, sent separate letters both dated 1 August 1980 to private respondents
Farrales and Mamasig advising both that their services as flight stewardesses would be
terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment
agreement [they had) executed with [PIA]."2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a
complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of company
benefits and bonuses, against PIA with the then Ministry of Labor and Employment
("MOLE"). After several unfruitful attempts at conciliation, the MOLE hearing officer Atty.
Jose M. Pascual ordered the parties to submit their position papers and evidence supporting
their respective positions. The PIA submitted its position paper, 3 but no evidence, and there
claimed that both private respondents were habitual absentees; that both were in the habit
of bringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel at
the Manila International Airport had been discreetly warned by customs officials to advise
private respondents to discontinue that practice. PIA further claimed that the services of
both private respondents were terminated pursuant to the provisions of the employment
contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the
reinstatement of private respondents with full backwages or, in the alternative, the payment
to them of the amounts equivalent to their salaries for the remainder of the fixed three-year
period of their employment contracts; the payment to private respondent Mamasig of an
amount equivalent to the value of a round trip ticket Manila-USA Manila; and payment of a
bonus to each of the private respondents equivalent to their one-month salary. 4 The Order
stated that private respondents had attained the status of regular employees after they had
rendered more than a year of continued service; that the stipulation limiting the period of
the employment contract to three (3) years was null and void as violative of the provisions of
the Labor Code and its implementing rules and regulations on regular and casual
employment; and that the dismissal, having been carried out without the requisite clearance
from the MOLE, was illegal and entitled private respondents to reinstatement with full
backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister,
MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the
latter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "to
pay each of the complainants [private respondents] their salaries corresponding to the
unexpired portion of the contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director
and the Order of the Deputy Minister as having been rendered without jurisdiction; for
having been rendered without support in the evidence of record since, allegedly, no hearing
was conducted by the hearing officer, Atty. Jose M. Pascual; and for having been issued in
disregard and in violation of petitioner's rights under the employment contracts with private
respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over
the subject matter of the complaint initiated by private respondents for illegal dismissal,
jurisdiction over the same being lodged in the Arbitration Branch of the National Labor
Relations Commission ("NLRC") It appears to us beyond dispute, however, that both at the
time the complaint was initiated in September 1980 and at the time the Orders assailed were
rendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by
Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over
termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of
employees with at least one (1) year of service without prior clearance from the Department
of Labor and Employment:
Art. 278. Miscellaneous Provisions — . . .
(b) With or without a collective agreement, no employer may shut
down his establishment or dismiss or terminate the employment of
employees with at least one year of service during the last two (2)
years, whether such service is continuous or broken, without prior
written authority issued in accordance with such rules and
regulations as the Secretary may promulgate . . . (emphasis
supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code,
made clear that in case of a termination without the necessary clearance, the
Regional Director was authorized to order the reinstatement of the employee
concerned and the payment of backwages; necessarily, therefore, the Regional
Director must have been given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. — Any shutdown
or dismissal without prior clearance shall be conclusively presumed
to be termination of employment without a just cause. The
Regional Director shall, in such case order the immediate
reinstatement of the employee and the payment of his wages from
the time of the shutdown or dismissal until the time of
reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976,
was similarly very explicit about the jurisdiction of the Regional Director over
termination of employment cases:
Under PD 850, termination cases — with or without CBA — are now
placed under the original jurisdiction of the Regional Director.
Preventive suspension cases, now made cognizable for the first
time, are also placed under the Regional Director. Before PD 850,
termination cases where there was a CBA were under the
jurisdiction of the grievance machinery and voluntary arbitration,
while termination cases where there was no CBA were under the
jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its
implementing rules and regulations with respect to termination and
preventive suspension cases are:
1. The Regional Director is now required to rule on every
application for clearance, whether there is opposition or not, within
ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation of
petitioner's right to procedural due process . 6 This claim, however, cannot be given serious
consideration. Petitioner was ordered by the Regional Director to submit not only its position
paper but also such evidence in its favor as it might have. Petitioner opted to rely solely upon
its position paper; we must assume it had no evidence to sustain its assertions. Thus, even if
no formal or oral hearing was conducted, petitioner had ample opportunity to explain its
side. Moreover, petitioner PIA was able to appeal his case to the Ministry of Labor and
Employment. 7
There is another reason why petitioner's claim of denial of due process must be rejected. At
the time the complaint was filed by private respondents on 21 September 1980 and at the
time the Regional Director issued his questioned order on 22 January 1981, applicable
regulation, as noted above, specified that a "dismissal without prior clearance shall be
conclusively presumed to be termination of employment without a cause", and the Regional
Director was required in such case to" order the immediate reinstatement of the employee
and the payment of his wages from the time of the shutdown or dismiss until . . .
reinstatement." In other words, under the then applicable rule, the Regional Director did not
even have to require submission of position papers by the parties in view of the
conclusive (juris et de jure) character of the presumption created by such applicable law and
regulation. In Cebu Institute of Technology v. Minister of Labor and Employment, 8 the Court
pointed out that "under Rule 14, Section 2, of the Implementing Rules and Regulations, the
termination of [an employee] which was without previous clearance from the Ministry of
Labor is conclusively presumed to be without [just] cause . . . [a presumption which] cannot
be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of
employment with private respondents Farrales and Mamasig, arguing that its relationship
with them was governed by the provisions of its contract rather than by the general
provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by
agreement between the parties; while paragraph 6 provided that, notwithstanding any other
provision in the Contract, PIA had the right to terminate the employment agreement at any
time by giving one-month's notice to the employee or, in lieu of such notice, one-months
salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract
is the law between the parties. 10 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, 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 into the contract. 11 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. It is thus necessary to
appraise the contractual provisions invoked by petitioner PIA in terms of their consistency
with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that
paragraph 5 of that employment contract was inconsistent with Articles 280 and 281 of the
Labor Code as they existed at the time the contract of employment was entered into, and
hence refused to give effect to said paragraph 5. These Articles read as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the
employer shall not terminate the services of an employee except
for a just cause or when authorized by this Title An employee who
is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and to his backwages computed
from the time his compensation was withheld from him up to the
time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the
oral agreements of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: provided, that, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered as regular employee with
respect to the activity in which he is employed and his employment
shall continue while such actually exists. (Emphasis supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., 12 the Court had occasion to
examine in detail the question of whether employment for a fixed term has been outlawed
under the above quoted provisions of the Labor Code. After an extensive examination of the
history and development of Articles 280 and 281, the Court reached the conclusion that a
contract providing for employment with a fixed period was not necessarily unlawful:
There can of course be no quarrel with the proposition that where
from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregarded as contrary to
public policy, morals, etc. But where no such intent to circumvent
the law is shown, or stated otherwise, where the reason for the law
 does not exist e.g. where it is indeed the employee himself who
insists upon a period or where the nature of the engagement is
such that, without being seasonal or for a specific project, a definite
date of termination is a sine qua non would an agreement fixing a
period be essentially evil or illicit, therefore anathema Would such
an agreement come within the scope of Article 280 which
admittedly was enacted "to prevent the circumvention of the right
of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given
that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly,
but would also appear to restrict, without reasonable distinctions,
the right of an employee to freely stipulate with his employer the
duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be
given reasonable interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term employment and
subverting to boot the principle of freedom of contract to remedy
the evil of employers" using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the
nose to spite the face or, more relevantly, curing a headache by
lopping off the head.
xxx xxx xxx
Accordingly, and since the entire purpose behind the development
of legislation culminating in the present Article 280 of the Labor
Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure,
the clause in said article indiscriminately and completely ruling out
all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of tenure.
It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than
those explicitly stated by its framers; it thus becomes pointless and
arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or
absence of a substantial indication that the period specified in an employment
agreement was designed to circumvent the security of tenure of regular
employees which is provided for in Articles 280 and 281 of the Labor Code. This
indication must ordinarily rest upon some aspect of the agreement other than
the mere specification of a fixed term of the ernployment agreement, or upon
evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between
petitioner PIA and private respondents, we consider that those provisions must be read
together and when so read, the fixed period of three (3) years specified in paragraph 5 will
be seen to have been effectively neutralized by the provisions of paragraph 6 of that
agreement. Paragraph 6 in effect took back from the employee the fixed three (3)-year
period ostensibly granted by paragraph 5 by rendering such period in effect a facultative one
at the option of the employer PIA. For petitioner PIA claims to be authorized to shorten that
term, at any time and for any cause satisfactory to itself, to a one-month period, or even less
by simply paying the employee a month's salary. Because the net effect of paragraphs 5 and
6 of the agreement here involved is to render the employment of private respondents
Farrales and Mamasig basically employment at the pleasure of petitioner PIA, the Court
considers that paragraphs 5 and 6 were intended to prevent any security of tenure from
accruing in favor of private respondents even during the limited period of three (3)
years,13 and thus to escape completely the thrust of Articles 280 and 281 of the Labor Code.
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. Neither may petitioner invoke the second clause of paragraph 10, specifying the
Karachi courts as the sole venue for the settlement of dispute; between the contracting
parties. Even a cursory scrutiny of the relevant circumstances of this case will show the
multiple and substantive contacts between Philippine law and Philippine courts, on the one
hand, and the relationship between the parties, upon the other: the contract was not only
executed in the Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and respondents, while petitioner, although a foreign
corporation, is licensed to do business (and actually doing business) and hence resident in
the Philippines; lastly, private respondents were based in the Philippines in between their
assigned flights to the Middle East and Europe. All the above contacts point to the Philippine
courts and administrative agencies as a proper forum for the resolution of contractual
disputes between the parties. 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. Finally, and in any event, the petitioner PIA
did not undertake to plead and prove the contents of Pakistan law on the matter; it must
therefore be presumed that the applicable provisions of the law of Pakistan are the same as
the applicable provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally dismissed and
that public respondent Deputy Minister, MOLE, had not committed any grave abuse of
discretion nor any act without or in excess of jurisdiction in ordering their reinstatement with
backwages. Private respondents are entitled to three (3) years backwages without
qualification or deduction. Should their reinstatement to their former or other substantially
equivalent positions not be feasible in view of the length of time which has gone by since
their services were unlawfully terminated, petitioner should be required to pay separation
pay to private respondents amounting to one (1) month's salary for every year of service
rendered by them, including the three (3) years service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the
Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1)
private respondents are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to their former positions
or to substantially equivalent positions not be feasible, then petitioner shall, in lieu thereof,
pay to private respondents separation pay amounting to one (1)-month's salary for every
year of service actually rendered by them and for the three (3) years putative service by
private respondents. The Temporary Restraining Order issued on 13 September 1982 is
hereby LIFTED. Costs against petitioner.
SO ORDERED.
Fernan (C.J., Chairman), Gutierrez, Jr., Bidin and Cortés, JJ., concur.
FIRST DIVISION
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, Petitioner, vs. COURT OF APPEALS, MILAGROS P. MORADA and
HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial
Court of Quezon City, Respondents.
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. . . .
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 lune 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 plaintiffs
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 stood by as the police put pressure on her to make a statement dropping the case against
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 THIS 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.
xxx xxx xxx
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 reauested 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
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 sigh 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 manger, 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
Philippines 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:
Sec. 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:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and cots 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)
xxx xxx xxx
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) xxx xxx xxx
(b) Personal actions. - All other actions may be commenced and tried where the defendant
or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh heavily in
favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the
litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages
and obstacles to a fair trial are equally important. Plaintiff may not, by choice of an
inconvenient forum, "vex", "harass", or "oppress" the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the balance is strongly in favor of the defendant,
the plaintiffs choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear the case in
the Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff
(private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi
Arabia where she no longer maintains substantial connections. That would have caused a
fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of the plaintiff
(now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By
filing her Complaint and Amended Complaint with the trial court, private respondent has
voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the
dismissal of 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 by the respondent appellate court, "considering that it was the petitioner who was invoking
law is excluded from application in a given case for the reason that it falls under one of the the applicability of the law of Saudi Arabia, then the burden was on it [petitioner] to plead
exceptions to the applications of foreign law; and and to establish what the law of Saudi Arabia is". 66

(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 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed admitted 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.
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 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.
Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.
SECOND DIVISION

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 CRESCENT PETROLEUM, LTD., G.R. No. 155014 Petitioner,
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 Present:
with justice, give 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
Puno, J.,
country is of no moment. For in our view what is important here is the place where the over-
all harm or the totality of the alleged injury to the person, reputation, social standing and
human rights of complainant, had lodged, according to the plaintiff below (herein private - versus - Chairman,
respondent). All told, it is not without basis to identify the Philippines as the situs of the
alleged tort.
Austria-Martinez,

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 Callejo, Sr.,
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 Ting
case. a,
and
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 *Chico-Nazario, JJ.
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 M/V 'LOK MAHESHWARI,
where the relationship, if any, between the parties is centered. 62

THE SHIPPING CORPORATION '

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 OF INDIA, and PORTSERV LIMITED Promulgated:
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 and/or TRANSMAR SHIPPING, INC.,
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.
Respondents. ' November 11, 2005

Prescinding from this premise that the Philippines is the situs of the tort complained of and
the place "having the most interest in the problem", we find, by way of recapitulation, that x--------------------------------------------------x
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
DECISION
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
PUNO, J.: 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

This petition for review on certiorari under Rule 45 seeks the (a) reversal of the November
consequence, petitioner Crescent incurred additional expenses of US$8,572.61 for interest,

28, 2001 Decision of the Court of Appeals in CA-G.R. No. CV-54920, [1] which dismissed for
tracking fees, and legal fees.

'want of jurisdiction the instant case, and the September 3, 2002 Resolution of the same

appellate court, [2] which denied petitioner's motion for reconsideration, and (b) On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent

reinstatement of the July 25, 1996 Decision [3] of the Regional Trial Court (RTC) in Civil Case instituted before the RTC of Cebu City an action 'for a sum of money with prayer for

No. CEB-18679, which held that respondents were solidarily liable to pay petitioner the sum temporary restraining order and writ of preliminary attachment against respondents Vessel

prayed for in the complaint. and SCI, Portserv and/or Transmar. The case was raffled to Branch 10 and docketed as Civil

Case No. CEB-18679.

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 On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond

corporation organized and existing under the laws of India and principally owned by the at P2,710,000.00. Petitioner Crescent withdrew its prayer for a temporary restraining order

Government of India. It was time-chartered by respondent SCI to Halla Merchant Marine Co. and posted the required bond. '

Ltd. (Halla), a South Korean company. Halla, in turn, sub-chartered the Vessel through a time

On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv
charter to Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to

and/or Transmar through the Master of the Vessel. On May 28, 1996, respondents Vessel
Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and

and SCI, through Pioneer Insurance and Surety Corporation (Pioneer), filed an urgent ex-
existing under the laws of Canada.

parte motion to approve Pioneer's letter of undertaking, to consider it as counter-bond and

On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd. to discharge the attachment. 'On May 29, 1996, the trial court granted the motion; thus, the

(Crescent), a corporation organized and existing under the laws of Canada that is engaged in letter of undertaking was approved as counter-bond to discharge the attachment.

the business of selling petroleum and oil products for the use and operation of oceangoing

For failing to file their respective answers and upon motion of petitioner Crescent, the trial
vessels, to deliver marine fuel oils (bunker fuels) to the Vessel. Petitioner Crescent granted

court declared respondents Vessel and SCI, Portserv and/or Transmar in default. Petitioner
and confirmed the request through an advice via facsimile dated November 2, 1995. As

Crescent was allowed to present its evidence ex-parte.

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

On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to
Consequently, the latter are hereby ordered to pay plaintiff jointly
US$103,544 inclusive of barging and demurrage charges to the Vessel at the port of Pioneer and solidarily, the following:

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
(a) the sum of US$103,544.00, representing
the outstanding obligation;
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. (b) interest of US$10,978.50 as of July 3,
1996, plus additional interest at 18%
per annum for the period
Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated November thereafter, until the principal
account is fully paid;
21, 1995 to 'Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or
(c) attorney's fees of P300,000.00; and
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 (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 We find against petitioner Crescent.
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 I.
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
P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted 'to accelerate the growth
to attachment under Rule 59 [now Rule 57] of the Rules of
Court. [10] 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
But, is petitioner Crescent entitled to a maritime lien under our laws? Petitioner Crescent
mortgages. [14] Notably, Sections 21, 22 and 23 of P.D. No. 1521 or the Ship Mortgage
bases its claim of a maritime lien on Sections 21, 22 and 23 of Presidential Decree No.
Decree of 1978 are identical to Subsections P, Q, and R, respectively, of the U.S. Ship
1521 (P.D. No. 1521), also known as the Ship Mortgage Decree of 1978, viz:
Mortgage Act of 1920, which is part of the Federal Maritime Lien Act. Hence, U.S.

Sec. 21. Maritime Lien for Necessaries; persons jurisprudence finds relevance to determining whether P.D. No. 1521 or the Ship Mortgage
entitled to such lien. - Any person furnishing repairs, supplies,
towage, use of dry dock or maritime railway, or other necessaries, Decree of 1978 applies in the present case.
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 The various tests used in the U.S. to determine whether a maritime lien exists are the
credit was given to the vessel.
following:
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 One. 'In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a
necessaries for the vessel: The managing owner, ship's husband,
master or any person to whom the management of the vessel at foreign port, whether such lien exists, or whether the court has or will exercise jurisdiction,
the port of supply is entrusted. No person tortuously or unlawfully
in possession or charge of a vessel shall have authority to bind the depends on the law of the country where the supplies were furnished, which must be
vessel.
pleaded and proved. [15] This principle was laid down in the 1888 case of The
Sec. 23. Notice to Person Furnishing Repairs,
Supplies and Necessaries. - The officers and agents of a vessel Scotia, [16] reiterated in The Kaiser Wilhelm II [17] (1916), 'in The Woudrichem [18] (1921)
specified in Section 22 of this Decree shall be taken to include
such officers and agents when appointed by a charterer, by an and in The City of Atlanta [19] (1924).
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 Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-factor
charter party, agreement for sale of the vessel, or for any other
reason, the person ordering the repairs, supplies, or other methodologies as the law of the place of supply. [20]
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
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.

must be furnished in the Philippines in order to give petitioner the right to seek enforcement
Several years after Lauritzen, the U.S. Supreme Court in the case of Romero v. International
of the lien with a Philippine court. [11]
Terminal Operating Co. [22] again considered a foreign seaman's personal injury claim under

Respondents Vessel and SCI, on the other hand, maintain that Section 21 of the P.D. No. both the Jones Act and the general maritime law. The Court held that the factors first

1521 or the Ship Mortgage Decree of 1978 does not apply to a foreign supplier like petitioner announced in the case of Lauritzen were applicable not only to personal injury claims

Crescent as the provision refers only to a situation where the person furnishing the supplies arising under the Jones Act but to all matters arising under maritime law in general. [23]

is situated inside the territory of the Philippines and not where the necessaries were
Hellenic Lines, Ltd. v. Rhoditis [24] was also a suit under the Jones Act by a Greek seaman
furnished in a foreign jurisdiction like Canada. [12]
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 lien as well as the statutory directives found in the Maritime Lien Statute and that the initial

and whose stock is more than 95% owned by a U.S. domiciliary who is also a Greek citizen. choice of law determination is significantly affected by the statutory policies surrounding a

The ship was engaged in regularly scheduled runs between various ports of the U.S. and the maritime lien. It ruled that the facts in the case call for the application of the Restatement

Middle East, Pakistan, and India, with its entire income coming from either originating or (Second) of Conflicts of Law. The U.S. Court gave much significance to the congressional

terminating in the U.S. The contract of employment provided that Greek law and a Greek intent in enacting the Maritime Lien Statute to protect the interests of American supplier of

collective bargaining agreement would apply between the employer and the seaman and goods, services or necessaries by making maritime liens available where traditional services

that all claims arising out of the employment contract were to be adjudicated by a Greek are routinely rendered. It concluded that the Maritime Lien Statute represents a relevant

court. The U.S. Supreme Court observed that of the seven factors listed in the Lauritzen policy of the forum that serves the needs of the international legal system as well as the

test, four were in favor of the shipowner and against jurisdiction. 'In arriving at the basic policies underlying maritime law. The court also gave equal importance to the

conclusion that the Jones Act applies, it ruled that the application of the Lauritzen test is not predictability of result and protection of justified expectations in a particular field of law. In

a mechanical one. It stated thus: '[t]he significance of one or more factors must be the maritime realm, it is expected that when necessaries are furnished to a vessel in an

considered in light of the national interest served by the assertion of Jones Act jurisdiction. American port by an American supplier, the American Lien Statute will apply to protect that

(footnote omitted) Moreover, the list of seven factors in Lauritzen was not intended to be supplier regardless of the place where the contract was formed or the nationality of the

exhaustive. x x x [T]he shipowner's base of operations is another factor of importance in vessel.

determining whether the Jones Act is applicable; and there well may be others.

The same principle was applied in the case of Swedish Telecom Radio v. M/V Discovery

The principles enunciated in these maritime tort cases have been extended to cases involving I [29] where the American court refused to apply the Federal Maritime Lien Act to create a

unpaid supplies and necessaries such as the maritime lien for goods and services supplied by foreign companies in foreign ports. In this

cases of Forsythe International U.K., Ltd. v. M/V Ruth Venture, [25] and Comoco Marine case, a Swedish company supplied radio equipment in a Spanish port to refurbish a

Services v. M/V El Centroamericano. [26] 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

Three. The factors provided in Restatement (Second) of Conflicts of Law have also been
submit to Swedish law. The ship was later sold under a contract of purchase providing for the

applied, especially in resolving cases brought under the Federal Maritime Lien Act. Their
application of New York law and was arrested in the U.S. The U.S. Court of Appeals also held

application suggests that in the absence of an effective choice of law by the parties, the
that while the contacts-based framework set forth in Lauritzen was useful in the analysis of

forum contacts to be considered include: (a) the place of contracting; (b) the place of
all maritime choice of law situations, the factors were geared towards a seaman's injury

negotiation of the contract; (c) the place of performance; (d) the location of the subject
claim. As in Gulf Trading, the lien arose by operation of law because the ship's owner was

matter of the contract; and (e) the domicile, residence, nationality, place of incorporation
not a party to the contract under which the goods were supplied. As a result, the court found
and place of business of the parties. [27]
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
In Gulf Trading and Transportation Co. v. The Vessel Hoegh Shield, [28] an admiralty
Maritime Lien Act is the protection of American suppliers of goods and services.
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
The same factors were applied in the case of Ocean Ship Supply, Ltd. v. M/V Leah. [30]

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 II.

within the jurisdiction of the U.S., and because the invoice specified payment in the U.S., the

Finding guidance from the foregoing decisions, the Court cannot sustain petitioner Crescent's
admiralty and maritime law of the U.S. applied. The U.S. Court of Appeals recognized the

insistence on the application of P.D. No. 1521 or the Ship Mortgage Decree of 1978 and hold
modern approach to maritime conflict of law problems introduced in the Lauritzen case.
that a maritime lien exists.
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 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
disclaimer that its conclusion is limited to the unique circumstances surrounding a maritime 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. pleaded and proved, such foreign law must be presumed to be the same as Philippine law

pursuant to the doctrine of processual presumption.

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 Thus, we are left with two choices: (1) dismiss the case for petitioner's failure to establish a

the U.S., P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted primarily to cause of action [31] or (2) presume that Canadian law is the same as Philippine law. In either

protect Filipino suppliers and was not intended to create a lien from a contract for supplies case, the case has to be dismissed.

between foreign entities delivered in a foreign port.

It is well-settled that a party whose cause of action or defense depends upon a foreign law

Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of 1978 and rule that a maritime has the burden of proving the foreign law. Such foreign law is treated as a question of fact to

lien exists would not promote the public policy behind the enactment of the law to develop be properly pleaded and proved. [32] Petitioner Crescent's insistence on enforcing a

the domestic shipping industry. Opening up our courts to foreign suppliers by granting them maritime lien before our courts depended on the existence of a maritime lien under the

a maritime lien under our laws even if they are not entitled to a maritime lien under their proper law. By erroneously claiming a maritime lien under Philippine law instead of proving

laws will encourage forum shopping. that a maritime lien exists under Canadian law, petitioner Crescent failed to establish a cause

of action. [33]
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 Even if we apply the doctrine of processual presumption, the result will still be the same.

Canada, they could not have intended the laws of a remote country like the Philippines to Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the following are the requisites

determine the creation of a lien by the mere accident of the Vessel's being in Philippine for maritime liens on necessaries to exist: (1) the 'necessaries' must have been furnished to

territory. 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
III.
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
But under which law should petitioner Crescent prove the existence of its maritime lien?
avail in the instant case.

In light of the interests of the various foreign elements involved, it is clear that Canada has
First. It was not established that benefit was extended to the vessel. While this is presumed
the most significant interest in this dispute. The injured party is a Canadian corporation, the
when the master of the ship is the one who placed the order, it is not disputed that in this
sub-charterer which placed the orders for the supplies is also Canadian, the entity which
case it was the sub-charterer Portserv which placed the orders to petitioner
physically delivered the bunker fuels is in Canada, the place of contracting and negotiation is
Crescent. [35] Hence, the presumption does not arise and it is incumbent upon petitioner
in Canada, and the supplies were delivered in Canada.
Crescent to prove that benefit was extended to the vessel. Petitioner did not.

The arbitration clause contained in the Bunker Fuel Agreement which states that New York
Second. Petitioner Crescent did not show any proof that the marine products were
law governs the 'construction, validity and performance of the contract is only a factor that
necessary for the continuation of the vessel.
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 Third. It was not established that credit was extended to the vessel. It is presumed that 'in

operation of law and not by contract because the shipowner was not a party to the contract the absence of fraud or collusion, where advances are made to a captain in a foreign port,

under which the goods were supplied. 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
It is worthy to note that petitioner Crescent never alleged and proved Canadian law as basis
vessel, that they are made upon the credit of the vessel as well as upon that of her
for the existence of a maritime lien. To the end, it insisted on its theory that Philippine law
owners. [36] In this case, it was the sub-charterer Portserv which requested for the delivery
applies. Petitioner contends that even if foreign law applies, since the same was not properly
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.
EN BANC
[G.R. No. L-23145. November 29, 1968.]
TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased. RENATO D. TAYAG, ancillary
administrator-appellee, v. BENGUET CONSOLIDATED, INC., Oppositor-Appellant.
Cirilo F. Asperillo, Jr., for ancillary administrator-appellee.
Ross, Salcedo, Del Rosario, Bito & Misa for Oppositor-Appellant.
SYLLABUS
1. REMEDIAL LAW; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATE; WHEN ANCILLARY
ADMINISTRATION IS PROPER. — The ancillary administration is proper, whenever a person
dies, leaving in a country other than that of his last domicile, property to be administered in
the nature of assets of the deceased liable for his individual debts or to be distributed among
his heirs (Johannes v. Harvey, 43 Phil. 175). Ancillary administration is necessary or the
reason for such administration is because a grant of administration does not ex proprio
vigore have any effect beyond the limits of the country in which it is granted. Hence, an
administrator appointed in a foreign state has no authority in the Philippines.
2. ID.; ID.; ID.; SCOPE OF POWER AND AUTHORITY OF AN ANCILLARY ADMINISTRATOR. — No
one could dispute the power of an ancillary administrator to gain control and possession of
all assets of the decedent within the jurisdiction of the Philippines. Such a power is inherent
in his duty to settle her estate and satisfy the claims of local creditors (Rule 84, Sec. 3, Rules
of Court. Cf Pavia v. De la Rosa, 8 Phil. 70; Liwanag v. Reyes, L-19159, Sept. 29, 1964; Ignacio
v. Elchico, L-18937, May 16, 1967; etc.). It is a general rule universally recognized that
administration, whether principal or ancillary, certainly extends to the assets of a decedent
found within the state or country where it was granted, the corollary being "that an
administrator appointed in one state or country has no power over property in another state
or country" (Leon and Ghezzi v. Manufacturers Life Ins. Co., 90 Phil. 459).
3. ID.; ID.; ID.; ID.; CASE AT BAR. — Since, in the case at bar, there is a refusal, persistently
adhered to by the domiciliary administrator in New York, to deliver the shares of stocks of
appellant corporation owned by the decedent to the ancillary administrator in the
Philippines, there was nothing unreasonable or arbitrary in considering them as lost and
requiring the appellant to issue new certificates in lieu thereof. Thereby, the task incumbent
under the law on the ancillary administrator could be discharged and his responsibility
fulfilled. Any other view would result in the compliance to a valid judicial order being made
to depend on the uncontrolled discretion of a party or entity.
4. CORPORATION LAW; CORPORATIONS; CONCEPT AND NATURE. — A corporation is an
artificial being created by operation of law (Sec. 2, Act No. 1459). A corporation as known to
Philippine jurisprudence is a creature without any existence until it has received the
imprimatur of the state acting according to law. It is logically inconceivable therefore that it
will have rights and privileges of a higher priority than that of its creator. More than that, it
cannot legitimately refuse to yield obedience to acts of its state organs, certainly not
excluding the judiciary, whenever called upon to do so. A corporation is not in fact and in
reality a person, but the law treats it as though it were a person by process of fiction, or by
regarding it as an artificial person distinct and separate from its individual stockholders (1
Fletcher, Cyclopedia Corporations, pp. 19-20)
DECISION
FERNANDO, J.:
Confronted by an obstinate and adamant refusal of the domiciliary administrator, the County
Trust Company of New York, United States of America, of the estate of the deceased Idonah
Slade Perkins, who died in New York City on March 27, 1960, to surrender to the ancillary
administrator in the Philippines the stock certificates owned by her in a Philippine
corporation, Benguet Consolidated, Inc., to satisfy the legitimate claims of local creditors, the
lower court, then presided by the Honorable Arsenio Santos, now retired, issued on May 18,
1964, an order of this tenor: "After considering the motion of the ancillary administrator,
dated February 11, 1964, as well as the opposition filed by the Benguet Consolidated, Inc.,
the Court hereby (1) considers as lost for all purposes in connection with the administration
and liquidation of the Philippine estate of Idonah Slade Perkins the stock certificates covering
the 33,002 shares of stock standing in her name in the books of the Benguet Consolidated,
Inc., (2) orders said certificates cancelled, and (3) directs said corporation to issue new
certificates in lieu thereof, the same to be delivered by said corporation to either the
incumbent ancillary administrator or to the Probate Division of this Court." 1
From such an order, an appeal was taken to this Court not by the domiciliary administrator,
the County Trust Company of New York, but by the Philippine corporation, the Benguet
Consolidated, Inc. The appeal cannot possibly prosper. The order challenged represents a
response and expresses a policy, to paraphrase Frankfurter, arising out of a specific problem,
addressed to the attainment of specific ends by the use of specific remedies, with full and
ample support from legal doctrines of weight and significance.
The facts will explain why. As set forth in the brief of appellant Benguet Consolidated, Inc.,
Idonah Slade Perkins, who died on March 27, 1960 in New York City, left among others, two
stock certificates covering 33,002 shares of appellant, the certificates being in the possession
of the County Trust Company of New York, which as noted, is the domiciliary administrator
of the estate of the deceased 2 Then came this portion of the appellant’s brief: "On August
12, 1960, Prospero Sanidad instituted ancillary administration proceedings in the Court of
First Instance of Manila; Lazaro A. Marquez was appointed ancillary administrator; and on
January 22, 1963, he was substituted by the appellee Renato D. Tayag. A dispute arose
between the domiciliary administrator in New York and the ancillary administrator in the
Philippines as to which of them was entitled to the possession of the stock certificates in
question. On January 27, 1964, the Court of First Instance of Manila ordered the domiciliary
administrator, County Trust Company, to `produce and deposit’ them with the ancillary
administrator or with the Clerk of Court. The domiciliary administrator did not comply with
the order, and on February 11, 1964, the ancillary administrator petitioned the court to
"issue an order declaring the certificate or certificates of stocks covering the 33,002 shares
issued in the name of Idonah Slade Perkins by Benguet Consolidated, Inc. be declared [or]
considered as lost." 3

It is to be noted further that appellant Benguet Consolidated, Inc. admits that "it is
immaterial" as far as it is concerned as to "who is entitled to the possession of the stock
certificates in question; appellant opposed the petition of the ancillary administrator
because the said stock certificates are in existence, they are today in the possession of the
domiciliary administrator, the County Trust Company, in New York, U.S.A.. . . ." 4
It is its view, therefore, that under the circumstances, the stock certificates cannot be
declared or considered as lost. Moreover, it would allege that there was a failure to observe
certain requirements of its by-laws before new stock certificates could be issued. Hence, its
appeal.
As was made clear at the outset of this opinion, the appeal lacks merit. The challenged order
constitutes an emphatic affirmation of judicial authority sought to be emasculated by the
willful conduct of the domiciliary administrator in refusing to accord obedience to a court
decree. How, then, can this order be stigmatized as illegal?
As is true of many problems confronting the judiciary, such a response was called for by the
realities of the situation. What cannot be ignored is that conduct bordering on willful
defiance, if it had not actually reached it, cannot without undue loss of judicial prestige, be
condoned or tolerated. For the law is not so lacking in flexibility and resourcefulness as to
preclude such a solution, the more so as deeper reflection would make clear its being
buttressed by indisputable principles and supported by the strongest policy considerations.
It can truly be said then that the result arrived at upheld and vindicated the honor of the
judiciary no less than that of the country. Through this challenged order, there is thus
dispelled the atmosphere of contingent frustration brought about by the persistence of the
domiciliary administrator to hold on to the stock certificates after it had, as admitted,
voluntarily submitted itself to the jurisdiction of the lower court by entering its appearance
through counsel on June 27, 1963, and filing a petition for relief from a previous order of
March 15, 1963. Thus did the lower court, in the order now on appeal, impart vitality and
effectiveness to what was decreed. For without it, what it had been decided would be set at
naught and nullified. Unless such a blatant disregard by the domiciliary administrator, with
residence abroad, of what was previously ordained by a court order could be thus remedied,
it would have entailed, insofar as this matter was concerned, not a partial but a well-nigh
complete paralysis of judicial authority.
1. Appellant Benguet Consolidated, Inc. did not dispute the power of the appellee ancillary
administrator to gain control and possession of all assets of the decedent within the
jurisdiction of the Philippines. Nor could it. Such a power is inherent in his duty to settle her
estate and satisfy the claims of local creditors. 5 As Justice Tuason speaking for this Court
made clear, it is a "general rule universally recognized" that administration, whether
principal or ancillary, certainly "extends to the assets of a decedent found within the state or
country where it was granted," the corollary being "that an administrator appointed in one
state or country has no power over property in another state or country." 6
It is to be noted that the scope of the power of the ancillary administrator was, in an earlier
case, set forth by Justice Malcolm. Thus: "It is often necessary to have more than one
administration of an estate. When a person dies intestate owning property in the country of
his domicile as well as in a foreign country, administration is had in both countries. That
which is granted in the jurisdiction of decedent’s last domicile is termed the principal
administration, while any other administration is termed the ancillary administration. The
reason for the latter is because a grant of administration does not ex proprio vigore have any
effect beyond the limits of the country in which it is granted. Hence, an administrator
appointed in a foreign state has no authority in the [Philippines]. The ancillary administration
is proper, whenever a person dies, leaving in a country other than that of his last domicile,
property to be administered in the nature of assets of the deceased liable for his individual
debts or to be distributed among his heirs." 7 The fear of appellant of a contingent liability with which it could be saddled unless the
It would follow then that the authority of the probate court to require that ancillary
administrator’s right to "the stock certificates covering the 33,002 shares .. standing in her
name in the books of [appellant] Benguet Consolidated, Inc.." be respected is equally beyond
question. For appellant is a Philippine corporation owing full allegiance and subject to the
unrestricted jurisdiction of local courts. Its shares of stock cannot therefore be considered in
any wise as immune from lawful court orders.
Our holding in Wells Fargo Bank and Union v. Collector of Internal Revenue 8 finds
application. "In the instant case, the actual situs of the shares of stock is in the Philippines,
the corporation being domiciled [here]." To the force of the above undeniable proposition,
not even appellant is insensible. It does not dispute it. Nor could it successfully do so even if
it were so minded.
2. In the face of such incontrovertible doctrines that argue in a rather conclusive fashion for
the legality of the challenged order, how does appellant Benguet Consolidated, Inc. propose
to carry the extremely heavy burden of persuasion of precisely demonstrating the contrary?
It would assign as the basic error allegedly committed by the lower court its "considering as
lost the stock certificates covering 33,002 shares of Benguet belonging to the deceased
Idonah Slade Perkins, . . ." 9 More specifically, appellant would stress that the "lower court
could not `consider as lost’ the stock certificates in question when, as a matter of fact, his
Honor the trial Judge knew, and does know, and it is admitted by the appellee, that the said
stock certificates are in existence and are today in the possession of the domiciliary
administrator in New York." 10
There may be an element of fiction in the above view of the lower court. That certainly does
not suffice to call for the reversal of the appealed order. Since there is a refusal, persistently
adhered to by the domiciliary administrator in New York, to deliver the shares of stocks of
appellant corporation owned by the decedent to the ancillary administrator in the
Philippines, there was nothing unreasonable or arbitrary in considering them as lost and
requiring the appellant to issue new certificates in lieu thereof. Thereby, the task incumbent
under the law on the ancillary administrator could be discharged and his responsibility
fulfilled.
Any other view would result in the compliance to a valid judicial order being made to depend
on the uncontrolled discretion of the party or entity, in this case domiciled abroad, which
thus far has shown the utmost persistence in refusing to yield obedience. Certainly, appellant
would not be heard to contend in all seriousness that a judicial decree could be treated as a
mere scrap of paper, the court issuing it being powerless to remedy its flagrant disregard.
It may be admitted of course that such alleged loss as found by the lower court did not
correspond exactly with the facts. To be more blunt, the quality of truth may be lacking in
such a conclusion arrived at. It is to be remembered however, again to borrow from
Frankfurter, "that fictions which the law may rely upon in the pursuit of legitimate ends have
played an important part in its development." 11
Speaking of the common law in its earlier period, Cardozo could state that fictions "were
devices to advance the ends of justice, [even if] clumsy and at times offensive." 12 Some of
them have persisted even to the present, that eminent jurist, noting "the quasi contract, the
adopted child, the constructive trust, all of flourishing vitality, to attest the empire of `as if’
today." 13 He likewise noted "a class of fictions of another order, the fiction which is a
working tool of thought, but which at times hides itself from view till reflection and analysis
have brought it to the light." 14
What cannot be disputed, therefore, is the at times indispensable role that fictions as such
played in the law. There should be then on the part of the appellant a further refinement in
the catholicity of its condemnation of such judicial technique. If ever an occasion did call for
the employment of a legal fiction to put an end to the anomalous situation of a valid judicial
order being disregarded with apparent impunity, this is it. What is thus most obvious is that
this particular alleged error does not carry persuasion.
3. Appellant Benguet Consolidated, Inc. would seek to bolster the above contention by its
invoking one of the provisions of its by-laws which would set forth the procedure to be
followed in case of a lost, stolen or destroyed stock certificate; it would stress that in the
event of a contest or the pendency of an action regarding ownership of such certificate or
certificates of stock allegedly lost, stolen or destroyed, the issuance of a new certificate or
certificates would await the "final decision by [a] court regarding the ownership [thereof]."
15
Such reliance is misplaced. In the first place, there is no such occasion to apply such a by-law.
It is admitted that the foreign domiciliary administrator did not appeal from the order now in
question. Moreover, there is likewise the express admission of appellant that as far as it is
concerned, "it is immaterial . . . who is entitled to the possession of the stock certificates . . ."
Even if such were not the case, it would be a legal absurdity to impart to such a provision
conclusiveness and finality. Assuming that a contrariety exists between the above by-law and
the command of a court decree, the latter is to be followed.
It is understandable, as Cardozo pointed out, that the Constitution overrides a statute, to
which, however, the judiciary must yield deference, when appropriately invoked and
deemed applicable. It would be most highly unorthodox, however, if a corporate by-law
would be accorded such a high estate in the jural order that a court must not only take note
of it but yield to its alleged controlling force.
appealed order be set aside for its inconsistency with one of its by-laws does not impress us.
Its obedience to a lawful court order certainly constitutes a valid defense, assuming that such
apprehension of a possible court action against it could possibly materialize. Thus far,
nothing in the circumstances as they have developed gives substance to such a fear.
Gossamer possibilities of a future prejudice to appellant do not suffice to nullify the lawful
exercise of judicial authority.
4. What is more the view adopted by appellant Benguet Consolidated, Inc. is fraught with
implications at war with the basic postulates of corporate theory.
We start with the undeniable premise that, "a corporation is an artificial being created by
operation of law . . ." 16 It owes its life to the state, its birth being purely dependent on its
will. As Berle so aptly stated: "Classically, a corporation was conceived as an artificial person,
owing its existence through creation by a sovereign power. 17 As a matter of fact, the
statutory language employed owes much to Chief Justice Marshall, who in the Dartmouth
College decision, defined a corporation precisely as "an artificial being invisible, intangible,
and existing only in contemplation of law." 18
The well-known authority Fletcher could summarize the matter thus: "A corporation is not in
fact and in reality a person, but the law treats it as though it were a person by process of
fiction, or by regarding it as an artificial person distinct and separate from its individual
stockholders.. It owes its existence to law. It is an artificial person created by law for certain
specific purposes, the extent of whose existence, powers and liberties is fixed by its charter."
19 Dean Pound’s terse summary, a juristic person, resulting from an association of human
beings granted legal personality by the state, puts the matter neatly. 20
There is thus a rejection of Gierke’s genosssenchaft theory, the basic theme of which to
quote from Friedmann, "is the reality of the group as a social and legal entity, independent of
state recognition and concession." 21 A corporation as known to Philippine jurisprudence is a
creature without any existence until it has received the imprimatur of the state acting
according to law. It is logically inconceivable therefore that it will have rights and privileges
of a higher priority than that of its creator. More than that, it cannot legitimately refuse to
yield obedience to acts of its state organs, certainly not excluding the judiciary, whenever
called upon to do so.
As a matter of fact, a corporation once it comes into being, following American law still of
persuasive authority in our jurisdiction, comes more often within the ken of the judiciary
than the other two coordinate branches. It institutes the appropriate Court Action to enforce
its rights. Correlatively, it is not immune from judicial control in those instances, where a
duty under the law as ascertained in an appropriate legal proceeding is cast upon it.
To assert that it can choose which court order to follow and which to disregard is to confer
upon it not autonomy which may be conceded but license which cannot be tolerated. It is to
argue that it may, when so minded, overrule the state, the source of its very existence; it is
to contend that what any of its governmental organs may lawfully require could be ignored
at will. So extravagant a claim cannot possibly merit approval.
5. One last point. In Viloria v. Administrator of Veterans Affairs, 22 it was shown that in a
guardianship proceeding then pending in a lower court, the United States Veterans
Administration filed a motion for the refund of a certain sum of money paid to the minor
under guardianship, alleging that the lower court had previously granted its petition to
consider the deceased father as not entitled to guerilla benefits according to a determination
arrived at by its main office in the United States. The motion was denied. In seeking a
reconsideration of such order, the Administrator relied on an American federal statute
making his decisions "final and conclusive on all questions of law or fact" precluding any
other American official to examine the matter anew, "except a judge or judges of the United
States court." 23 Reconsideration was denied, and the Administrator appealed.
In an opinion by Justice J.B.L. Reyes, we sustained the lower court. Thus: "We are of the
opinion that the appeal should be rejected. The provisions of the U.S. Code, invoked by the
appellant, make the decisions of U.S. Veteran Administrator final and conclusive when made
on claims properly submitted to him for resolution; but they are not applicable to the
present case, where the Administrator is not acting as a judge but as a litigant. There is a
great difference between actions against the Administrator (which must be filed strictly in
accordance with the conditions that are imposed by the Veterans’ Act, including the
exclusive review by United States courts), and those actions where the Veterans’
Administrator seeks a remedy from our courts and submits to their jurisdiction by filing
actions therein. Our attention has not been called to any law or treaty that would make the
findings of the Veterans’ Administrator, in actions where he is a party, conclusive on our
courts. That, in effect, would deprive our tribunals of judicial discretion and render them
mere subordinate instrumentalities of the Veterans’ Administrator."cralaw virtua1aw library
It is bad enough as the Viloria decision made patent for our judiciary to accept as final and
conclusive, determinations made by foreign governmental agencies. It is infinitely worse if
through the absence of any coercive power by our courts over juridical persons within our
jurisdiction, the force and effectivity of their orders could be made to depend on the whim or
caprice of alien entities. It is difficult to imagine of a situation more offensive to the dignity of
the bench or the honor of the country.
Yet that would be the effect, even if unintended, of the proposition to which appellant
Benguet Consolidated seems to be firmly committed as shown by its failure to accept the
validity of the order complained of; it seeks its reversal. Certainly we must at all pains see to
it that it does not succeed. The deplorable consequences attendant on appellant prevailing
attest to the necessity of a negative response from us. That is what appellant will get.
That is all then that this case presents. It is obvious why the appeal cannot succeed. It is
always easy to conjure extreme and even oppressive possibilities. That is not decisive. It does
not settle the issue. What carries weight and conviction is the result arrived at, the just
solution obtained, grounded in the soundest of legal doctrines and distinguished by its
correspondence with what a sense of realism requires. For through the appealed order, the
imperative requirement of justice according to law is satisfied and national dignity and honor
maintained.
WHEREFORE, the appealed order of the Honorable Arsenio Santos, the Judge of the Court of
First Instance, dated May 18, 1964, is affirmed. With costs against oppositor-appellant
Benguet Consolidated, Inc.
Makalintal, Zaldivar, and Capistrano, JJ., concur.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez and Ruiz Castro, JJ., concur in the result.
FIRST DIVISION
G.R. No. 192285, July 11, 2018
MATEO ENCARNACION (DECEASED), SUBSTITUTED BY HIS HEIRS, NAMELY: ELSA DEPLIAN-
ENCARNACION, KRIZZA MARIE D. ENCARNACION, LORETA ENCARNACION, CARMELITA E.
STADERMAN, CORAZON S. ENCARNACION, RIZALINA ENCARNACION-PARONG, VICTORIA
ENCARNACION-DULA, MARIA HELEN ENCARNACION-DAY, TERESITA ENCARNACION-
MANALANG, GEORGE ENCARNACION, MARY MITCHIE E. EDWARDSON, ERNESTO
ENCARNACION, MATEO ENCARNACION, JR., AND GRACE WAGNER, Petitioners, v. THOMAS
JOHNSON, Respondent.
DECISION
JARDELEZA, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to
nullify the Court of Appeals' (CA) August 12, 2009 Decision 2 and May 13, 2010 Resolution3 in
CA-G.R. SP No. 100483. The CA denied the petition for annulment of judgment filed by
Mateo Encarnacion (Mateo) against the February 17, 2005 Order 4 of Branch 72 of the
Regional Trial Court (RTC) of Olongapo City in Civil Case No. 110-0-2003. The RTC granted
Thomas Johnson's (respondent) prayer to further amend the amended writ of execution in
his action for recognition and enforcement of foreign judgment.
On October 6, 2000, respondent filed an action for breach of contract with prayer for
damages and costs against spouses Narvin Edwarson (Narvin) and Mary Mitchie Edwarson
(also known as Mary Encarnacion; hereinafter shall be referred to as Mary), Mateo's
daughter, before the Vancouver Registry of the Supreme Court of British Columbia, Canada.
Respondent alleged that Narvin and Mary convinced him to invest his money and personal
property in a vehicle leasing company owned by the couple, which turned out to be a
fraudulent business scheme. The couple neither deposited the promised profits into his
account nor gave an accounting or explanation as to where his funds went.5
The Supreme Court of British Columbia gave due course to respondent's action and ordered
summons to be served upon Narvin and Mary. While service of summons was being
attempted, respondent moved that the Supreme Court of British Columbia grant him a
Mareva injunction, with ex juris affect, to restrain Narvin and Mary from dealing with any of
their assets except as is necessary for payment of ordinary living expenses or to carry on
their ordinary business.6 On October 6, 2000, the Supreme Court of British Columbia issued a
Mareva injunction7 and authorized respondent, among others, to obtain orders in foreign
jurisdictions which would permit its enforcement in those jurisdictions.
On February 26, 2001, the Supreme Court of British Columbia issued a Default
Judgment8 finding Narvin and Mary liable to respondent in the amount of C$380,431.00 with
interest in the amount of C$18,385.56, C$1,198.04 as cost, and for damages to be
determined. On June 29, 2001, it ordered Narvin and Mary to each pay respondent the sum
of C$25,000.00 as aggravated damages.9
On February 24, 2003, respondent filed an action for recognition and enforcement of foreign
judgment with prayer for the recognition of the Mareva injunction 10 with Branch 72 of the
RTC of Olongapo City, docketed as Civil Case No. 110-0-2003. Respondent also
simultaneously petitioned to be allowed to litigate as a pauper litigant. 11 On February 27,
2003, the RTC granted his petition on the condition that a lien of P123,161.00, representing
the amount of the filing fees, would be imposed upon him in the event of a favorable
judgment.12
On March 5, 2003, the RTC issued an Order13 restraining Narvin and Mary from disposing or
encumbering their assets, as well as those belonging to, or controlled by, the Zambales-
Canada Foundation, the 5-E Foundation, and those belonging to Mateo (for being properties
transferred in fraud of creditors). On May 12, 2003, the RTC ordered the Register of Deeds of
Zambales and the Provincial Assessor to annotate its March 5, 2003 Order on the titles and
tax declarations of all properties owned by Narvin and Mary, as well as those belonging to
Mateo.14 Thereafter, the RTC ordered the service of summonses by publication upon Narvin
and Mary.15 Despite publication, Narvin and Mary still failed to file their answer. Accordingly,
on December 1, 2003, the RTC declared them in default, and subsequently rendered a
judgment in default in accordance with the judgment of the Supreme Court of British
Columbia.16
On March 30, 2004, the RTC issued a Writ of Execution17 authorizing the sheriff to attach
sufficient properties belonging to Narvin and Mary to satisfy the judgment award. On August
3, 2004, the RTC, acting on respondent's motion to modify the Writ of Execution (to include
in the writ the properties under the name of Mateo whose title and tax declarations were
previously annotated), modified the Writ of Execution. 18 It issued an Amended Writ of
Execution19 on September 9, 2004 authorizing the sheriff to include the properties registered
in the name of Mateo as subject of the execution.
Subsequently, 13 levied properties not covered by certificates of title were sold in public
auction on June 23, 2004, wherein respondent placed the highest bid of
P10,000,000.00.20 The properties listed in the Certificate of Sale21 were: (1) a
coco/agricultural land covered by Tax Declaration No. 016-0322A in the name of "Mary
Mitchie Encarnacion;" and (2) a commercial/agricultural land covered by Tax Declaration No.
007-0410AR in the name of "Mary Mitchie E. Edwardson."
On January 11, 2005, respondent filed a motion for clarificatory order 22 seeking further
amendment of the writ of execution to expressly authorize the levy of the properties in the
name of Mateo whose title and tax declarations were previously annotated with the March
30, 2004 Order.
Subsequently, Mateo filed an Affidavit of Third Party Claim 23 dated January 17, 2005 before
the RTC, which was noted on January 20, 2005,24 claiming that he is the owner of 14 parcels
of land which were being levied. The records, however, are not clear as to what action was
taken by the RTC on Mateo's third party claim. 25
In its February 17, 2005 Order,26 the RTC, acting on respondent's motion for clarificatory
order, further amended the Writ of Execution as follows:
"x x x
"AND FURTHER ORDERS to levy the properties registered under the name of Mateo
Encarnacion which was previously annotated in the Assessors Office and the Register of
Deeds of Iba, Zambales, shall be the subject of the same under execution."
On September 10, 2007, or more than two years after the February 17, 2005 Order was
issued, Mateo filed a petition for annulment of judgment 27 before the CA (CA-G.R. SP No.
100483). He alleged that he is the owner of 18 properties levied in Civil Case No. 110-0-2003;
that he was not made a party to the case; and that the inclusion of his properties in the levy
and execution sale were made without notice to him. 28 Mateo, nonetheless, admitted before
the CA that he has no standing to question the proceedings on the action for recognition and
enforcement of judgment. He asserts that he is only questioning the February 17, 2005 Order
which deprived him of his properties.29
In his answer,30 respondent countered that the tax declarations under Mateo's name cannot
be invoked as a legal basis to claim ownership over the properties. According to respondent,
Mateo fraudulently caused the issuance of these tax declarations under his name—they
were effected after the issuance of the March 5, 2003 Order and the execution sale on July
23, 2004.31 Respondent also averred that the RTC conducted an investigation and had
already excluded from the levy certain properties which undisputedly belonged to Mateo. 32
Meanwhile, another sale in Civil Case No. 110-0-2003 resulted in a Certificate of Sale33 dated
November 29, 2006 in favor of respondent, covering the properties covered by the following:
(1) Original Certificate of Title (OCT) No. P-9496; (2) Tax Declaration No. 016-0324AR; (3) OCT
No. P-9498; (4) OCT No. P-9336; (5) OCT No. P-9421; (6) OCT No. P-9508; and (7) Tax
Declaration No. 016-0845. Respondent was the highest bidder for these properties in the
total amount of P4,000,000.00. On November 3, 2008, the RTC issued an Order 34 granting
the motion for consolidation of title filed by respondent over the properties subject of the
Certificates of Sale.
During the pendency of the proceedings before the CA, Mateo died and was substituted by
his heirs (petitioners), including his daughter Mary. 35 In their Memorandum36 dated January
12, 2009, petitioners amended their argument to aver that all the proceedings in Civil Case
No. 110-0-2003 should be annulled on the ground of lack of jurisdiction and extrinsic fraud. 37
On August 12, 2009, the CA denied the petition. 38 It upheld the jurisdiction of the RTC over
the action of recognition of foreign judgment. By filing an Affidavit of Third Party Claim,
Mateo was deemed to have voluntarily submitted himself to the jurisdiction of the RTC. 39 It
also ruled that the remedy of annulment of judgment is not proper because the February 17,
2005 Order is not a final order as it merely seeks to clarify the RTC's further amended writ of
execution; the proper remedy is to move to quash the writ of execution and if unsuccessful,
to file a petition for certiorari under Rule 65 of the Rules of Court. 40 The CA also said that
even if procedural rules were relaxed, the petition would still fail because it has already been
barred by estoppel and laches due to Mateo's delay in filing the petition despite numerous
opportunities to do so.41 Lastly, the CA pointed out that Mateo is not the proper party to file
the petition, as he had already transferred the properties to Mary by virtue of a deed of
quitclaim on February 27, 1995.42
On May 13, 2010, the CA denied petitioners' motion for reconsideration. 43 Hence, this
petition.
Petitioners reiterate their arguments before the CA that the whole proceedings in Civil Case
No. 110-0-2003 be annulled on grounds of lack of jurisdiction and extrinsic fraud because the
RTC: (1) allowed respondent to sue as an indigent party when he is willing and able to put up
a bond that may be required by the court; (2) allowed a complaint with a grossly defective
certification against forum shopping; (3) allowed service of summons by publication in an
action in personam and exercised jurisdiction on that basis; (4) recognized a global injunction
issued by a foreign court as a writ of attachment; (5) promulgated a final order without
requiring the presentation of evidence, even ex parte, and without distinctly stating the facts
and the law on which it is based; (6) allowed the levy on execution of properties belonging to
a party who was not named as defendant in the civil action; and (7) allowed the sale and
delivery of the properties to a foreigner who is disqualified from owning private lands under
the Constitution.44
The issues presented are:
I. Whether an action for annulment of judgment is the proper remedy of a third-
party claimant of properties levied and sold under execution sale; and
II. Whether respondent, an alien, may own private lands by virtue of an execution
sale.
We deny the petition. Nevertheless, we nullify the sale of the private lands to respondent for
being a flagrant violation of Section 7, Article XII of the Constitution.
I
An action for annulment of judgment is a remedy in law independent of the case where the
judgment sought to be annulled is rendered. 45 The ultimate objective of the remedy is "to
undo or set aside the judgment or final order, and thereby grant to the petitioner an
opportunity to prosecute his cause or to ventilate his defense." 46 The remedy is provided by
Section 1 of Rule 47 of the Rules of Court:
Sec. 1. Coverage. - This Rule shall govern the annulment by the Court of Appeals of
judgments or final orders and resolutions in civil actions of Regional Trial Courts for which
the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies
are no longer available through no fault of the petitioner.
In Dare Adventure Farm Corporation v. Court of Appeals,47 we explained the nature of the
remedy, to wit:
A petition for annulment of judgment is a remedy in equity so exceptional in nature that it
may be availed of only when other remedies are wanting, and only if the judgment, final
order or final resolution sought to be annulled was rendered by a court lacking jurisdiction or
through extrinsic fraud. Yet, the remedy, being exceptional in character, is not allowed to be
so easily and readily abused by parties aggrieved by the final judgments, orders or
resolutions. The Court has thus instituted safeguards by limiting the grounds for the
annulment to lack of jurisdiction and extrinsic fraud, and by prescribing in Section 1 of Rule
47 of the Rules of Court that the petitioner should show that the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies are no longer available through
no fault of the petitioner. A petition for annulment that ignores or disregards any of the
safeguards cannot prosper.
The attitude of judicial reluctance towards the annulment of a judgment, final order or final
resolution is understandable, for the remedy disregards the time-honored doctrine of
immutability and unalterability of final judgments, a solid corner stone in the dispensation of
justice by the courts.48 x x x (Citations omitted.)
In Pinausukan Seafood House, Roxas Boulevard, Inc. v. Far East Bank & Trust Company,49 we
said that owing to the extraordinary nature and objective of the remedy of annulment of
judgment or final order, there are requirements that must be complied with before the
remedy is granted. First, the remedy is only available when the petitioner can no longer
resort to the ordinary remedies of new trial, appeal, petition for relief, or other appropriate
remedies through no fault of the petitioner. Second, the ground for the remedy is limited to
either extrinsic fraud or lack of jurisdiction (although lack of due process has been cited as a
ground by jurisprudence). Third, the time for availing the remedy is set by the rules: if based
on extrinsic fraud, it must be filed within four years from the discovery of extrinsic fraud; if
based on lack of jurisdiction, it must be brought before it is barred by laches or
estoppel. Fourth, the petition should be verified and should allege with particularity the facts
and law relied upon, and those supporting the petitioner's good and substantial cause of
action or defense.50
Petitioners failed to show their standing to file the petition. They have also failed to comply
with the first requirement.
a.
The proper party to file a petition for annulment of judgment or final order need not be a
party to the judgment sought to be annulled. Nevertheless, it is essential that he is able to
prove by preponderance of evidence that he is adversely affected by the judgment.51 A
person not adversely affected by a decision in the civil action or proceeding cannot bring an
action for annulment of judgment under Rule 47 of the Rules of Court. The exception is if he
is a successor in interest by title subsequent to the commencement of the action, or if the
action or proceeding is in rem, in which case the judgment is binding against him. 52
In Bulawan v. Aquende,53 we held that assuming that the petitioner is not an indispensable
party to the case that is being annulled, he may still file for a petition for annulment of
judgment. Our basic ruling is that "[w]hat is essential is that he can prove his allegation that
the judgment was obtained by the use of fraud and collusion and that he would be adversely
affected thereby."54
Here, the action sought to be annulled is a recognition of foreign judgment in a collection
case rendered by the Supreme Court of British Columbia filed by respondent against Narvin
and Mary. Under Section 48(b), Rule 39 of the Rules of Court, a foreign judgment or final
order against a person creates a "presumptive evidence of a right as between the parties and
their successors in interest by a subsequent title." We have previously held that Philippine
courts exercise limited review on foreign judgments and are not allowed to delve into its
merits. Thus, the action for recognition of foreign judgment does not require the relitigation
of the case under a Philippine court. 55 Once admitted and proven in a Philippine court, a
foreign judgment can only be repelled by the parties and their successors in interest by
subsequent title on grounds external to its merits, i.e., "want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact." 56Consequently, the right being
enforced in the action is the subject of the collection case, which is a personal one against
the couple and their successors in interest.
Considering the foregoing, Mateo is not a party who could be adversely affected by the
outcome of Civil Case No. 110-0-2003. To begin with, he was not an indispensable party to
the action for recognition whose interest in the controversy is such that a final decree will
necessarily affect his rights, as he was not the judgment debtor in the action. 57 Neither is
Mateo a real party in Interest58 in Civil Case No. 110-0-2003, as aptly noted by the CA, having
already transferred his interest in the properties to Mary. Lastly, he is not a successor in
interest of Narvin and Mary.
Further, since the ultimate objective of the remedy is to grant the petitioner an opportunity
to prosecute his cause or ventilate his defense,59 granting the petition for annulment of
judgment would not give Mateo or petitioners available defenses that he originally did not
possess. Mateo and petitioners were affected only ins far as the alleged properties of Mateo
were levied and sold at the public auction—which came after the judgment in Civil Case No.
110-0-2003. Mateo himself admitted this when he initially filed the petition. 60 Therefore,
Mateo and his heirs cannot raise the alleged irregularities in the action for recognition of
foreign judgment; he may only question the propriety of the levy and sale of their alleged
properties.
Petitioners' arguments show that the very relief they are claiming is one against the alleged
wrongful execution of the decision (which resulted in the levy and sale of the properties
allegedly belonging to Mateo), and not the decision itself. It is apparent that had the
judgment not been executed against the properties they are claiming, they would not be
seeking to annul the judgment in Civil Case No. 110-0-2003. However, any alleged irregular
implementation of a writ of execution (or resulting levy) cannot be corrected through the
equitable relief of annulment of judgment; the remedy lies elsewhere. 61
b.
In this regard, there is another reason that militates against petitioners. The remedy of
annulment of judgment is a remedy in equity so exceptional in nature that it may only be
availed of when the ordinary or other appropriate remedies provided by law are
wanting without fault or neglect on the petitioner's part.62 It is a condition sine qua non that
one must have availed of the proper remedies before resorting to the action for annulment
of judgment.63
We note that the ordinary remedies of new trial, appeal, and petition for relief were not
available to Mateo for the reason that he was not a party to Civil Case No. 110-0-2003.
Mateo was neither able to participate in the original proceedings nor resort to the other
remedies because he was not a real party in interest or an indispensable party thereto. There
are, however, other appropriate remedies available to him that he could have resorted to.
Section 16, Rule 39 of the Rules of Court provides for the remedies of a third-party claimant
of an alleged wrongfully levied property:
Sec. 16. Proceedings where property claimed by third person. - If the property levied on is
claimed by any person other than the judgment obligor or his agent, and such person makes
an affidavit of his title thereto or right to the possession thereof, stating the grounds of such
right or title, and serves the same upon the officer making the levy and a copy thereof upon
the judgment obligee, the officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved by the court to indemnify
the third-party claimant in a sum not less than the value of the property levied on. In case of
disagreement as to such value, the same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping of the property may be enforced
against the bond unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the property, to any
third-party claimant if such bond is filed. Nothing herein contained shall prevent such
claimant or any third person from vindicating his claim to the property in a separate action,
or prevent the judgment obligee from claiming damages in the same or a separate action
against a third-party claimant who filed a frivolous or plainly spurious claim.
xxxx
Based on this section, a third-party claimant has the following cumulative remedies: (a) he
may avail of "terceria" by serving on the levying officer making the levy an affidavit of his
title, and serving also a copy to the judgment creditor; (b) he may file a case for damages
against the bond issued by the judgment debtor within 120 days from the date of the filing of
the bond; and (c) he may file "any proper action" to vindicate his claim to the property. 64
In Sy v. Discaya,65 and later in Power Sector Assets and Liabilities Management Corporation
(PSALM) v. Maunlad Homes, Inc.,66 we recognized the right of a third-party claimant to file an
independent action to vindicate his claim of ownership over the properties seized under
Section 16, Rule 39 of the Rules of Court. As we pointed out in Sy, a "proper action" is
entirely "distinct and separate from that in which the judgment is being enforced, with the
court of competent jurisdiction." Such a "proper action" may have for its object the recovery
of ownership or possession of the property seized by the sheriff, as well as damages from the
allegedly wrongful seizure and detention of the property. This determination of ownership is
not the proper subject of an action for annulment of judgment. 67
In this case, the proper recourse for petitioners is to vindicate and prove their ownership
over the properties in a separate action as allowed under Section 16, Rule 39 of the Rules of
Court. This is the more prudent action since respondent also asserts that the properties
claimed were owned by Mary, and the CA upheld such assertion. At this juncture, we note
that if we grant the petition, we would be nullifying the whole proceeding in Civil Case No.
110-0-2003 which is more than what is necessary to address the remedy being sought by
petitioners.
II
While mindful of our ruling that petitioners cannot file the petition for annulment of
judgment, we nevertheless cannot turn a blind eye to the blatant violation of the
Constitution's prohibition on foreign ownership of lands. This violation was committed when
respondent was allowed to participate in the public auction sales where, as highest bidder,
he acquired land.
Section 7, Article XII of the Constitution states:
Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.
The fundamental law is clear that aliens, whether individuals or corporations, are disqualified
from acquiring lands of the public domain. 68 The right to acquire lands of the public domain
is reserved only to Filipino citizens or corporations at least 60% of the capital of which is
owned by Filipinos.69 Consequently, they are also disqualified from acquiring private lands.
In Matthews v. Taylor,70 we took cognizance of the violation of the Constitutional prohibition
on alien land ownership despite the failure of the trial and appellate courts to consider and
apply these constitutional principles. There we said, "[t]he trial and appellate courts both
focused on the property relations of petitioner and respondent in light of the Civil Code and
Family Code provisions. They, however, failed to observe the applicable constitutional
principles, which, in fact, are the more decisive."71 We said further:
The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or
private lands in the Philippines, save only in constitutionally recognized exceptions. There
is no rule more settled than this constitutional prohibition, as more and more aliens attempt
to circumvent the provision by trying to own lands through another. In a long line of cases,
we have settled issues that directly or indirectly involve the above constitutional
provision. We had cases where aliens wanted that a particular property be declared as part
of their father's estate; that they be reimbursed the funds used in purchasing a property
titled in the name of another; that an implied trust be declared in their (aliens') favor; and
that a contract of sale be nullified for their lack of consent.
In Ting Ho, Jr. v. Teng Gui, Felix Ting Ho, a Chinese citizen, acquired a parcel of land, together
with the improvements thereon. Upon his death, his heirs (the petitioners therein) claimed
the properties as part of the estate of their deceased father, and sought the partition of said
properties among themselves. We, however, excluded the land and improvements thereon
from the estate of Felix Ting Ho, precisely because he never became the owner thereof in
light of the above-mentioned constitutional prohibition.
In Muller v. Muller, petitioner Elena Buenaventura Muller and respondent Helmut Muller
were married in Germany. During the subsistence of their marriage, respondent purchased a
parcel of land in Antipolo City and constructed a house thereon. The Antipolo property was
registered in the name of the petitioner. They eventually separated, prompting the
respondent to file a petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In deciding the case
in favor of the petitioner, the Court held that respondent was aware that as an alien, he was
prohibited from owning a parcel of land situated in the Philippines. He had, in fact, declared
that when the spouses acquired the Antipolo property, he had it titled in the name of the
petitioner because of said prohibition. Hence, we denied his attempt at subsequently
asserting a right to the said property in the form of a claim for reimbursement. Neither did
the Court declare that an implied trust was created by operation of law in view of
petitioner's marriage to respondent. We said that to rule otherwise would permit
circumvention of the constitutional prohibition.
In Frenzel v. Catito, petitioner, an Australian citizen, was married to Teresita Santos; while
respondent, a Filipina, was married to Klaus Muller. Petitioner and respondent met and later
cohabited in a common-law relationship, during which petitioner acquired real properties;
and since he was disqualified from owning lands in the Philippines, respondent's name
appeared as the vendee in the deeds of sale. When their relationship turned sour, petitioner
filed an action for the recovery of the real properties registered in the name of respondent,
claiming that he was the real owner. Again, as in the other cases, the Court refused to
declare petitioner as the owner mainly because of the constitutional prohibition. The Court
added that being a party to an illegal contract, he could not come to court and ask to have
his illegal objective carried out. One who loses his money or property by knowingly engaging
in an illegal contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court, petitioner (an American citizen) and
Criselda Cheesman acquired a parcel of land that was later registered in the latter's name.
Criselda subsequently sold the land to a third person without the knowledge of the
petitioner. The petitioner then sought the nullification of the sale as he did not give his
consent thereto. The Court held that assuming that it was his (petitioner's) intention that the
lot in question be purchased by him and his wife, he acquired no right whatever over the
property by virtue of that purchase; and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as to him
was null and void.72 (Emphasis supplied; citations omitted.)
Also in Hulst v. PR Builders, Inc.,73 we said that "[b]efore resolving the question [of] whether
the CA erred in affirming the Order of the [Housing and Land Use Regulatory Board (HLURB)]
setting aside the levy made by the sheriff, it behooves this Court to address a matter of
public and national importance which completely escaped the attention of the HLURB
Arbiter and the CA: petitioner and his wife are foreign nationals who are disqualified under
the Constitution from owning real property in their names." 74 There, Hulst, a Dutch national,
won an action for rescission of a contract to sell over a 210-square meter townhouse against
the developer in the HLURB. The HLURB ordered reimbursement of the contract price to
Hulst. Subsequently, the sheriff levied real properties owned by the developer. The
developer filed a motion to quash the writ of levy on the ground of over-levy of properties,
which the HLURB Arbiter granted. While the issue before the CA, and successively before us,
was whether the HLURB Arbiters erred in setting aside the levy, we took cognizance of the
violation of the Constitution that escaped both the HLURB and the CA. We declared that the
contract to sell was void.
In this case, it is undisputed that respondent is a Canadian citizen. 75 Respondent neither
denied this, nor alleged that he became a Filipino citizen. Being an alien, he is absolutely
prohibited from acquiring private and public lands in the Philippines. Concomitantly,
respondent is also prohibited from participating in the execution sale, which has for its
object, the transfer of ownership and title of property to the highest bidder. What cannot be
legally done directly cannot be done indirectly.
In light of this, we nullify the auction sales conducted on June 23, 2004 and November 29,
2006 where respondent was declared the highest bidder, as well as the proceedings which
led to the acquisition of ownership by respondent over the lands involved. Article 1409(1)
and (7) of the Civil Code states that all contracts whose cause, object, or purpose is contrary
to law or public policy, and those expressly prohibited or declared void by law are inexistent
and void from the beginning. We thus remand the case back to Branch 72 of the RTC of
Olongapo City, to conduct anew the auction sale of the levied properties, and to exclude
respondent from participating as bidder.
WHEREFORE, the petition is DENIED. Nevertheless, the public auction sales conducted on
June 23, 2004 and November 29, 2006 in Civil Case No. 110-0-2003, and the proceedings
which resulted therefrom, are NULLIFIED for being contrary to Section 7, Article XII of the
Constitution. Branch 72 of the Regional Trial Court of Olongapo City, in Civil Case No. 110-0-
2003, is directed: (1) to proceed with the execution of the Decision dated December 1, 2003;
(2) to exclude respondent Thomas Johnson from participating in any public auction sale of
lands in said case; and (3) to order the delivery of the proceeds of any public auction sale
relevant to the execution of the Decision dated December 1, 2003 to respondent Thomas
Johnson. No costs.
SO ORDERED.
THIRD DIVISION
G.R. No. 138322. October 2, 2001
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO,, Petitioner, v. REDERICK A.
RECIO, respondent.
DECISION
PANGANIBAN, J.:
A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such
decree is valid according to the national law of the foreigner. However, the divorce decree
and the governing personal law of the alien spouse who obtained the divorce must be
proven. Our courts do not take judicial notice of foreign laws and judgments; hence, like any
other facts, both the divorce decree and the national law of the alien must be alleged and
proven according to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the
January 7, 1999 Decision 1 and the March 24, 1999 Order 2 of the Regional Trial Court of
Cabanatuan City, Branch 28, in Civil Case No. 3026AF. The assailed Decision disposed as
follows:
WHEREFORE, this Court declares the marriage between Grace J. Garcia and Rederick A. Recio
solemnized on January 12, 1994 at Cabanatuan City as dissolved and both parties can now
remarry under existing and applicable laws to any and/or both parties. 3cräläwvirtualibräry
The assailed Order denied reconsideration of the above-quoted Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in
Malabon, Rizal, on March 1, 1987. 4 They lived together as husband and wife in Australia. On
May 18, 1989, 5 a decree of divorce, purportedly dissolving the marriage, was issued by an
Australian family court.
On June 26, 1992, respondent became an Australian citizen, as shown by a Certificate of
Australian Citizenship issued by the Australian government. 6 Petitioner -- a Filipina -- and
respondent were married on January 12, 1994 in Our Lady of Perpetual Help Church in
Cabanatuan City. 7 In their application for a marriage license, respondent was declared as
single and Filipino. 8cräläwvirtualibräry
Starting October 22, 1995, petitioner and respondent lived separately without prior judicial
dissolution of their marriage. While the two were still in Australia, their conjugal assets were
divided on May 16, 1996, in accordance with their Statutory Declarations secured in
Australia. 9cräläwvirtualibräry
On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage 10 in the
court a quo, on the ground of bigamy -- respondent allegedly had a prior subsisting marriage
at the time he married her on January 12, 1994. She claimed that she learned of respondents
marriage to Editha Samson only in November, 1997.
In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner his
prior marriage and its subsequent dissolution. 11 He contended that his first marriage to an
Australian citizen had been validly dissolved by a divorce decree obtained in Australia in
1989; 12 thus, he was legally capacitated to marry petitioner in 1994.
On July 7, 1998 -- or about five years after the couples wedding and while the suit for the
declaration of nullity was pending -- respondent was able to secure a divorce decree from a
family court in Sydney, Australia because the marriage ha[d] irretrievably broken
down. 13cräläwvirtualibräry
Respondent prayed in his Answer that the Complaint be dismissed on the ground that it
stated no cause of action. 14 The Office of the Solicitor General agreed with
respondent. 15 The court marked and admitted the documentary evidence of both
parties. 16 After they submitted their respective memoranda, the case was submitted for
resolution. 17cräläwvirtualibräry
Thereafter, the trial court rendered the assailed Decision and Order.
Ruling of the Trial Court
The trial court declared the marriage dissolved on the ground that the divorce issued in
Australia was valid and recognized in the Philippines. It deemed the marriage ended, but not
on the basis of any defect in an essential element of the marriage; that is, respondents
alleged lack of legal capacity to remarry. Rather, it based its Decision on the divorce decree
obtained by respondent. The Australian divorce had ended the marriage; thus, there was no
more marital union to nullify or annul.
Hence, this Petition. 18
Issues
Petitioner submits the following issues for our consideration:
1
The trial court gravely erred in finding that the divorce decree obtained in Australia by the
respondent ipso facto terminated his first marriage to Editha Samson thereby capacitating
him to contract a second marriage with the petitioner.
2 separately a sworn application for such license with the proper local civil registrar which shall
The failure of the respondent, who is now a naturalized Australian, to present a certificate of
legal capacity to marry constitutes absence of a substantial requisite voiding the petitioners
marriage to the respondent
3 annulled;
The trial court seriously erred in the application of Art. 26 of the Family Code in this case.
4 ART. 13. In case either of the contracting parties has been previously married, the applicant
The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52 and
53 of the Family Code as the applicable provisions in this case.
5 absolute divorce, or the judicial decree of annulment or declaration of nullity of his or her
The trial court gravely erred in pronouncing that the divorce decree obtained by the
respondent in Australia ipso facto capacitated the parties to remarry, without first securing a
recognition of the judgment granting the divorce decree before our
courts.19cräläwvirtualibräry
The Petition raises five issues, but for purposes of this Decision, we shall concentrate on two
pivotal ones: (1) whether the divorce between respondent and Editha Samson was proven,
and (2) whether respondent was proven to be legally capacitated to marry petitioner.
Because of our ruling on these two, there is no more necessity to take up the rest.
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial courts recognition of the divorce between respondent and Editha
Samson. Citing Adong v. Cheong Seng Gee, 20 petitioner argues that the divorce decree, like
any other foreign judgment, may be given recognition in this jurisdiction only upon proof of
the existence of (1) the foreign law allowing absolute divorce and (2) the alleged divorce
decree itself. She adds that respondent miserably failed to establish these elements.
Petitioner adds that, based on the first paragraph of Article 26 of the Family Code, marriages
solemnized abroad are governed by the law of the place where they were celebrated (the lex
loci celebrationis). In effect, the Code requires the presentation of the foreign law to show
the conformity of the marriage in question to the legal requirements of the place where the
marriage was performed.
At the outset, we lay the following basic legal principles as the take-off points for our
discussion. Philippine law does not provide for absolute divorce; hence, our courts cannot
grant it. 21 A marriage between two Filipinos cannot be dissolved even by a divorce obtained
abroad, because of Articles 15 22 and 17 23 of the Civil Code. 24 In mixed marriages involving a
Filipino and a foreigner, Article 26 25 of the Family Code allows the former to contract a
subsequent marriage in case the divorce is validly obtained abroad by the alien spouse
capacitating him or her to remarry. 26 A divorce obtained abroad by a couple, who are both
aliens, may be recognized in the Philippines, provided it is consistent with their respective
national laws. 27cräläwvirtualibräry
A comparison between marriage and divorce, as far as pleading and proof are concerned,
can be made. Van Dorn v. Romillo Jr. decrees that aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided they are valid according to their national
law. 28 Therefore, before a foreign divorce decree can be recognized by our courts, the party
pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign
law allowing it. 29 Presentation solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in evidence, it must first
comply with the registration requirements under Articles 11, 13 and 52 of the Family Code.
These articles read as follows:
ART. 11. Where a marriage license is required, each of the contracting parties shall file
specify the following:
xxx
(5) If previously married, how, when and where the previous marriage was dissolved or
xxx
shall be required to
ART. 13. In case either of the contracting parties has been previously married, the applicant
shall be required to furnish, instead of the birth or baptismal certificate required in the last
preceding article, the death certificate of the deceased spouse or the judicial decree of the
previous marriage. x x x.
ART. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and
distribution of the properties of the spouses, and the delivery of the childrens presumptive
legitimes shall be recorded in the appropriate civil registry and registries of property;
otherwise, the same shall not affect their persons.
Respondent, on the other hand, argues that the Australian divorce decree is a public
document -- a written official act of an Australian family court. Therefore, it requires no
further proof of its authenticity and due execution.
Respondent is getting ahead of himself. Before a foreign judgment is given presumptive
evidentiary value, the document must first be presented and admitted in evidence. 30 A
divorce obtained abroad is proven by the divorce decree itself. Indeed the best evidence of a
judgment is the judgment itself. 31 The decree purports to be a written act or record of an act
of an official body or tribunal of a foreign country. 32cräläwvirtualibräry
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be
proven as a public or official record of a foreign country by either (1) an official publication or
(2) a copy thereof attested 33 by the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in the Philippine foreign service stationed
in the foreign country in which the record is kept and (b) authenticated by the seal of his
office. 34cräläwvirtualibräry
The divorce decree between respondent and Editha Samson appears to be an authentic one
issued by an Australian family court. 35 However, appearance is not sufficient; compliance
with the aforementioned rules on evidence must be demonstrated.
Fortunately for respondents cause, when the divorce decree of May 18, 1989 was submitted
in evidence, counsel for petitioner objected, not to its admissibility, but only to the fact that
it had not been registered in the Local Civil Registry of Cabanatuan City. 36 The trial court
ruled that it was admissible, subject to petitioners qualification. 37 Hence, it was admitted in
evidence and accorded weight by the judge. Indeed, petitioners failure to object properly
rendered the divorce decree admissible as a written act of the Family Court of Sydney,
Australia. 38cräläwvirtualibräry
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary;
respondent was no longer bound by Philippine personal laws after he acquired Australian
citizenship in 1992. 39 Naturalization is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a citizen. 40 Naturalized citizens, freed from the
protective cloak of their former states, don the attires of their adoptive countries. By
becoming an Australian, respondent severed his allegiance to the Philippines and
the vinculum juris that had tied him to Philippine personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law falls upon petitioner,
because she is the party challenging the validity of a foreign judgment. He contends that
petitioner was satisfied with the original of the divorce decree and was cognizant of the
marital laws of Australia, because she had lived and worked in that country for quite a long
time. Besides, the Australian divorce law is allegedly known by Philippine courts; thus, judges
may take judicial notice of foreign laws in the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the party who alleges the existence of a
fact or thing necessary in the prosecution or defense of an action. 41 In civil cases, plaintiffs
have the burden of proving the material allegations of the complaint when those are denied
by the answer; and defendants have the burden of proving the material allegations in their
answer when they introduce new matters. 42 Since the divorce was a defense raised by
respondent, the burden of proving the pertinent Australian law validating it falls squarely
upon him.
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign
laws. 43 Like any other facts, they must be alleged and proved. Australian marital laws are not
among those matters that judges are supposed to know by reason of their judicial
function. 44 The power of judicial notice must be exercised with caution, and every
reasonable doubt upon the subject should be resolved in the negative.
Second Issue: Respondents Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the divorce, respondent was
legally incapacitated to marry her in 1994. Hence, she concludes that their marriage was
void ab initio.
Respondent replies that the Australian divorce decree, which was validly admitted in
evidence, adequately established his legal capacity to marry under Australian law.
Respondents contention is untenable. In its strict legal sense, divorce means the legal
dissolution of a lawful union for a cause arising after marriage. But divorces are of different
types. The two basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited
divorce or a mensa et thoro. The first kind terminates the marriage, while the second
suspends it and leaves the bond in full force. 45 There is no showing in the case at bar which
type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory decree -- a conditional or provisional
judgment of divorce. It is in effect the same as a separation from bed and board, although an
absolute divorce may follow after the lapse of the prescribed period during which no
reconciliation is effected. 46cräläwvirtualibräry
Even after the divorce becomes absolute, the court may under some foreign statutes and
practices, still restrict remarriage. Under some other jurisdictions, remarriage may be limited
by statute; thus, the guilty party in a divorce which was granted on the ground of adultery
may be prohibited from marrying again. The court may allow a remarriage only after proof of
good behavior. 47cräläwvirtualibräry
On its face, the herein Australian divorce decree contains a restriction that reads:
1. A party to a marriage who marries again before this decree becomes absolute (unless the
other party has died) commits the offence of bigamy. 48cräläwvirtualibräry
This quotation bolsters our contention that the divorce obtained by respondent may have
been restricted. It did not absolutely establish his legal capacity to remarry according to his
national law. Hence, we find no basis for the ruling of the trial court, which erroneously
assumed that the Australian divorce ipso facto restored respondents capacity to remarry
despite the paucity of evidence on this matter.
We also reject the claim of respondent that the divorce decree raises a disputable
presumption or presumptive evidence as to his civil status based on Section 48, Rule 39 49 of
the Rules of Court, for the simple reason that no proof has been presented on the legal
effects of the divorce decree obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of the Family
Code was not submitted together with the application for a marriage license. According to
her, its absence is proof that respondent did not have legal capacity to remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by the national
law of the party concerned. The certificate mentioned in Article 21 of the Family Code would
have been sufficient to establish the legal capacity of respondent, had he duly presented it in
court. A duly authenticated and admitted certificate is prima facie evidence of legal capacity
to marry on the part of the alien applicant for a marriage license. 50cräläwvirtualibräry
As it is, however, there is absolutely no evidence that proves respondents legal capacity to
marry petitioner. A review of the records before this Court shows that only the following
exhibits were presented before the lower court: (1) for petitioner: (a) Exhibit A
Complaint; 51 (b) Exhibit B Certificate of Marriage Between Rederick A. Recio (Filipino-
Australian) and Grace J. Garcia (Filipino) on January 12, 1994 in Cabanatuan City, Nueva
Ecija; 52 (c) Exhibit C Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha
D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila; 53 (d) Exhibit D Office of
the City Registrar of Cabanatuan City Certification that no information of annulment
between Rederick A. Recio and Editha D. Samson was in its records; 54 and (e) Exhibit E
Certificate of Australian Citizenship of Rederick A. Recio; 55 (2) for respondent: (a) Exhibit 1 --
Amended Answer; 56 (b) Exhibit 2 Family Law Act 1975 Decree Nisi of Dissolution of Marriage
in the Family Court of Australia; 57 (c) Exhibit 3 Certificate of Australian Citizenship of
Rederick A. Recio; 58 (d) Exhibit 4 Decree Nisi of Dissolution of Marriage in the Family Court of
Australia Certificate; 59 and Exhibit 5 -- Statutory Declaration of the Legal Separation Between
Rederick A. Recio and Grace J. Garcia Recio since October 22, 1995. 60cräläwvirtualibräry
Based on the above records, we cannot conclude that respondent, who was then a
naturalized Australian citizen, was legally capacitated to marry petitioner on January 12,
1994. We agree with petitioners contention that the court a quo erred in finding that the
divorce decree ipso facto clothed respondent with the legal capacity to remarry without
requiring him to adduce sufficient evidence to show the Australian personal law governing
his status; or at the very least, to prove his legal capacity to contract the second marriage.
Neither can we grant petitioners prayer to declare her marriage to respondent null and void
on the ground of bigamy. After all, it may turn out that under Australian law, he was really
capacitated to marry petitioner as a direct result of the divorce decree. Hence, we believe
that the most judicious course is to remand this case to the trial court to receive evidence, if
any, which show petitioners legal capacity to marry petitioner. Failing in that, then the
court a quo may declare a nullity of the parties marriage on the ground of bigamy, there
being already in evidence two existing marriage certificates, which were both obtained in the
Philippines, one in Malabon, Metro Manila dated March 1, 1987 and the other, in
Cabanatuan City dated January 12, 1994.
WHEREFORE , in the interest of orderly procedure and substantial justice, we REMAND the
case to the court a quo for the purpose of receiving evidence which conclusively show
respondents legal capacity to marry petitioner; and failing in that, of declaring the parties
marriage void on the ground of bigamy, as above discussed. No costs.
SO ORDERED.
Melo, (Chairman), Vitug, and Sandoval-Gutierrez, JJ., concur .
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 195432 August 27, 2014
EDELINA T. ANDO, Petitioner,
vs.
DEPARTMENT OF FOREIGN AFFAIRS, Respondent.
DECISION
SERENO, CJ:
This is a Petition for Review under Rule 45 of the Rules of Court, seeking the nullification of
the Orders dated 14 January and 8 February 2011 issued by the Regional Trial Court (R TC),
Third Judicial Region, Branch 45,1 City of San Fernando, Pampanga, in Civil Case No. 137,
which dismissed the Petition for Declaratory Relief filed therein.
STATEMENT OF THE FACTS AND OF THE CASE
The pertinent facts of the case, as alleged by petitioner, are as follows:
3. On 16 September 2001, petitioner married Yuichiro Kobayashi, a Japanese
National, in a civil wedding solemnized at Candaba, Pampanga. A copy of their
Certificate of Marriage is hereto attached as Annex 'A' and made an integral part
hereof.
4. On 16 September 2004, Yuichiro Kobayashi sought in Japan, and was validly
granted under Japaneselaws, a divorce in respect of his marriage with
petitioner. A copy of the Divorce Certificate duly issued by the Consulate-
General of Japan and duly authenticated by the Department of Foreign Affairs,
Manila, is heretoas Annex ‘B’ and made an integral part hereof. 5. Said Divorce
Certificate was duly registered with the Office of the Civil Registry of Manila. A
copy of the Certification dated 28 October 2005 is hereto attached as Annex ‘C’
and made an integral part hereof.
6. Believing in good faith that said divorce capacitated her to remarry and that
by such she reverted to her single status, petitioner married Masatomi Y. Ando
on 13 September 2005 in a civil wedding celebrated in Sta. Ana, Pampanga. A
copy of their Certificate of Marriage is hereto attached as Annex ‘D’ and made
an integral part hereof.
7. In the meantime, Yuichiro Kobayashi married Ryo Miken on 27 December
2005. A copy of the JapaneseFamily Registry Record of Kobayashi showing the
divorce he obtained and his remarriage with Ryo Miken, duly authenticated by
the Consulate-General of Japan and the Department of Foreign Affairs, Manila,
is hereto attached as Annex ‘E’ and made an integral part hereof.
8. Recently, petitioner applied for the renewal of her Philippine passport to
indicate her surname withher husband Masatomi Y. Ando but she was told at
the Department of Foreign Affairs that the same cannot be issued to her until
she can prove bycompetent court decision that her marriage with her said
husband Masatomi Y. Ando is valid until otherwise declared.
xxxx
12. Prescinding from the foregoing, petitioner’s marriage with her said husband
Masatomi Y. Ando musttherefore be honored, considered and declared valid,
until otherwise declared by a competent court. Consequently, and until then,
petitioner therefore is and must be declared entitled to the issuance of a
Philippine passport under the name ‘Edelina Ando y Tungol.’ Hence, this
petitioner pursuant to Rule 63 of the Rules of Court. 2
On 29 October 2010, petitioner filed with the RTC a Petition for Declaratory Relief, which was
later raffled off to Branch 46. She impleaded the Department of Foreign Affairs (DFA) as
respondent and prayed for the following reliefs before the lower court:
WHEREFORE, petitioner most respectfully prays of this Honorable Court that after proper
proceedings, judgment be rendered, as follows:
(a) declaring as valid and subsisting the marriage between petitioner Edelina T.
Ando and her husband Masatomi Y. Ando until otherwise declared by a
competent court;
(b) declaring petitioner entitled to the issuance of a Philippine Passport under
the name "Edelina Ando y Tungol"; and
(c) directing the Department ofForeign Affairs to honor petitioner’s marriage to
her husband Masatomi Y. Ando and to issue a Philippine Passport to petitioner
under the name "Edelina Ando y Tungol".
Petitioner prays for such other just and equitable reliefs. 3
On 15 November 2010, in an Order dismissing the Petition for want of cause and action, as
well as jurisdiction, the RTC held thus:
Records of the case would reveal that prior to petitioner’s marriage to Masatomi Y. Ando,
herein petitioner was married to Yuichiro Kobayashi, a Japanese National, in Candaba,
Pampanga, on September 16, 2001, and that though a divorce was obtained and granted in
Japan, with respect to the their (sic) marriage, there is no showing that petitioner herein
complied with the requirements set forth in Art. 13 of the Family Code – that is obtaining a
judicial recognition of the foreign decree of absolute divorce in our country.
It is therefore evident, under the foregoing circumstances, that herein petitioner does not
have any causeof action and/or is entitled to the reliefs prayed for under Rule 63 of the Rules
of Court. In the same vein, though there is other adequate remedy available to the
petitioner, such remedy is however beyond the authority and jurisdiction of this court to act
upon and grant, as it isonly the family court which is vested with such authority and
jurisdiction.4
On 3 December 2010, petitioner filed an Ex ParteMotion for Reconsideration of the Order
dated 15 November 2010. In anOrder dated 14 December 2010, the RTC granted the motion
in this wise:
WHEREFORE, considering that the allegations and reliefs prayed for by the petitioner in her
petition and the instant Motion for Reconsideration falls within the jurisdiction of the Special
Family Court of this jurisdiction and for the interest ofsubstantial justice, the Order of the
Court dated November 15, 2010 is hereby reconsidered.
Let the record of this case be therefore referred back to the Office of the Clerk of Court for
proper endorsement to the Family Court of this jurisdiction for appropriateaction and/or
disposition.5 Thereafter, the case was raffled to Branch 45 of the RTC. On 14 January 2011,
the trial court dismissed the Petition anew on the ground that petitioner had no cause of
action. The Order reads thus:
The petition specifically admits that the marriage she seeks to be declared as valid is already
her second marriage, a bigamous marriage under Article 35(4) of the Family Codeconsidering
that the first one, though allegedly terminated by virtue of the divorce obtained by
Kobayashi, was never recognized by a Philippine court, hence, petitioner is considered as still
married to Kobayashi. Accordingly, the second marriage with Ando cannot be honored and
considered asvalid at this time.
Petitioner’s allegation of Sec. 2 (a) of A.M. No. 02-11-10-SC is misplaced. The fact that no
judicial declaration of nullity of her marriage with Ando was rendered does not make the
same valid because such declaration under Article 40 ofthe Family Code is applicable onlyin
case of re-marriage. More importantly, the absence of a judicial declaration of nullity of
marriage is not even a requisite to make a marriage valid.
In view of the foregoing, the dismissal of this case is imperative. 6
On 1 February 2011,petitioner filed an Ex ParteMotion for Reconsideration of the Order
dated 14 January 2011. The motion was denied by the RTC in open court on 8 February2011,
considering that neither the Office of the Solicitor General (OSG) nor respondent was
furnished with copies of the motion.
On 24 March 2011, petitioner filed the instant Petition for Review, raising the sole issue of
whether or not the RTC erred in ruling that she had no cause of action.
Petitioner argues that under A.M. No. 02-11-10-SC, or the Rule on the Declaration of
Absolute Nullity of Void Marriages and Annulment of Voidable Marriages, it is solely the wife
or the husband who can file a petition for the declaration of the absolute nullity of a void
marriage. Thus, as the state is not even allowed to filea direct petition for the declaration of
the absolute nullity of a void marriage,with even more reason can it not collaterally attack
the validity of a marriage, as in a petition for declaratory relief. Further, petitioner alleges
that under the law, a marriage – even one that is void or voidable – shall be deemed valid
until declared otherwise in a judicial proceeding.
Petitioner also argues that assuming a court judgment recognizing a judicial decree of
divorce is required under Article 13 of the Family Code, noncompliance therewith is a mere
irregularity in the issuance of a marriage license. Any irregularity in the formal requisites of
marriage, such as with respect to the marriage license, shall notaffect the legality of the
marriage. Petitioner further claims that all the requisites for a petition for declaratory relief
have been complied with.
With respect to the failure to furnish a copy of the Ex ParteMotion for Reconsideration to the
OSG and the DFA, petitioner avers that at the time of the filing, the RTC had yet to issue a
summons to respondent; thus, it had yet to acquire jurisdiction over them.
Thereafter, the DFA, through the OSG, filed a Comment on the Petition. The latter raised the
following arguments: (1) the Petition was improperly verified, as the juratin the Verification
thereof only stated that the affiant had exhibited "her currentand valid proof of identity,"
which proof was not properly indicated, however; (2) prior judicial recognition by a
Philippine court of a divorce decree obtained by the alien spouse is required before a Filipino
spouse can remarry and be entitled to the legal effects of remarriage; (3) petitioner failed to
show that she had first exhausted all available administrative remedies, such as appealing to
the Secretary of the DFA under Republic Act No. (R.A.) 8239, or the Philippine Passport Act of
1996, before resorting to the special civil action of declaratory relief; and (4) petitioner’s
Motion for Reconsideration before the RTC was a mere scrap of paper and did not toll the
running of the period to appeal. Hence, the RTC Order dated 14 January 2011 is now final.
On 29 November 2011, petitioner filed her Reply to the Comment, addressing the issues
raised therein.
THE COURT’S RULING
The Court finds the Petition to be without merit.
First, with respect to her prayer tocompel the DFA to issue her passport, petitioner
incorrectly filed a petition for declaratory relief before the RTC. She should have first
appealed before the Secretary of Foreign Affairs, since her ultimate entreaty was toquestion
the DFA’s refusal to issue a passport to her under her second husband’s name.
Under the Implementing Rules and Regulations (IRR) of R.A. 8239, which was adopted on 25
February 1997, the following are the additional documentary requirements before a married
woman may obtain a passport under the name of her spouse:
SECTION 2. The issuance of passports to married, divorced or widowed women shall be made
inaccordance with the following provisions:
a) In case of a woman who is married and who decides to adopt the surname of
her husband pursuant to Art. 370 of Republic Act No. 386, she must present the
original or certifiedtrue copy of her marriage contract, and one photocopy
thereof.
In addition thereto, a Filipino who contracts marriage in the Philippines to a
foreigner, shall be required to present a Certificate of Attendance in a Guidance
and Counselling Seminar conducted by the CFO when applying for a passport for
the first time.
b) In case of annulment of marriage, the applicant must present a certified true
copy of her annotated Marriage Contract or Certificate of Registration and the
Court Order effecting the annulment.
c) In case of a woman who was divorced by her alien husband, she must present
a certified true copy of the Divorce Decree duly authenticated by the Philippine
Embassy or consular post which has jurisdiction over the place where the
divorce is obtained or by the concerned foreign diplomatic or consular mission
in the Philippines.
When the divorcee is a Filipino Muslim, she must present a certified true copy of the Divorce
Decree or a certified true copy of the Certificate of Divorce from the Shari’ah Court or the
OCRG. d) In the event that marriage is dissolved by the death of the husband, the applicant
must present the original or certified true copy of the Death Certificate of the husband or the
Declaration of Presumptive Death by a Civil or Shari’ah Court, in which case the applicant
may choose to continue to use her husband’s surname or resume the use of her maiden
surname. From the above provisions, it is clear that for petitioner to obtain a copy of her
passport under her married name, all she needed to present were the following: (1) the
original or certified true copyof her marriage contract and one photocopy thereof; (2) a
Certificate of Attendance in a Guidance and Counseling Seminar, if applicable; and (3) a
certified true copy of the Divorce Decree duly authenticated by the Philippine Embassy or
consular post that has jurisdiction over the place where the divorce is obtained or by the
concerned foreign diplomatic or consular mission in the Philippines.
In this case, petitioner was allegedly told that she would not be issued a Philippine passport
under her second husband’s name.1âwphi1 Should her application for a passport be denied,
the remedies available to her are provided in Section 9 of R.A. 8239, which reads thus:
Sec. 9. Appeal. — Any person who feels aggrieved as a result of the application of this Act of
the implementing rules and regulations issued by the Secretary shall have the right to appeal
to the Secretary of Foreign Affairs from whose decision judicial review may be had to the
Courts in due course.
The IRR further provides in detail:
ARTICLE 10
Appeal
In the event that an application for a passport is denied, or an existing one cancelled or
restricted, the applicant or holder thereof shall have the right to appeal in writing to the
Secretary within fifteen (15) days from notice of denial, cancellation or restriction.
Clearly, she should have filed anappeal with the Secretary of the DFA in the event of the
denial of her application for a passport, after having complied with the provisions of R.A.
8239. Petitioner’s argument that her application "cannot be said to havebeen either denied,
cancelled or restricted by [the DFA ], so as to make her an aggrieved party entitled to
appeal",7 as instead she "was merely told"8 that her passport cannot be issued, does not
persuade. The law provides a direct recourse for petitioner in the event of the denial of her
application.
Second, with respect to her prayer for the recognition of her second marriage as valid,
petitioner should have filed, instead, a petition for the judicial recognition of her foreign
divorce from her first husband.
In Garcia v. Recio,9 we ruled that a divorce obtained abroad by an alien may be recognized in
our jurisdiction, provided the decree is valid according to the national law of the foreigner.
The presentation solely of the divorce decree is insufficient; both the divorce decree and the
governing personal law of the alien spouse who obtained the divorce must be proven.
Because our courts do not take judicial notice of foreign laws and judgment, our law on
evidence requires that both the divorce decree and the national law of the alien must be
alleged and proven and like any other fact. 10
While it has been ruled that a petition for the authority to remarry filed before a trial court
actually constitutes a petition for declaratory relief,11 we are still unable to grant the prayer
of petitioner. As held by the RTC, there appears to be insufficient proof or evidence
presented on record of both the national law of her first husband, Kobayashi, and of the
validity of the divorce decree under that national law. 12 Hence, any declaration as to the
validity of the divorce can only be made upon her complete submission of evidence proving
the divorce decree and the national law of her alien spouse, in an action instituted in the
proper forum.
WHEREFORE, the instant Petition is DENIED without prejudice to petitioner's recourse to the
proper remedies available.
SO ORDERED.
SECOND DIVISION
G.R. No. 139325 April 12, 2005
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI
DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf and on behalf of the Class
Plaintiffs in Class Action No. MDL 840, United States District Court of Hawaii, Petitioner,
vs.
HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137,
Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its
court appointed legal representatives in Class Action MDL 840, United States District Court
of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos, Jr., Respondents.
DECISION
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding
out its bitter crop. While the restoration of freedom and the fundamental structures and
processes of democracy have been much lauded, according to a significant number, the
changes, however, have not sufficiently healed the colossal damage wrought under the
oppressive conditions of the martial law period. The cries of justice for the tortured, the
murdered, and the desaparecidos arouse outrage and sympathy in the hearts of the fair-
minded, yet the dispensation of the appropriate relief due them cannot be extended through
the same caprice or whim that characterized the ill-wind of martial rule. The damage done
was not merely personal but institutional, and the proper rebuke to the iniquitous past has
to involve the award of reparations due within the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights violations 1 who, deprived
of the opportunity to directly confront the man who once held absolute rule over this
country, have chosen to do battle instead with the earthly representative, his estate. The
clash has been for now interrupted by a trial court ruling, seemingly comported to legal logic,
that required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-Two
Million Pesos (P472,000,000.00) in order that they be able to enforce a judgment awarded
them by a foreign court. There is an understandable temptation to cast the struggle within
the simplistic confines of a morality tale, and to employ short-cuts to arrive at what might
seem the desirable solution. But easy, reflexive resort to the equity principle all too often
leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will comfort those
who maintain that our substantive and procedural laws, for all their perceived ambiguity and
susceptibility to myriad interpretations, are inherently fair and just. The relief sought by the
petitioners is expressly mandated by our laws and conforms to established legal principles.
The granting of this petition for certiorari is warranted in order to correct the legally infirm
and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with the
United States District Court (US District Court), District of Hawaii, against the Estate of former
Philippine President Ferdinand E. Marcos (Marcos Estate). The action was brought forth by
ten Filipino citizens2 who each alleged having suffered human rights abuses such as arbitrary
detention, torture and rape in the hands of police or military forces during the Marcos
regime.3 The Alien Tort Act was invoked as basis for the US District Court's jurisdiction over
the complaint, as it involved a suit by aliens for tortious violations of international
law.4 These plaintiffs brought the action on their own behalf and on behalf of a class of
similarly situated individuals, particularly consisting of all current civilian citizens of the
Philippines, their heirs and beneficiaries, who between 1972 and 1987 were tortured,
summarily executed or had disappeared while in the custody of military or paramilitary
groups. Plaintiffs alleged that the class consisted of approximately ten thousand (10,000)
members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US
Federal Rules of Civil Procedure, the provisions of which were invoked by the plaintiffs.
Subsequently, the US District Court certified the case as a class action and created three (3)
sub-classes of torture, summary execution and disappearance victims.5 Trial ensued, and
subsequently a jury rendered a verdict and an award of compensatory and exemplary
damages in favor of the plaintiff class. Then, on 3 February 1995, the US District Court,
presided by Judge Manuel L. Real, rendered a Final Judgment (Final Judgment) awarding the
plaintiff class a total of One Billion Nine Hundred Sixty Four Million Five Thousand Eight
Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was
eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision rendered
on 17 December 1996.6
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of
Makati (Makati RTC) for the enforcement of the Final Judgment. They alleged that they are
members of the plaintiff class in whose favor the US District Court awarded damages.7 They
argued that since the Marcos Estate failed to file a petition for certiorari with the US
Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and executory, and hence should be
recognized and enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules of
Court then in force.8
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the
non-payment of the correct filing fees. It alleged that petitioners had only paid Four
Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact that they
sought to enforce a monetary amount of damages in the amount of over Two and a Quarter
Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court Circular No. 7,
pertaining to the proper computation and payment of docket fees. In response, the
petitioners claimed that an action for the enforcement of a foreign judgment is not capable
of pecuniary estimation; hence, a filing fee of only Four Hundred Ten Pesos (P410.00) was
proper, pursuant to Section 7(c) of Rule 141. 9
On 9 September 1998, respondent Judge Santiago Javier Ranada 10 of the Makati RTC issued
the subject Order dismissing the complaint without prejudice. Respondent judge opined that
contrary to the petitioners' submission, the subject matter of the complaint was indeed
capable of pecuniary estimation, as it involved a judgment rendered by a foreign court
ordering the payment of definite sums of money, allowing for easy determination of the
value of the foreign judgment. On that score, Section 7(a) of Rule 141 of the Rules of Civil
Procedure would find application, and the RTC estimated the proper amount of filing fees
was approximately Four Hundred Seventy Two Million Pesos, which obviously had not been
paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied
in an Order dated 28 July 1999. From this denial, petitioners filed a Petition for
Certiorari under Rule 65 assailing the twin orders of respondent judge. 11 They prayed for the
annulment of the questioned orders, and an order directing the reinstatement of Civil Case
No. 97-1052 and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the subject
matter of the suit is the enforcement of a foreign judgment, and not an action for the
collection of a sum of money or recovery of damages. They also point out that to require the
class plaintiffs to pay Four Hundred Seventy Two Million Pesos (P472,000,000.00) in filing
fees would negate and render inutile the liberal construction ordained by the Rules of Court,
as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the inexpensive
disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which
provides that "Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty," a mandate which is
essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable, and
unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case. 12 It urged
that the petition be granted and a judgment rendered, ordering the enforcement and
execution of the District Court judgment in accordance with Section 48, Rule 39 of the 1997
Rules of Civil Procedure. For the CHR, the Makati RTC erred in interpreting the action for the
execution of a foreign judgment as a new case, in violation of the principle that once a case
has been decided between the same parties in one country on the same issue with finality, it
can no longer be relitigated again in another country. 13 The CHR likewise invokes the
principle of comity, and of vested rights.
The Court's disposition on the issue of filing fees will prove a useful jurisprudential guidepost
for courts confronted with actions enforcing foreign judgments, particularly those lodged
against an estate. There is no basis for the issuance a limited pro hac vice ruling based on the
special circumstances of the petitioners as victims of martial law, or on the emotionally-
charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge
ignored the clear letter of the law when he concluded that the filing fee be computed based
on the total sum claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis
for the computation of the filing fee of over P472 Million. The provision states:
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive counterclaim or money claim
against an estate not based on judgment, or for filing with leave of
court a third-party, fourth-party, etc., complaint, or a complaint in
intervention, and for all clerical services in the same time, if the
total sum claimed, exclusive of interest, or the started value of the
property in litigation, is:
1. Less than P 100,00.00
2. P 100,000.00 or more but less than P 150,000.00
3. P 150,000.00 or more but less than P 200,000.00
4. P 200,000.00 or more but less than P 250,000.00
5. P 250,000.00 or more but less than P 300,00.00
6. P 300,000.00 or more but not more than P 400,000.00
7. P 350,000.00 or more but not more than P400,000.00
8. For each P 1,000.00 in excess of P 400,000.00
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive
counterclaims, third-party, etc. complaints and complaints-in-interventions, and on the
other, money claims against estates which are not based on judgment. Thus, the relevant
question for purposes of the present petition is whether the action filed with the lower court
is a "money claim against an estate not based on judgment."
Petitioners' complaint may have been lodged against an estate, but it is clearly based on a
judgment, the Final Judgment of the US District Court. The provision does not make any
distinction between a local judgment and a foreign judgment, and where the law does not
distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee is
computed on the basis of the amount of the relief sought, or on the value of the property in
litigation. The filing fee for requests for extrajudicial foreclosure of mortgage is based on the
amount of indebtedness or the mortgagee's claim. 14 In special proceedings involving
properties such as for the allowance of wills, the filing fee is again based on the value of the
property.15 The aforecited rules evidently have no application to petitioners' complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the
subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.-
(b) For filing
 1. Actions where the value
of the subject matter
cannot be estimated --- P 600.00
2. Special civil actions except
judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00
3. All other actions not
involving property --- P 600.00
In a real action, the assessed value of the property, or if there is none, the estimated value,
thereof shall be alleged by the claimant and shall be the basis in computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed value or
estimated value of the property shall be alleged by the claimant and shall be the basis in
computing the fees. Yet again, this provision does not apply in the case at bar. A real action is
one where the plaintiff seeks the recovery of real property or an action affecting title to or
recovery of possession of real property.16 Neither the complaint nor the award of damages
adjudicated by the US District Court involves any real property of the Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the filing fees
should be computed on the basis of the schematic table of Section 7(a), as the action
involved pertains to a claim against an estate based on judgment. What provision, if any,
then should apply in determining the filing fees for an action to enforce a foreign judgment?
To resolve this question, a proper understanding is required on the nature and effects of a
foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage among
civilized states by which final judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious under certain conditions that may vary in
different countries.17 This principle was prominently affirmed in the leading American case
of Hilton v. Guyot18 and expressly recognized in our jurisprudence beginning with Ingenholl v.
Walter E. Olsen & Co.19 The conditions required by the Philippines for recognition and
enforcement of a foreign judgment were originally contained in Section 311 of the Code of
Civil Procedure, which was taken from the California Code of Civil Procedure which, in turn,
was derived from the California Act of March 11, 1872. 20 Remarkably, the procedural rule
now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has remained unchanged
down to the last word in nearly a century. Section 48 states:
SEC. 48. Effect of foreign judgments. — The effect of a judgment of a
tribunal of a foreign country, having jurisdiction to pronounce the judgment is as
follows:
(a) In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title;
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
There is an evident distinction between a foreign judgment in an action in rem and one in
personam. For an action in rem, the foreign judgment is deemed conclusive upon the title to
the thing, while in an action in personam, the foreign judgment is presumptive, and not
conclusive, of a right as between the parties and their successors in interest by a subsequent
title.21 However, in both cases, the foreign judgment is susceptible to impeachment in our
local courts on the grounds of want of jurisdiction or notice to the party, 22 collusion,
fraud,23 or clear mistake of law or fact. 24 Thus, the party aggrieved by the foreign judgment is
entitled to defend against the enforcement of such decision in the local forum. It is essential
that there should be an opportunity to challenge the foreign judgment, in order for the court
in this jurisdiction to properly determine its efficacy. 25
It is clear then that it is usually necessary for an action to be filed in order to enforce a
foreign judgment26 , even if such judgment has conclusive effect as in the case of in
rem actions, if only for the purpose of allowing the losing party an opportunity to challenge
the foreign judgment, and in order for the court to properly determine its
efficacy.27 Consequently, the party attacking a foreign judgment has the burden of
overcoming the presumption of its validity.28
The rules are silent as to what initiatory procedure must be undertaken in order to enforce a
foreign judgment in the Philippines. But there is no question that the filing of a civil
complaint is an appropriate measure for such purpose. A civil action is one by which a party
sues another for the enforcement or protection of a right,29 and clearly an action to enforce a
foreign judgment is in essence a vindication of a right prescinding either from a "conclusive
judgment upon title" or the "presumptive evidence of a right." 30 Absent perhaps a statutory
grant of jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must be
brought before the regular courts.31
There are distinctions, nuanced but discernible, between the cause of action arising from the
enforcement of a foreign judgment, and that arising from the facts or allegations that
occasioned the foreign judgment. They may pertain to the same set of facts, but there is an
essential difference in the right-duty correlatives that are sought to be vindicated. For
example, in a complaint for damages against a tortfeasor, the cause of action emanates from
the violation of the right of the complainant through the act or omission of the respondent.
On the other hand, in a complaint for the enforcement of a foreign judgment awarding
damages from the same tortfeasor, for the violation of the same right through the same
manner of action, the cause of action derives not from the tortious act but from the foreign
judgment itself.
More importantly, the matters for proof are different. Using the above example, the
complainant will have to establish before the court the tortious act or omission committed
by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On the other hand, in an action to
enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and not
the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of
jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of
fact or law. The limitations on review is in consonance with a strong and pervasive policy in
all legal systems to limit repetitive litigation on claims and issues. 32 Otherwise known as the
policy of preclusion, it seeks to protect party expectations resulting from previous litigation,
to safeguard against the harassment of defendants, to insure that the task of courts not be
increased by never-ending litigation of the same disputes, and – in a larger sense – to
promote what Lord Coke in the Ferrer's Case of 1599 stated to be the goal of all law: "rest
and quietness."33 If every judgment of a foreign court were reviewable on the merits, the
plaintiff would be forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation.34
Petitioners appreciate this distinction, and rely upon it to support the proposition that the
subject matter of the complaintthe enforcement of a foreign judgmentis incapable of
pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-
intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the
matter at hand is capable of pecuniary estimation, down to the last cent. In the
assailed Order, the respondent judge pounced upon this point without equivocation:
The Rules use the term "where the value of the subject matter cannot be
estimated." The subject matter of the present case is the judgment rendered by
the foreign court ordering defendant to pay plaintiffs definite sums of money, as
and for compensatory damages. The Court finds that the value of the foreign
judgment can be estimated; indeed, it can even be easily determined. The Court
is not minded to distinguish between the enforcement of a judgment and the
amount of said judgment, and separate the two, for purposes of determining
the correct filing fees. Similarly, a plaintiff suing on promissory note for P1
million cannot be allowed to pay only P400 filing fees (sic), on the reasoning that
the subject matter of his suit is not the P1 million, but the enforcement of the
promissory note, and that the value of such "enforcement" cannot be
estimated.35
The jurisprudential standard in gauging whether the subject matter of an action is capable of
pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v. Isabela Sawmill
and Raymundo v. Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered capable of
 pecuniary estimation, and whether jurisdiction is in the municipal courts or in
the courts of first instance would depend on the amount of the claim. However,
where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the
principal relief sought, this Court has considered such actions as cases where the
subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,36 from which the rule in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover
a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, like in suits to have the defendant
perform his part of the contract (specific performance) and in actions for
support, or for annulment of judgment or to foreclose a mortgage, this Court
has considered such actions as cases where the subject of the litigation may not
be estimated in terms of money, and are cognizable exclusively by courts of first
instance.37
Petitioners go on to add that among the actions the Court has recognized as being incapable
of pecuniary estimation include legality of conveyances and money deposits, 38 validity of a
mortgage,39 the right to support,40 validity of documents,41 rescission of contracts,42 specific
performance,43 and validity or annulment of judgments. 44 It is urged that an action for
enforcement of a foreign judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject matter
of the action is undoubtedly the enforcement of a foreign judgment, the effect of a
providential award would be the adjudication of a sum of money. Perhaps in theory, such an
action is primarily for "the enforcement of the foreign judgment," but there is a certain
obtuseness to that sort of argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must
examine its possible ramifications. Petitioners raise the point that a declaration that an
action for enforcement of foreign judgment may be capable of pecuniary estimation might
lead to an instance wherein a first level court such as the Municipal Trial Court would have
jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction of
first level courts, B.P. 129, such courts are not vested with jurisdiction over actions for the
enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. — Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings,
testate and intestate, including the grant of provisional remedies in proper
cases, where the value of the personal property, estate, or amount of the
demand does not exceed One hundred thousand pesos (P100,000.00) or, in
Metro Manila where such personal property, estate, or amount of the demand
does not exceed Two hundred thousand pesos (P200,000.00) exclusive of
interest damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided, That where
there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be
the totality of the claims in all the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question
of ownership in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership shall be
resolved only to determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and costs: Provided, That
value of such property shall be determined by the assessed value of the
adjacent lots.45
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter
pertains to an assertion of rights and interests over property or a sum of money. But as
earlier pointed out, the subject matter of an action to enforce a foreign judgment is the
foreign judgment itself, and the cause of action arising from the adjudication of such
judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement
of a foreign judgment, even if capable of pecuniary estimation, would fall under the
jurisdiction of the Regional Trial Courts, thus negating the fears of the petitioners. Indeed, an
examination of the provision indicates that it can be relied upon as jurisdictional basis with
respect to actions for enforcement of foreign judgments, provided that no other court or
office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person
or body exercising jurisdiction or any court, tribunal, person or body exercising
judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US
District Court judgment is one capable of pecuniary estimation. But at the same time, it is
also an action based on judgment against an estate, thus placing it beyond the ambit of
Section 7(a) of Rule 141. What provision then governs the proper computation of the filing
fees over the instant complaint? For this case and other similarly situated instances, we find
that it is covered by Section 7(b)(3), involving as it does, "other actions not involving
property."
Notably, the amount paid as docket fees by the petitioners on the premise that it was an
action incapable of pecuniary estimation corresponds to the same amount required for
"other actions not involving property." The petitioners thus paid the correct amount of filing
fees, and it was a grave abuse of discretion for respondent judge to have applied instead a
clearly inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which should disabuse
the notion that the doctrine affirmed in this decision is grounded solely on the letter of the
procedural rule. We earlier adverted to the the internationally recognized policy of
preclusion,46 as well as the principles of comity, utility and convenience of nations 47 as the
basis for the evolution of the rule calling for the recognition and enforcement of foreign
judgments. The US Supreme Court in Hilton v. Guyot48 relied heavily on the concept of
comity, as especially derived from the landmark treatise of Justice Story in his Commentaries
on the Conflict of Laws of 1834.49 Yet the notion of "comity" has since been criticized as one
"of dim contours"50 or suffering from a number of fallacies. 51 Other conceptual bases for the
recognition of foreign judgments have evolved such as the vested rights theory or the
modern doctrine of obligation.52
There have been attempts to codify through treaties or multilateral agreements the
standards for the recognition and enforcement of foreign judgments, but these have not
borne fruition. The members of the European Common Market accede to the Judgments
Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and révision au fond.53 The most ambitious of
these attempts is the Convention on the Recognition and Enforcement of Foreign Judgments
in Civil and Commercial Matters, prepared in 1966 by the Hague Conference of International
Law.54 While it has not received the ratifications needed to have it take effect,55 it is
recognized as representing current scholarly thought on the topic. 56 Neither the Philippines
nor the United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition and
enforcement of foreign judgments or a universal treaty rendering it obligatory force, there is
consensus that the viability of such recognition and enforcement is essential. Steiner and
Vagts note:
. . . The notion of unconnected bodies of national law on private international
law, each following a quite separate path, is not one conducive to the growth of
a transnational community encouraging travel and commerce among its
members. There is a contemporary resurgence of writing stressing the identity
or similarity of the values that systems of public and private international law
seek to further – a community interest in common, or at least reasonable, rules
on these matters in national legal systems. And such generic principles as
reciprocity play an important role in both fields. 57
Salonga, whose treatise on private international law is of worldwide renown, points out:
Whatever be the theory as to the basis for recognizing foreign judgments, there
can be little dispute that the end is to protect the reasonable expectations and
demands of the parties. Where the parties have submitted a matter for
adjudication in the court of one state, and proceedings there are not tainted
 with irregularity, they may fairly be expected to submit, within the state or
elsewhere, to the enforcement of the judgment issued by the court. 58
There is also consensus as to the requisites for recognition of a foreign judgment and the
defenses against the enforcement thereof. As earlier discussed, the exceptions enumerated
in Section 48, Rule 39 have remain unchanged since the time they were adapted in this
jurisdiction from long standing American rules. The requisites and exceptions as delineated
under Section 48 are but a restatement of generally accepted principles of international law.
Section 98 of The Restatement, Second, Conflict of Laws, states that "a valid judgment
rendered in a foreign nation after a fair trial in a contested proceeding will be recognized in
the United States," and on its face, the term "valid" brings into play requirements such
notions as valid jurisdiction over the subject matter and parties. 59 Similarly, the notion that
fraud or collusion may preclude the enforcement of a foreign judgment finds affirmation
with foreign jurisprudence and commentators,60 as well as the doctrine that the foreign
judgment must not constitute "a clear mistake of law or fact." 61 And finally, it has been
recognized that "public policy" as a defense to the recognition of judgments serves as an
umbrella for a variety of concerns in international practice which may lead to a denial of
recognition.62
The viability of the public policy defense against the enforcement of a foreign judgment has
been recognized in this jurisdiction.63 This defense allows for the application of local
standards in reviewing the foreign judgment, especially when such judgment creates only a
presumptive right, as it does in cases wherein the judgment is against a person.64 The
defense is also recognized within the international sphere, as many civil law nations adhere
to a broad public policy exception which may result in a denial of recognition when the
foreign court, in the light of the choice-of-law rules of the recognizing court, applied the
wrong law to the case.65 The public policy defense can safeguard against possible abuses to
the easy resort to offshore litigation if it can be demonstrated that the original claim is
noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the Philippines
to recognize foreign judgments, or allow a procedure for the enforcement thereof.
However, generally accepted principles of international law, by virtue of the incorporation
clause of the Constitution, form part of the laws of the land even if they do not derive from
treaty obligations.66 The classical formulation in international law sees those customary rules
accepted as binding result from the combination two elements: the established, widespread,
and consistent practice on the part of States; and a psychological element known as
the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the latter
element is a belief that the practice in question is rendered obligatory by the existence of a
rule of law requiring it.67
While the definite conceptual parameters of the recognition and enforcement of foreign
judgments have not been authoritatively established, the Court can assert with certainty that
such an undertaking is among those generally accepted principles of international law. 68 As
earlier demonstrated, there is a widespread practice among states accepting in principle the
need for such recognition and enforcement, albeit subject to limitations of varying degrees.
The fact that there is no binding universal treaty governing the practice is not indicative of a
widespread rejection of the principle, but only a disagreement as to the imposable specific
rules governing the procedure for recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition and
enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted
in various foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48,
Rule 39 of the Rules of Court which has existed in its current form since the early 1900s.
Certainly, the Philippine legal system has long ago accepted into its jurisprudence and
procedural rules the viability of an action for enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from internationally accepted doctrines.
Again, there may be distinctions as to the rules adopted by each particular state, 69 but they
all prescind from the premise that there is a rule of law obliging states to allow for, however
generally, the recognition and enforcement of a foreign judgment. The bare principle, to our
mind, has attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but
by virtue of the incorporation clause of the Constitution. Rules of procedure are
promulgated by the Supreme Court,70 and could very well be abrogated or revised by the
high court itself. Yet the Supreme Court is obliged, as are all State components, to obey the
laws of the land, including generally accepted principles of international law which form part
thereof, such as those ensuring the qualified recognition and enforcement of foreign
judgments.71
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that
there is a general right recognized within our body of laws, and affirmed by the Constitution,
to seek recognition and enforcement of foreign judgments, as well as a right to defend
against such enforcement on the grounds of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country merely due
to an exhorbitant assessment of docket fees is alien to generally accepted practices and
principles in international law. Indeed, there are grave concerns in conditioning the amount
of the filing fee on the pecuniary award or the value of the property subject of the foreign
decision. Such pecuniary award will almost certainly be in foreign denomination, computed
in accordance with the applicable laws and standards of the forum. 72 The vagaries of
inflation, as well as the relative low-income capacity of the Filipino, to date may very well
translate into an award virtually unenforceable in this country, despite its integral validity, if
the docket fees for the enforcement thereof were predicated on the amount of the award
sought to be enforced. The theory adopted by respondent judge and the Marcos Estate may
even lead to absurdities, such as if applied to an award involving real property situated in
places such as the United States or Scandinavia where real property values are inexorably
high. We cannot very well require that the filing fee be computed based on the value of the
foreign property as determined by the standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes
that the subject matter of an action for enforcement of a foreign judgment is the foreign
judgment itself, and not the right-duty correlatives that resulted in the foreign judgment. In
this particular circumstance, given that the complaint is lodged against an estate and is based
on the US District Court's Final Judgment, this foreign judgment may, for purposes of
classification under the governing procedural rule, be deemed as subsumed under Section
7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving property." Thus,
only the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that
"[F]ree access to the courts and quasi-judicial bodies and adequate legal assistance shall not
be denied to any person by reason of poverty." Since the provision is among the guarantees
ensured by the Bill of Rights, it certainly gives rise to a demandable right. However, now is
not the occasion to elaborate on the parameters of this constitutional right. Given our
preceding discussion, it is not necessary to utilize this provision in order to grant the relief
sought by the petitioners. It is axiomatic that the constitutionality of an act will not be
resolved by the courts if the controversy can be settled on other grounds73 or unless the
resolution thereof is indispensable for the determination of the case. 74
One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final
Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners against
the Marcos Estate. Moreover, the Marcos Estate is not precluded to present evidence, if any,
of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact. This ruling, decisive as it is on the question of filing fees and no other, does not render
verdict on the enforceability of the Final Judgment before the courts under the jurisdiction of
the Philippines, or for that matter any other issue which may legitimately be presented
before the trial court. Such issues are to be litigated before the trial court, but within the
confines of the matters for proof as laid down in Section 48, Rule 39. On the other hand, the
speedy resolution of this claim by the trial court is encouraged, and contumacious delay of
the decision on the merits will not be brooked by this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET ASIDE, and
a new order REINSTATING Civil Case No. 97-1052 is hereby issued. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76595 May 6, 1988
PACIFIC ASIA OVERSEAS SHIPPING CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and TEODORO RANCES, respondents.
Acaban, Corvera, Valdez & Del Castillo Law Office for petitioner.
The Solicitor General for public respondent.
Valentin A Zozobrado for private respondent.
FELICIANO, J.:
The petitioner, Pacific Asia Overseas Shipping Corporation (Pascor, in short), seeks the
annulment and setting aside of the Resolutions of the public respondent National Labor
Relations Commission (NLRC) dated 14 August 1986 and 19 November 1986, denying
Pascor's appeal for having been filed out of time and denying its Motion for Reconsideration,
respectively.
In the present Petition for certiorari and mandamus with prayer for Preliminary Injunction
and Temporary Restraint ' 9 Order, Pascor urges that public respondent NLRC acted with
grave abuse of discretion or in excess of its jurisdiction in denying its appeal and motion for
reconsideration.

Sometime in March 1984, private respondent Teodoro Rances was engaged by petitioner
Pascor as Radio Operator of a vessel belonging to Pascor's foreign principal, the Gulf-East
Ship Management Limited. Four (4) months later, and after having been transferred from
one vessel to another four times for misbehaviour and inability to get along with officers and
crew members of each of the vessels, the foreign principal terminated the services of private
respondent Rances citing the latter's poor and incorrigible work attitude and incitement of
others to insubordination. 1
Petitioner Pascor filed a complaint against private respondent with the Philippine Overseas
Employment Administration tion (POEA) for acts unbecoming a marine officer and for,
character assassination," which case was docketed as POEA Case No: M-84-09-848. Private
respondent denied the charges set out in the complaint and by way of counterclaim
demanded an amount of US$ 1,500.00 which a court in Dubai had, he contended, awarded in
his favor against petitioner's foreign principal. In due course, on 4 September 1985, the POEA
found private respondent liable for inciting another officer or seaman to insubordination and
challenging a superior officer to a fist fight and imposed six (6) months suspension for each
offense or a total of twelve (12) months suspension, with a warning that commission of the
same or similar offense in the future would be met with a stiffer disciplinary sanction. The
POEA decision passed over sub silentio the counterclaim of private respondent. 2
On 10 October 1985, private respondent filed a complaint against petitioner, docketed as
POEA Case No: M-85-10-0814 and entitled "Teodoro Rances v. Pacific Asia Overseas Shipping
Corporation." In this complaint, he sought to carry out and enforce the same award obtained
by him in Dubai allegedly against Pascor's foreign principal which he had pleaded as a
counterclaim in POEA Case No: M-84-09-848. Private respondent claimed that be had filed
an action in the Dubai court for US$ 9,364.89, which claim was compromised by the parties
for US$ 5,500.00 plus "a return ticket to (private respondent's) country," with the proviso
that "the opponent" would pay "to the claimant" US$ 1,500.00 'in case the wife of the
claimant Rantes doesn't agree with the amount sent to [her] Private respondent further
claimed that since his wife did not "agree with" the amount given to her as 'an allotment for
the 3-month period (of April, May and June 1984), he was entitled to recover the additional
US$ 1,500.00 "as mandated under the Compromise Agreement which was the basis of the
decision of the Dubai Civil Court. 3 As evidence of this foreign award, private respondent
submitted what purports to be an "original copy (sic) of the decision" of the Dubai court
written in Arabic script and language, With a copy of an English translation by an unidentified
translator and a copy of a transmittal letter dated 23 September 1984 signed by one Mohd
Bin Saleh "Honorary Consul for Philippines." The full texts of the purported English
translation of the Dubai award and of the transmittal letter are set out in the margin. 4
In its answer filed on 11 December 1985, petitioner Pascor made four principal arguments:
that the copy of the Dubai decision relied upon by private respondent could not be
considered as evidence, not having been properly authenticated; that Pascor was not a party
to the Dubai court proceedings; that the POEA had no jurisdiction over cases for the
enforcement of foreign judgments; and that the claim had already been resolved in POEA
Case No: M-84-09-848, having been there dismissed as a counterclaim.
We think petitioner's contention has merit. The record shows, not an intent to delay the
proceedings but rather a genuine and substantial effort on the part of petitioner Pascor to
file, in a timely manner, its Memorandum on Appeal which, in the circumstances of this case,
should not have been disregarded by respondent NLRC. The circumstances surrounding the
one (1) day delay in the filing of petitioner's Memorandum on Appeal are summed up by
petitioner in the following terms:
30.1. Mr. Ruben de la Cruz, who was newly hired as messenger in
the law firm representing the petitioner was tasked with the
delivery of the memorandum on appeal in the afternoon of April
28, 1986 (the last day for filing the same).
30.2. When Mr. de la Cruz read the caption of the memorandum,
he noted that the same is addressed to the respondent NLRC and
he erroneously concluded that it should be filed with the offices of
the NLRC in Intramuros, Manila.
30.3. Wen Mr. de la Cruz presented petitioner's Appeal at the
docket section of respondent NLRC, he was advised that the same
should be filed with the offices of the POEA in Ortigas, San Juan,
Metro Manila.
30.4. Mr. de la Cruz upon being apprised of his error immediately
proceeded to the offices of the POEA in order to have petitioner's
(PASCOR's) appeal received but unfortunately, by the time he
arrived thereat, the POEA office had already closed for the day.
Thus, the appeal was filed the following day.
To Support the above explanation, in addition to an affidavit executed by Mr. Ruben de la
Cruz, petitioner submitted a certification dated 2 May 1986 executed by Evelyn G. Sauza,
receive . receiving clerk of respondent NLRC stating that she had read to receive the
Memorandum on Appeal on or about 4:15 P.M., 28 April 1986, because the Memorandum
was supposed to be filed with the POEA office in Ortigas and not with the NLRC in
Intramuros.
The brevity of the delay in filing an appeal is not, of course, by itself a sufficient basis for
giving due course to the appeal. In the present case, however, the factual circumstances
combine with the legal merits of the case urged by the petitioner to move us to the
conviction that respondent NLRC should have recognized and heeded the requirements of
orderly procedure and substantial justice which are at stake in the present case by allowing
the appeal. In Siguenza v. Court of appeals, 5 the Court stressed that the right to appeal
should not be lightly disregarded by a stringent application of rules of procedure especially
where the appeal is on its face meritorious and the interests of substantial justice would be
served by permitting the appeal:

In a decision dated 14 April 1986, the POEA held petitioner Pascor liable to pay private In the case of Castro v. Court of Appeals (132 SCRA 782), we
respondent Rances the amount of US$ 1,500.00 "at the prevailing rate of exchange at the stressed the importance and real purpose of the remedy of appeal
time of payment." This decision was served on petitioner's counsel on 18 April 1986, which and ruled:
counsel filed a 'Memorandum on Appeal and/or Motion for Reconsideration" on 29 April
1986.
An appeal is an essential part of our
judicial system. We have advised the
Private respondent moved the next day for dismissal of the appeal and for issuance of a writ courts to proceed with caution so as not to
of execution, upon the ground that petitioner's appeal had been filed one (1) day beyond the deprive a party of the right to
reglementary period and that, consequently, the POEA decision had become final and appeal (National Waterworks and
executory. Sewerage Authority v. Municipality of
Libmanan, 97 SCRA 138) and instructed
that every party-litigant should
Petitioner opposed dismissal of its appeal and issuance of a writ of execution, arguing that be afforded the amplest opportunity for
the one (1) day delay in filing its Memorandum on Appeal had been occasioned by an the proper and just disposition of his
excusable mistake. cause, freed from the constraints of
technicalities (A. One Feeds, Inc. v. Court
On 20 May 1986, the POEA issued an order denying petitioner's appeal for having been filed of Appeals, 100 SCRA
out of time. Petitioner moved for reconsideration, paid the docket fee and posted the 590).<äre||anº•1àw>
required supercedes bond in connection with its appeal.
The rules of procedure are not to be
On 29 May 1986, the POEA denied private respondent's Motion for a Writ of Execution and applied in a very rigid and technical sense.
elevated the case to the NLRC. The rules of procedure are used only to
help secure not override substantial
justice. (Gregorio v. Court of Appeals [72
On 14 August 1986, public respondent NLRC denied petitioner's appeal as flied out of time. SCRA 1201). Therefore, we ruled
Petitioner's Motion for Reconsideration was similarly denied. in Republic v. Court of Appeals (83 SCRA
453) that a six-day delay in the perfection
 of the appeal does not warrant its
dismissal. And again in Ramos v. Bagasao,
96 SCRA 396, this Court held that the
delay in four (4) days in filing a notice of
appeal and a notion for extension of time
to file a record on appeal can be excused
on the basis of equity.
We should emphasize, however, that we have allowed the of an
appeal in some cases where a sent application of the rules would
have denied it only when to do so would serve the demands
of substantial justice and in the exercise of our equity junction.
In the case at bar, the petitioner's delay in their record on
appeal should not be strictly construed as to deprive them of the
right to appeal especially since on its face the appeal appears to be
impressed appeal especially with merit. 6
We turn to the merits of the Petition. An examination of the complaint and of the
Manifestation and Motion filed by respondent Rances in POEA Case No: M-85-08-14, shows
that the cause of action pleaded by respondent Rances was enforcement of the decision
rendered by c. Dubai Court which purported to award him, among other things, an additional
amount of US$ 1,500.00 under certain circumstances. In the complaint dated 23 October
1985, respondent Rances stated:
Details of cause of action (Why are you complaining?) (To include
place and date of occurrence of case of action and amount of claim,
if any) P 2,295 US$ salary for three (3) months stated in the
compromise of 1,500 TJS$ total of 2,795.50 US$ [as] per decision
from Civil Court of Dubai U.A.E. 7
The Motion/Manifestation dated 3 December 1985 filed by respondent Rances may be
quoted in extension
1. Originally, complainant's claim was US$ 9,364.89 which he filed
with the Dubai Court for adjudication.
xxx xxx xxx
2. The US$ 9,364.89 claim was compromised by the court in a
decision dated September 12, 1984. Xerox copy of the decision is
hereto attached as Annex "B" and the authentication as Annex "B-l'
and made an integral part thereof.
3. Pertinent portion of the decision referred to above reads as
follows:
Both parties came to a decision that the
opponent would pay to the claimant the
amount of Five Thousand & Five Hundred
dollars for the withdrawal of the claimant
and providing him return ticket to his
country. The opponent declared that he
would pay One Thousand & Five Hundred
Dollars to the opponent in case the wife of
the claimant doesn't agree with the
amount sent to.
4. During the hearing leading to the Compromise, I emphasized that
the allotment I was giving my wife was US$ 765.00 per month and
at the time the case was filed the allotment was already 3 months
in arrears which already amounted to US$ 2,295.00.
5. The amount sent my wife which is only P 13,393.45 through
PASCOR and confirmed by a Certification of the Philippine National
Bank, Dagupan City Branch, hereto attached as Annex 'C' is
definitely very meager compared to the exchange value of US$
2,295.00;
6. My wife certainly did not agree and cannot agree or admit that
only P 13,393.45 will be given her as an allotment for the 3-month
period; hence, urder the Compromise Agreement, we are entitled to
recover the additional US$ 1,500.00;
7. The agreement insofar as the additional remittance to my wife of
US$1,500.00 is reasonable in that adding the same to the
P13,393.45 my wife received would sum up to US$2,295.00
corresponding to the accumulated 3 month allotment due my wife.
WHEREFORE, premises considered, it is respectfully prayed of this
Honorable Office to —
Cause or require respondent to remit and/or pay the undersigned
or his wife of the amount of US$ 1,500.00 as mandated under the
Compromise Agreement which was the basis of the decision of the
Dubai Civil Court. 8
It should be noted that respondent Rances submitted to the POEA only the Dubai Court
decision; he did not submit any copy of the 'Compromise Agreement' (assuming that to have
been reduced to writing) which he presumably believed to have been absorbed and
superseded by the Dubai decision.
That the cause of action set out in respondent Rances' complaint was enforcement of the
Dubai decision is further, indicated in the decision dated 14 April 1986 rendered by the
POEA. This decision provided in part as follows:
Complainant alleged that his original claim of US$ 9,364.89 for
unpaid salaries, termination pay and travel expenses was filed in
Dubai. In a decision rendered by the Dubai Court, his claim was
compromised in the amount of US$ 5,500.00 plus return plane
ticket. The amount of US$ 1,500.00 will be paid to his wife if she
does not agree with the amount sent to her. The three (3) months
unremitted allotments refers to the months of April, May and June
1984. As evidenced by the Allotment Shp, respondent approved the
authority given by complainant stating that the amount of US$
765.00 be remitted to his wife belong with the month of April 1984.
The amount remitted to his wife for allotment cover the three (3)
month period was only P 13,393.45. The basis of complainant's
claim is the reservation in the decision of the Dubai Court which
states that in case the wife of the claimant does not agree with the
amount sent to her, the opponent shall pay US$ l,500.00. 9
Clearly, therefore, respondent Rances' action was for enforcement of the Dubai decision to
the extent that such decision provided for payment of an additional amount of US$1,500.00
and that respondent relied upon such decision.
Petitioner argues vigorously that the POEA had no authority and jurisdiction to enforce the
judgment of a foreign court. Under Section 1, Rule 1, Book VI of the POEA Rules and
Regulations, it will be seen that the POEA has jurisdiction to decide all cases 'involving
employer employee relations arising out of or by virtue of any law or contract involving
Filipino workers for overseas employment, including seamen." Respondent Rances, however,
relied not upon the employer - employee relationship between himself and petitioner
corporation and the latter's foreign principal, but rather upon the judgment obtained by him
from the Dubai Court which had apparently already been partially satisfied by payment to
respondent Rances of US$ 5,500.00. The POEA has no jurisdiction to hear and decide a claim
for enforcement of a foreign judgment. Such a claim must be brought before the regular
courts. The POEA is not a court; it is an administrative agency exercising, inter alia,
adjudicatory or quasi-judicial functions. Neither the rules of procedure nor the rules of
evidence which are mandatorily applicable in proceedings before courts, are observed in
proceedings before the POEA. 10
Even assuming (arguendo, merely) that the POEA has jurisdiction to recognize and enforce a
foreign judgment, still respondent Rances cannot rely upon the Dubai decision. The Dubai
decision was not properly proved before the POEA. The Dubai decision purports to be the
written act or record of an act of an official body or tribunal of a foreign country, and
therefore a public writing under Section 20 (a) of Rule 132 of the Revised Rules of Court.
Sections 25 and 26 of Rules 132 prescribe the manner of proving a public of official record of
a foreign country in the following terms:
Sec. 25. Proof of public or official record. — An official record or an
entry therein, when admissible for any purpose, may be evidenced
by an official publication thereof or by a copy attested by the officer
having the legal custody of the record, or by his deputy, and
accompanied. if the record is not kept in the Philippines, with a
certificate that such officer has the custody. If the office in which the
record is kept is in a foreign country, the certificate maybe be
made by a secretary of embassy or litigation, consul general,
consul, vice consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office.
 Sec. 26. What attestation of copy must state. — Whenever a copy
of a writing is attend for the purpose of evidence, the attestation
must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be. The
attestation must be under the official seal of the attesting officer, if
there be any, or if he be the clerk of a court having a seal, under the
seal of such court. (Emphasis supplied)
In the instant case, respondent Rances failed to submit any attestation issued by the proper
Dubai official having legal custody of the original of the decision of the Dubai Court that the
copy presented by said respondent is a faithful copy of the original decision, which
attestation must furthermore be authenticated by a Philippine Consular Officer having
jurisdiction in Dubai. The transmittal letter, dated 23 September 1984, signed by Mohd Bin
Saleh, Honorary Consul for Philippines' does not comply with the requirements of either the
attestation under Section 26 nor the authentication envisaged by Section 25. 11
There is another problem in respect of the admissibility in evidence of the Dubai decision.
The Dubai decision is accompanied by a document which purports to be an English
translation of that decision., but that translation is legally defective. Section 34 of Rule 132 of
the Revised Rules of Court requires that documents written in a non-official language hke
Arabic) shall not be admitted as evidence unless accompanied by a translation into English or
Spanish or Filipino. 12 In Ahag v. Cabiling, 13 Mr. Justice Moreland elaborated on the need for
a translation of a document written in a language other than an official language:
... Moreover, when there is presented in evidence an exhibit
written in any language other than Spanish, if there is an
appeal, that exhibit should be translated into Spanish by the official
interpreter of the court, or a translation should be agreed upon by
the parties, and both original and translation sent to this court. In
the case before us, there is an untranslated exhibit written in the
Visayan language. 14
In Teng Giok Yan v. Hon. Court of Appeals, et al., 15 the Court, speaking through Mr. Justice
Montemayor, had occasion to stress the importance of having a translation made by the
court interpreter who must, of course, be of recognized competence both in the language in
which the document involved is written and in English. The Court said:
[t]he trial court was certainly not bound by the translation given by
the Chinese Embassy, specially in the absence of a delete assurance
that said translation was correct and that it was made by the
Embassy Adviser himself. On the other hand, the translation made
by the court interpreter is official and reliable not only because of
the recognized ability of said interpreter to translate Chinese
characters into English, but also because said interpreter was under
the direct supervision and control of the court. .... 16
In the instant case, there is no showing of who effected the English translation of the Dubai
decision which respondent Rances submitted to the POEA. The English translation
does not purport to have been made by an official court interpreter of the Philippine
Government nor of the Dubai Government. Neither the Identity of the translator nor his
competence in both the Arabic and English languages has been shown. The English
translation submitted by the respondent is not sworn to as an accurate translation of the
original decision in Arabic. Neither has that translation been agreed upon by the parties as a
true and faithful one.
The foregoing does not exhaust the difficulties presented by reliance upon the Dubai
decision. The Dubai Court decision, even on the basis of the English translation submitted by
respondent Rances, does not purport on its face to have been rendered against petitioner
Pascor nor against the foreign principal of petitioner. Respondent Rances simply assumed
that the decision was rendered against petitioner's foreign principal. The Dubai decision does
not Identify the parties to the litigation that was resolved by said decision. Accordingly, the
Dubai decision can scarcely be enforced against petitioner Pascor. Further, even if the Dubai
decision had on its face purported to be rendered against petitioner Pascor, we must note
that petitioner Pascor has expressly denied that jurisdiction had ever been acquired by the
Dubai court over the person of Pascor in accordance with the Rules of Procedure applicable
before the Dubai Court. 17 Respondent Rances has not proved the contents of the Dubai
Rules of Procedure governing acquisition of jurisdiction over the person of a non-resident
defendant.
Finally, if it be assumed (arguendo, once more) that the Dubai Court had indeed acquired
jurisdiction over the person of Pascor's foreign principal — Gulf East Ship Management Ltd.
— it still would not follow that Pascor would automatically be bound by the Dubai decision.
The statutory agency (or suretyship) of Pascor is limited in its reach to the contracts of
employment Pascor entered into on behalf of its principal with persons like respondent
Rances. 18 Such statutory inability does not extend to liability for judgments secured against
Gulf East Ship Management Ltd., in suits brought against Gulf East outside Philippine
territorial jurisdiction, even though such a suit may involve a contract of employment with a
Filipino seaman.
We conclude that the POEA acted without or in excess of jurisdiction in rendering its Decision
dated 14 April 1986 and its Order dated 20 May 1986, and that public respondent NLRC
similarly acted without or in excess of jurisdiction in rendering its Orders dated 14 August
1986 and 19 November 1986 denying petitioner's appeal and Motion for Reconsideration.
This, however, is without prejudice to the right of respondent Rances to initiate another
proceeding before the POEA against petitioner Pascor, this time on the basis alone of the
contract of employment which existed between said respondent and petitioner or
petitioner's foreign principal; there, respondent Rances may seek to show that he is still
entitled to the allotments which he claims were not remitted by his employer to his wife.
ACCORDINGLY, the Petition for certiorari is GRANTED and the Resolutions of public
respondent NLRC dated 14 August 1986 and 19 November 1986 are hereby NULLIFIED and
SET ASIDE. The Temporary Restraining Order issued by this Court on 8 December 1986 is
hereby made PERCENT. No pronouncement as to costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes JJ., concur.
FIRST DIVISION
G.R. No. 167052, March 11, 2015
BANK OF THE PHILIPPINE ISLANDS SECURITIES CORPORATION, Petitioner, v. EDGARDO V.
GUEVARA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision1 dated December 19, 2003 and Resolution 2 dated
February 9, 2005 of the Court Appeals in CA-G.R. CV No. 69348, affirming the Decision3 dated
September 11, 2000 of the Regional Trial Court (RTC) of Makati City, Branch 57 in Civil Case
No. 92-1445. The RTC acted favorably on the action instituted by respondent Edgardo V.
Guevara for the enforcement of a foreign judgment, particularly, the Order 4 dated March 13,
1990 of the United States (U.S.) District Court for the Southern District of Texas, Houston
Division (U.S. District Court), in Civil Action No. H-86-440, and ordered petitioner Bank of the
Philippine Islands (BPI) Securities Corporation to pay respondent (a) the sum of
US$49,500.00 with legal interest; (b) P250,000.00 attorney’s fees and litigation expenses;
and (c) costs of suit.
The facts are culled from the records of the case.
Ayala Corporation, a holding company, and its subsidiaries are engaged in a wide array of
businesses including real estate, financial services, telecommunications, water and used
water, electronics manufacturing services, automotive dealership and distributorship,
business process outsourcing, power, renewable energy, and transport infrastructure. 5
In the 1980s, Ayala Corporation was the majority stockholder of Ayala Investment and
Development Corporation (AIDC). AIDC, in turn, wholly owned Philsec Investment
Corporation (PHILSEC), a domestic stock brokerage firm, which was subsequently bought by
petitioner; and Ayala International Finance Limited (AIFL), a Hong Kong deposit-taking
corporation, which eventually became BPI International Finance Limited (BPI-IFL). PHILSEC
was a member of the Makati Stock Exchange and the rules of the said organization required
that a stockbroker maintain an amount of security equal to at least 50% of a client’s
outstanding debt.
Respondent was hired by Ayala Corporation in 1958. Respondent later became the Head of
the Legal Department of Ayala Corporation and then the President of PHILSEC from
September 1, 1980 to December 31, 1983. Thereafter, respondent served as Vice-President
of Ayala Corporation until his retirement on August 31, 1997.
While PHILSEC President, one of respondent’s obligations was to resolve the outstanding
loans of Ventura O. Ducat (Ducat), which the latter obtained separately from PHILSEC and
AIFL. Although Ducat constituted a pledge of his stock portfolio valued at approximately
US$1.4 million, Ducat’s loans already amounted to US$3.1 million. Because the security for
Ducat’s debts fell below the 50% requirement of the Makati Stock Exchange, the trading
privileges of PHILSEC was in peril of being suspended.
Ducat proposed to settle his debts by an exchange of assets. Ducat owned several pieces of
real estate in Houston, Texas, in partnership with Drago Daic (Daic), President of 1488, Inc., a
U.S.-based corporation. Respondent relayed Ducat’s proposal to Enrique Zobel (Zobel), the
Chief Executive Officer of Ayala Corporation. Zobel was amenable to Ducat’s proposal but
advised respondent to send Thomas Gomez (Gomez), an AIFL employee who traveled often
to the U.S., to evaluate Ducat’s properties.
In December of 1982, Gomez examined several parcels of real estate that were being offered
by Ducat and 1488, Inc. for the exchange. Gomez, in a telex to respondent, recommended
the acceptance of a parcel of land in Harris County, Texas (Harris County property), which
was believed to be worth around US$2.9 million. Gomez further opined that the “swap
would be fair and reasonable” and that it would be better to take this opportunity rather
than pursue a prolonged legal battle with Ducat. Gomez’s recommendation was brought to
Zobel’s attention. The property-for-debt exchange was subsequently approved by the AIFL
Board of Directors even without a prior appraisal of the Harris County property. However,
before the exchange actually closed, an AIFL director asked respondent to obtain such an
appraisal.
William Craig (Craig), a former owner of the Harris County property, conducted the appraisal
of the market value of the said property. In his January 1983 appraisal, Craig estimated the
fair market value of the Harris County property at US$3,365,000.
Negotiations finally culminated in an Agreement,6 executed on January 27, 1983 in Makati
City, Philippines, among 1488, Inc., represented by Daic; Ducat, represented by Precioso
Perlas (Perlas); AIFL, represented by Joselito Gallardo (Gallardo); and PHILSEC and Athona
Holdings, N. V. (ATHONA), both represented by respondent. Under the Agreement, the total
amount of Ducat’s debts was reduced from US$3.1 million to US$2.5 million; ATHONA, a
company wholly owned by PHILSEC and AIFL, would buy the Harris County property from
1488, Inc. for the price of US$2,807,209.02; PHILSEC and AIFL would grant ATHONA a loan of
US$2.5 million, which ATHONA would entirely use as initial payment for the purchase price
of the Harris County property; ATHONA would execute a promissory note in favor of 1488,
Inc. in the sum of US$307,209.02 to cover the balance of the purchase price for the Harris
County property; upon its receipt of the initial payment of US$2.5 million from ATHONA,
1488, Inc. would then fully pay Ducat’s debts to PHILSEC and AIFL in the same amount; for
their part, PHILSEC and AIFL would release and transfer possession of Ducat’s pledged stock
portfolio to 1488, Inc.; and 1488, Inc. would become the new creditor of Ducat, subject to
such other terms as they might agree upon.
The series of transactions per the Agreement was eventually executed. However, after
acquiring the Harris County property, ATHONA had difficulty selling the same. Despite
repeated demands by 1488, Inc., ATHONA failed to pay its promissory note for the balance of
the purchase price for the Harris County property, and PHILSEC and AIFL refused to release
the remainder of Ducat’s stock portfolio, claiming that they were defrauded into believing
that the said property had a fair market value higher than it actually had.
Civil Action No. H-86-440 before the
U.S. District Court of Southern District
of Texas, Houston Division
On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC, AIFL, and ATHONA for (a)
misrepresenting that an active market existed for two shares of stock included in Ducat’s
portfolio when, in fact, said shares were to be withdrawn from the trading list; (b) conversion
of the stock portfolio; (c) fraud, as ATHONA had never intended to abide by the provisions of
its promissory note when they signed it; and (d) acting in concert as a common enterprise or
in the alternative, that ATHONA was the alter ego of PHILSEC and AIFL. The suit was
docketed as Civil Action No. H-86-440 before the U.S. District Court.
PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc., Daic, Craig, Ducat, and
respondent, for the recovery of damages and excess payment or, in the alternative, the
rescission of the sale of the Harris County property, alleging fraud, negligence, and
conspiracy on the part of counter-defendants who knew or should have known that the
value of said property was less than the appraisal value assigned to it by Craig.
Before the referral of the case to the jury for verdict, the U.S. District Court dropped
respondent as counter-defendant for lack of evidence to support the allegations against
him. Respondent then moved in open court to sanction petitioner (formerly PHILSEC), AIFL,
and ATHONA based on Rule 11 of the U.S. Federal Rules of Civil Procedure. 7
In its Order dated March 13, 1990, the U.S. District Court stated that on February 14, 1990,
after trial, the jury returned a verdict for 1488, Inc. In the same Order, the U.S. District Court
ruled favorably on respondent’s pending motion for sanction, thus:
During the course of the trial, the Court was required to review plaintiff’s Exhibit No. 91 to
determine whether the exhibit should be admitted. After reviewing the exhibit and hearing
the evidence, the Court concluded that the defendants’ counterclaims against Edgardo V.
Guevara are frivolous and brought against him simply to humiliate and embarrass him. It is
the opinion of the Court that the defendants, Philsec Investment Corporation, A/K/A BPI
Securities, Inc., and Ayala International Finance Limited, should be sanctioned appropriately
based on Fed. R. Civ. P. 11 and the Court’s inherent powers to punish unconscionable
conduct. Based upon the motion and affidavit of Edgardo V. Guevara, the Court finds that
$49,450 is reasonable punishment.
ORDERED that defendants, Philsec Investment Corporation A/K/A BPI Securities, Inc., and
Ayala International Finance Limited, jointly and severally, shall pay to Edgardo V. Guevara
$49,450 within 30 days of the entry of this order.8
Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as the aforementioned order
of the U.S. District Court for them to pay respondent US$49,450.00; while 1488, Inc.
appealed a post-judgment decision of the U.S. District Court to amend the amount of
attorney’s fees awarded. The appeals were docketed as Case No. 90-2370 before the U.S.
Court of Appeals, Fifth Circuit.
The U.S. Court of Appeals rendered its Decision on September 3, 1991 affirming the verdict
in favor of 1488, Inc. The U.S. Court of Appeals found no basis for the allegations of fraud
made by petitioner, AIFL, and ATHONA against 1488, Inc., Daic, Craig, and Ducat:
[2] To state a cause of action for fraud under Texas law, a plaintiff must allege sufficient facts
to show:
(1) that a material representation was made;
(2) that it was false;
(3) that when the speaker made it he knew that it was false or made it recklessly
without any knowledge of the truth and as a positive assertion;
(4) that he made it with the intention that it should be acted on by the party;
(5) that the party acted in reliance upon it;
(6) that he thereby suffered injury.
Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). We agree with the district
court’s decision to grant a directed verdict against the defendants. The defendants failed to
allege sufficient facts to establish the elements necessary to demonstrate fraud. In
particular, the defendants have failed to allege any facts that would tend to show that the
plaintiff or any of the third party defendants made a false representation or a representation
with reckless disregard as to its truth.
The Houston real estate market was extremely volatile during the late 1970’s and the early
1980’s. Like a stream of hot air, property values rose rapidly as the heat and fury generated
by speculation and construction plans mounted, but, just as rapidly, the climate cooled and
the high-flying market came crashing to an all time low. The real estate transaction involved
in this case was certainly affected by this environment of capriciousness. Moreover, a
number of additional variables may have contributed to the uncertainty of its value. For
instance, the land abutted a two-lane asphalt road that had been targeted by the state for
conversion into a major multi-lane divided highway. Water and sewage treatment facilities
were located near the boundary lines of the property. In addition, Houston’s lack of
conventional zoning ordinances meant that the value of the property could fluctuate
depending upon the use (commercial or residential) for which the property would ultimately
be used.
[3] The fact that the defendants were unable to sell the property at the price for which it had
been appraised does not demonstrate that the plaintiff or the third party defendants knew
that the value of the property was less than the appraised value, nor does it establish that
the opposing parties were guilty of negligent misrepresentation or negligence.
[4] In support of their allegation of fraud, the defendants rely heavily on a loan application
completed by 1488 shortly before the subject property was transferred to Athona. See
Defendant’s Exhibit 29. At the time, 1488 still owed approximately $300,000 to Republic of
Texas Savings Association on its original loan for the subject property. The debt had matured
and 1488 was planning to move the loan to Home Savings Association of Houston, that is,
take out a loan from Home Savings to pay off the debt to Republic. 1488 had planned to
borrow $350,000 for that purpose. A line item on the Home Savings loan application form
asked for the amount of the loan as a percentage of the appraised value of the land. A figure
of thirty-nine percent was typed into that space, and the defendants suggest that this proves
that the plaintiff knew Craig’s appraisal was erroneous. The defendants reason that if the
$350,000 loan amount was only thirty-nine percent of the land’s appraised value, then the
real estate must have been worth approximately $897,436.
Although their analysis is sound, the conclusion reached by the defendants cannot withstand
additional scrutiny. At the time that the loan application was completed, 1488 did not
request to have a new appraisal done for the property. Instead, 1488 planned to use the
numbers that had been generated for a quasi-appraisal done in 1977. The 1977 report
purported only to “supplement” an earlier appraisal that had been conducted in 1974, and
the supplement described its function as estimating market value “for mortgage loan
purposes” only. See Defendant’s Trial Exhibit 4. The two page supplement was based on
such old information that even the Home Savings Association would not accept it without
additional collateral as security for the loan. See Record on Appeal, Vol. 17 at 5-29 to 5-30.
The loan, however, was never made because the property was transferred to Athona, and
the outstanding loan to Republic was paid off as part of that transaction. In addition, the
loan application itself was never signed by anyone affiliated with 1488. The district court
was correct in dismissing this argument in support of the defendant’s fraud allegations.
[5] The defendants also allege that the plaintiff and counter defendants knew that Craig’s
appraisal was fraudulent because the purchaser’s statement signed by their own
representative, and the seller’s statement, signed by the plaintiff, as well as the title
insurance policy all recited a purchase price of $643,416.12. Robert Higgs, general counsel
for 1488, explained that because of the nature of the transaction, 1488, for tax purposes,
wanted the purchase price on the closing statement to reflect only that amount of cash
actually exchanged at the closing as well as the promissory note given at the closing. See
Record on Appeal, Vol. 17 at 5-127. Although the closing documents recite a purchase price
well under the actual sales price, nothing indicates that any of the parties actually believed
the property to be worth less than the sales amount.
The defendants also assert that it was error for the district court to deny them permission to
designate O. Frank McPherson, a Houston appraiser, as an expert witness after the cutoff
date established by a pretrial order for such designations. The defendants contend that the
error prevented them from presenting facts that would support their fraud allegations.
Although the defendants were allowed to present the testimony of another expert witness Department of Public Safety and Corrections, 901 F.2d 1288, 1293-94 (5th Cir.1990).
on the subject of valuation, they argue that McPherson’s testimony was critical because he Providing specific notice and an opportunity to respond is particularly important in cases,
had performed an appraisal of the property for the Texas Highway Department close to the such as the one before us, in which the sanctions have been imposed on the clients and not
time period during which Craig had made his appraisal. McPherson’s appraisal was the attorneys. See Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987) (“If sanctions are
performed as part of the State’s condemnation proceedings that preceded the planned proposed to be imposed on the client, due process will demand more specific notice because
highway expansion next to the subject property. the client is likely unaware of the existence of Rule 11 and should be given the opportunity to
prepare a defense.”). A separate hearing is not a prerequisite to the imposition of Rule 11
x x x x sanctions, see Donaldson, 819 F.2d at 1560 n. 12, but the defendants in this case, should
have been given more of an opportunity to respond to the motion than that provided at the
[9] In their briefs, the defendants fail to provide an adequate explanation for their failure to hearing in which the motion was first raised. Providing the defendant with an opportunity to
identify their expert witness in accordance with the district court’s pretrial order. This law mount a defense “on the spot” does not comport with due process. Given that the
suit was initiated in 1985, and the defendants had until November of 1988 to designate their defendants were not provided with adequate notice or an opportunity to be heard, we
expert witnesses. The defendants were aware of the condemnation proceedings, and they, vacate the award of sanctions and remand so that the district court can provide the
therefore, had approximately three years to determine the identity of any appraiser used by defendants with an adequate opportunity to be heard. 11
the state. The defendants simply failed to make this inquiry.
Finally, the U.S. Court of Appeals similarly vacated the award of attorney’s fees and
Enforcement of the district court’s pretrial order did not leave the defendants without an remanded the matter to the U.S. District Court for recalculation to conform with the
expert witness on the issue of valuation, and the available expert had also conducted requirements provided in the promissory note.
appraisals for the Texas Highway Department in the area surrounding the subject property. x
x x In accordance with the Decision dated September 3, 1991 of the U.S. Court of Appeals, the
U.S. District Court issued an Order12 dated October 28, 1991 giving petitioner, AIFL, and
Although the degree of prejudice suffered by the plaintiff due to the late designation of an ATHONA 20 days to formally respond to respondent’s motion for Rule 11 sanctions.
expert would not have been great, a district court still has the discretion to control pretrial Petitioner, AIFL, and ATHONA jointly filed before the U.S. District Court their opposition to
discovery and sanction a party’s failure to follow a scheduling order. See id. at 791. Such respondent’s motion for Rule 11 sanctions. 13 Respondent filed his reply to the opposition, to
action is particularly appropriate here, where the defendants have failed to provide an which petitioner, AIFL, and ATHONA, in turn, filed a reply-brief.14
adequate explanation for their failure to identify their expert within the designated
timetable. In an Order15 dated December 31, 1991, the U.S. District Court still found respondent’s
motion for Rule 11 sanctions meritorious and reinstated its Order dated March 13, 1990:
x x x x
The basis of the Court’s prior decision as well as now is the fact that the defendants filed suit
The defendants failed to produce enough evidence from which fraud could be inferred to against Guevara with knowledge that the basis of the suit was unfounded. In the
justify the submission of the issue to a jury. Conclusional allegations or speculation regarding
defendants’ file was an appraisal from an international appraisal firm, which the defendants
what the plaintiff knew or did not know concerning the value of the subject property are refused to disclose during discovery and was only discovered at a bench conference during a
insufficient to withstand a motion for a directed verdict. The district court committed no
discussion about appraisers. Based on the defendants’ own appraisers, no basis existed for a
error in granting the motion. suit by the defendants against their employee.
x x x x The previous judgment entered by this Court is REINSTATED.
Since the defendants failed to present the district court with any facts that would tend to The above-quoted Order of the U.S. District Court attained finality as it was no longer
show that the plaintiffs committed a fraud against them, their claim of a conspiracy to
appealed by petitioner, AIFL, and ATHONA.
commit fraud must also fail.9
Through a letter dated February 18, 1992, respondent demanded that petitioner pay the
The U.S. Court of Appeals likewise adjudged that petitioner, AIFL, and ATHONA failed to amount of US$49,450.00 awarded by the U.S. District Court in its Order dated March 13,
prove negligence on the part of 1488, Inc., Daic, Craig, and Ducat in the appraisal of the
1990. Given the continuous failure and/or refusal of petitioner to comply with the said
market value of the said property:
Order of the U.S. District Court, respondent instituted an action for the enforcement of the
same, which was docketed as Civil Case No. 92-1445 and raffled to the RTC of Makati City,
[10, 11] The defendants have likewise failed to present any facts that would tend to support Branch 57.
their claim of negligent misrepresentation or negligence. The defendants rely on
assumptions and unsupportable conclusions of law in establishing their case for negligence: Civil Case No. 92-1445 before
“Assuming the Property’s true value is less than $800,000, it is reasonable to assume that the Branch 57 of the RTC of Makati City
counter defendants failed to exercise reasonable care or competence . . .” Brief for Athona at
45-46 x x x. A party may not rely on assumptions of fact to carry their case forward. The In his Complaint for the enforcement of the Order dated March 13, 1990 of the U.S. District
defendants have presented no facts to suggest that the plaintiff was negligent in acquiring its Court in Civil Action No. H-86-440, respondent prayed that petitioner be ordered to pay:
appraisal. The plaintiff hired Craig, a real estate broker, to perform the appraisal after the
defendants had already given their initial approval for the transaction. Craig had performed
real estate appraisals in the past, and Texas law permits real estate brokers to conduct such 1. The sum of US$49,450.00 or its equivalent in Philippine Pesos x x x with interest
appraisals, see Tex.Rev.Civ.Stat.Ann. art. 6573a, §2(2)(E) (Vernon Supp. 1988) (Original from date of demand;
version at Tex.Rev.Civ.Stat.Ann. art. 6573a, §4(1)(e) (Vernon 1969). These facts do not
support a claim of negligence. 2. Attorney’s fees and litigation expenses in the sum of P250,000.00;

For the foregoing reasons the district court committed no error in granting a directed verdict
3. Exemplary damages of P200,000.00; and
against the counterclaims advanced by the defendants. 10

The U.S. Court of Appeals, however, vacated the award of exemplary damages in favor of 4. Costs of the suit.16
1488, Inc. for the fraudulent misrepresentation regarding the marketability of the two shares
of stock in Ducat’s portfolio. Under Texas law, a jury may not award damages unless it was
determined that the plaintiff had also sustained actual damages. The U.S. Court of Appeals
In its Amended Answer Ad Cautelam,17 petitioner opposed the enforcement of the Order
agreed with petitioner, AIFL, and ATHONA that 1488, Inc. brought its suit alleging fraudulent
dated March 13, 1990 of the U.S. District Court on the grounds that it was rendered upon a
misrepresentation after the two-year statute of limitation had expired. The
clear mistake of law or fact and/or in violation of its right to due process.
misrepresentation issue should never have gone to the jury. Therefore, the jury’s finding of
actual damages is nullified; and since the jury verdict is left without a specific finding of
In the course of the pre-trial and scheduled trial proceedings, the parties respectively
actual damages, the award of exemplary damages must be vacated.
manifested before the court that they were dispensing with the presentation of their
witnesses since the subject matter of their testimonies had already been stipulated upon. 18
The U.S. Court of Appeals also vacated the award of Rule 11 sanctions in favor of respondent
and against petitioner, AIFL, and ATHONA for being rendered without due process, and
Thereafter, the parties formally offered their respective evidence which entirely consisted of
remanded the issue to the U.S. District Court:
documentary exhibits. Respondent submitted authenticated and certified true copies of
Rule 11 of the U.S. Federal Rules of Civil Procedure; 19 the Orders dated March 13, 1990,
[18-20] The Rule 11 motion was first made by Guevara on February 14, 1990, and the court October 28, 1991, and December 31, 1991 of the U.S. District Court in Civil Action No. H-86-
immediately ruled on the issue without giving the defendants an opportunity to prepare a 440;20 the Decision dated September 3, 1991 of the U.S. Court of Appeals in Case No. 90-
written response. See Record on Appeal, Vol. 22 at 10-25 to 10-37. Although, the 2370;21 and the opposition to respondent’s motion for Rule 11 sanctions and reply-brief filed
defendants were given an opportunity to speak, we conclude that the hearing failed to by PHILSEC, AIFL, and ATHONA before the U.S. District Court. 22 Petitioner presented
comport with the requirements of due process, which demand that the defendants be photocopies of pleadings, documents, and transcripts of stenographic notes in Civil Action
provided with adequate notice and an opportunity to prepare a response. See Henderson v. No. H-86-440 before the U.S. District Court;23 the pleadings filed in other cases related to
Civil Case No. 92-1440;24 and a summary of lawyer’s fees incurred by petitioner in the U.S. 25
The RTC admitted in evidence the documentary exhibits of the parties in its Orders dated
September 21, 1998 and February 8, 1999,26 and then deemed the case submitted for
decision.
The RTC rendered a Decision on September 11, 2000 with the following dispositive portion:
WHEREFORE, judgment is hereby rendered in favor of [respondent] Edgardo V. Guevara
ordering [petitioner] BPI Securities Corporation to pay [respondent] the following:
1. the sum of US$49,500.00 with legal interest from the filing of this case until fully
paid;
2. the sum of P250,000.00 as attorney’s fees and litigation expenses; and
3. the costs of suit.
An award of exemplary damages for P200,000.00 is denied for being speculative. 27
Petitioner appealed to the Court of Appeals, assigning the following errors on the part of the
RTC:
A. The trial court erred in not passing upon the merit or validity of [petitioner’s]
defenses against the enforcement of the foreign judgment in the Philippines.
Had the trial court considered [petitioner’s] defenses, it would have concluded
that the foreign judgment was not enforceable because it was made upon a
clear mistake of law or fact and/or was made in violation of the [petitioner’s]
right to due process.
B. The trial court erred in not utilizing the standard for determining the
enforceability of the foreign award that was agreed upon by the parties to this
case during the pre-trial, namely, did the defendants in the Houston case
(PHILSEC, AIFL, AND ATHONA) have reasonable grounds to implead [respondent]
in the Houston case based upon the body of the evidence submitted therein.
Thus, whether or not PHILSEC, AIFL and ATHONA ultimately prevailed against
[respondent] was immaterial or irrelevant; the question only was whether they
had reasonable grounds to proceed against him, for if they had, then there was
admittedly no basis for the Rule 11 award against them by the Houston Court.
xxxx
C. In the light of its ruling, the trial court failed to pass upon and resolve the other
issues and/or defenses expressly raised by [petitioner], including the defense
that PHILSEC, AIFL, and ATHONA were deprived of their right to defend
themselves against the Rule 11 sanction and the main decision because of the
prohibitive cost of legal representation in the us and also because of the gross
negligence of its US counsel. x x x.28
In its Decision dated December 19, 2003, the Fifth Division of the Court of Appeals decreed:
WHEREFORE, the Decision dated 11 September 2000 in Civil Case No. 92-1445 of the
Regional Trial Court of Makati, Branch 57, is hereby AFFIRMED in all respect with costs
against [petitioner].29
In its Motion for Reconsideration,30 petitioner lamented that the Fifth Division of the Court of
Appeals failed to resolve on its own petitioner’s appeal as the Decision dated December 19,
2003 of the said Division was copied almost verbatim from respondent’s brief. Thus,
petitioner prayed that the Fifth Division of the Court of Appeals recuse itself from deciding
petitioner’s Motion for Reconsideration and that the case be re-raffled to another division.
The Fifth Division of the Court of Appeals maintained in its Resolution dated May 25, 2004
that the issues and contentions of the parties were all duly passed upon and that the case
was decided according to its merits. The said Division, nonetheless, abstained from resolving
petitioner’s Motion for Reconsideration and directed the re-raffle of the case.31
Petitioner’s Motion for Reconsideration was re-raffled to and subsequently resolved by the
Tenth Division of the Court of Appeals. In its Resolution dated February 9, 2005, the Tenth
Division of the appellate court denied the said Motion for lack of merit. 32
Hence, petitioner seeks recourse from this Court via the instant Petition for Review, insisting
that the Court of Appeals erred in affirming the RTC judgment which enforced the Order
dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440.
Petitioner contends that it was not accorded by the Court of Appeals the right to refute the
foreign judgment pursuant to Rule 39, Section 48 of the Rules of Court because the appellate
court gave the effect of res judicata to the said foreign judgment. The Court of Appeals
copied wholesale or verbatim the respondent’s brief without addressing the body of
evidence adduced by petitioner showing that it had reasonable grounds to implead
respondent in Civil Action No. H-86-440.
Petitioner asserts that the U.S. District Court committed a clear mistake of law and fact in its
issuance of the Order dated March 13, 1990, thus, said Order is unenforceable in this
jurisdiction. Petitioner discusses in detail its evidence proving that respondent, together
with 1488, Inc., Ducat, Craig, and Daic, induced petitioner to agree to a fraudulent deal.
Petitioner points out that respondent had the duty of looking for an independent and
competent appraiser of the market value of the Harris County property; that instead of
choosing an unbiased and skilled appraiser, respondent connived with 1488, Inc., Ducat, and
Daic in selecting Craig, who turned out to be the former owner of the Harris County property
and a close associate of 1488, Inc. and Daic; and that respondent endorsed to petitioner
Craig’s appraisal of the market value of the Harris County property, which was overvalued by
more than 400%.
According to petitioner, it had reasonable grounds to implead respondent in Civil Action No.
H-86-440 so the sanction imposed upon it under Rule 11 of the U.S. Federal Rules of Civil
Procedure was unjustified. Petitioner additionally argues that there is no basis for the U.S.
District Court to impose upon it the Rule 11 sanction as there is nothing in the said provision
which allows “the imposition of sanctions for simply bringing a meritless lawsuit.” If the Rule
11 sanction was imposed upon petitioner as punishment for impleading a party (when it had
reasonable basis for doing so) and not prevailing against said party, then, petitioner claims
that such a sanction is against Philippine public policy and should not be enforced in this
jurisdiction. Settled in this jurisdiction that there should be no premium attached to the
right to litigate, otherwise parties would be very hesitant to assert a claim in court.
Petitioner further alleges that it was denied due process in Civil Action No H-86-440 because:
(1) the U.S. District Court imposed the Rule 11 sanction on the basis of a single document,
i.e., the letter dated September 26, 1983 of Bruce C. Bossom, a partner at Jones Lang
Wooton, a firm of chartered surveyors and international real estate consultants, addressed
to a Mr. Senen L. Matoto of AIFL (marked as Exhibit 91 before the U.S. District Court), which
was never admitted into evidence; (2) in said letter, Jones Lang Wooton was “soliciting a
listing agreement” and in which the “said firm unilaterally, without being asked as to the
value of the [Harris County] property, indicated a value for the [same] which approximate[d]
with the value given in the Craig appraisal,” hence, it cannot be used as basis to conclude
that petitioner, AIFL, and ATHONA assented to Craig’s appraisal of the Harris County
property; (3) the counsel who represented petitioner, AIFL, and ATHONA in Civil Action No.
H-86-440 before the U.S. District Court was grossly ignorant and/or negligent in the
prosecution of their counterclaims and/or in proving their defenses, such as when said
counsel failed to present an expert witness who could have testified as to the actual market
value of the Harris County property or when said counsel failed to discredit respondent’s
credibility despite the availability of evidence that respondent had been previously fined by
the Philippine Securities and Exchange Commission for “stock manipulation;” and (4) the
excessive and unconscionable legal fees charged by their U.S. counsel effectively prevented
them from making further appeal.
The Court finds the Petition bereft of merit.
In Mijares v. Rañada,33 the Court extensively discussed the underlying principles for the
recognition and enforcement of foreign judgments in Philippine jurisdiction:
There is no obligatory rule derived from treaties or conventions that requires the Philippines
to recognize foreign judgments, or allow a procedure for the enforcement thereof.
However, generally accepted principles of international law, by virtue of the incorporation
clause of the Constitution, form part of the laws of the land even if they do not derive from
treaty obligations. The classical formulation in international law sees those customary rules
accepted as binding result from the combination two elements: the established, widespread,
and consistent practice on the part of States; and a psychological element known as
the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the latter
element is a belief that the practice in question is rendered obligatory by the existence of a
rule of law requiring it.
While the definite conceptual parameters of the recognition and enforcement of foreign
judgments have not been authoritatively established, the Court can assert with certainty that
such an undertaking is among those generally accepted principles of international law. As
earlier demonstrated, there is a widespread practice among states accepting in principle the
need for such recognition and enforcement, albeit subject to limitations of varying degrees.
The fact that there is no binding universal treaty governing the practice is not indicative of a
widespread rejection of the principle, but only a disagreement as to the imposable specific
rules governing the procedure for recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition and
enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted
in various foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48,
Rule 39 of the Rules of Court which has existed in its current form since the early 1900s.
Certainly, the Philippine legal system has long ago accepted into its jurisprudence and
procedural rules the viability of an action for enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from internationally accepted doctrines.
Again, there may be distinctions as to the rules adopted by each particular state, but they all
prescind from the premise that there is a rule of law obliging states to allow for, however
generally, the recognition and enforcement of a foreign judgment. The bare principle, to our
mind, has attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but
by virtue of the incorporation clause of the Constitution. Rules of procedure are promulgated
by the Supreme Court, and could very well be abrogated or revised by the high court itself.
Yet the Supreme Court is obliged, as are all State components, to obey the laws of the land,
including generally accepted principles of international law which form part thereof, such as
those ensuring the qualified recognition and enforcement of foreign judgments. (Citations
omitted.)
It is an established international legal principle that final judgments of foreign courts of
competent jurisdiction are reciprocally respected and rendered efficacious subject to certain
conditions that vary in different countries. 34 In the Philippines, a judgment or final order of a
foreign tribunal cannot be enforced simply by execution. Such judgment or order merely
creates a right of action, and its non-satisfaction is the cause of action by which a suit can be
brought upon for its enforcement.35 An action for the enforcement of a foreign judgment or
final order in this jurisdiction is governed by Rule 39, Section 48 of the Rules of Court, which
provides:
SEC. 48. Effect of foreign judgments or final orders. – The effect of a judgment or final order
of a tribunal of a foreign country, having jurisdiction to render the judgment or final order is
as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or final order is
conclusive upon the title to the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest by a
subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
The Court expounded in Mijares on the application of the aforequoted provision:
There is an evident distinction between a foreign judgment in an action in rem and one in
personam. For an action in rem, the foreign judgment is deemed conclusive upon the title to
the thing, while in an action in personam, the foreign judgment is presumptive, and not
conclusive, of a right as between the parties and their successors in interest by a subsequent
title. However, in both cases, the foreign judgment is susceptible to impeachment in our
local courts on the grounds of want of jurisdiction or notice to the party, collusion, fraud, or
clear mistake of law or fact. Thus, the party aggrieved by the foreign judgment is entitled to
defend against the enforcement of such decision in the local forum. It is essential that there
should be an opportunity to challenge the foreign judgment, in order for the court in this
jurisdiction to properly determine its efficacy.
It is clear then that it is usually necessary for an action to be filed in order to enforce a
foreign judgment, even if such judgment has conclusive effect as in the case of in
rem actions, if only for the purpose of allowing the losing party an opportunity to challenge
the foreign judgment, and in order for the court to properly determine its efficacy.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.
The rules are silent as to what initiatory procedure must be undertaken in order to enforce a
foreign judgment in the Philippines. But there is no question that the filing of a civil
complaint is an appropriate measure for such purpose. A civil action is one by which a party
sues another for the enforcement or protection of a right, and clearly an action to enforce a
foreign judgment is in essence a vindication of a right prescinding either from a “conclusive
judgment upon title” or the “presumptive evidence of a right.” Absent perhaps a statutory
grant of jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must be
brought before the regular courts.
There are distinctions, nuanced but discernible, between the cause of action arising from the
enforcement of a foreign judgment, and that arising from the facts or allegations that
occasioned the foreign judgment. They may pertain to the same set of facts, but there is an
essential difference in the right-duty correlatives that are sought to be vindicated. For
example, in a complaint for damages against a tortfeasor, the cause of action emanates from
the violation of the right of the complainant through the act or omission of the respondent.
On the other hand, in a complaint for the enforcement of a foreign judgment awarding
damages from the same tortfeasor, for the violation of the same right through the same
manner of action, the cause of action derives not from the tortious act but from the foreign
judgment itself.
More importantly, the matters for proof are different. Using the above example, the
complainant will have to establish before the court the tortious act or omission committed
by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On the other hand, in an action to
enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and not
the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of
jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake
of fact or law. The limitations on review [are] in consonance with a strong and pervasive
policy in all legal systems to limit repetitive litigation on claims and issues. Otherwise
known as the policy of preclusion, it seeks to protect party expectations resulting from
previous litigation, to safeguard against the harassment of defendants, to insure that the
task of courts not be increased by never-ending litigation of the same disputes, and – in a
larger sense – to promote what Lord Coke in the Ferrer’s Case of 1599 stated to be the goal
of all law: “rest and quietness.” If every judgment of a foreign court were reviewable on
the merits, the plaintiff would be forced back on his/her original cause of action, rendering
immaterial the previously concluded litigation.36 (Emphases supplied, citations omitted.)
Also relevant herein are the following pronouncements of the Court in Minoru Fujiki v.
Marinay37:
A petition to recognize a foreign judgment declaring a marriage void does not require
relitigation under a Philippine court of the case as if it were a new petition for declaration of
nullity of marriage. Philippine courts cannot presume to know the foreign laws under
which the foreign judgment was rendered. They cannot substitute their judgment on the
status, condition and legal capacity of the foreign citizen who is under the jurisdiction of
another state. Thus, Philippine courts can only recognize the foreign judgment as a
fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order
against a person creates a “presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title.” Moreover, Section 48 of the Rules of Court
states that “the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.” Thus, Philippine courts exercise limited review on foreign judgments. Courts are not
allowed to delve into the merits of a foreign judgment. Once a foreign judgment is
admitted and proven in a Philippine court, it can only be repelled on grounds external to its
merits, i.e., “want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.” The rule on limited review embodies the policy of efficiency and
the protection of party expectations, as well as respecting the jurisdiction of other
states. (Emphases supplied, citations omitted.)
As the foregoing jurisprudence had established, recognition and enforcement of a foreign
judgment or final order requires only proof of fact of the said judgment or final order. In an
action in personam, as in the case at bar, the foreign judgment or final order enjoys the
disputable presumption of validity. It is the party attacking the foreign judgment or final
order that is tasked with the burden of overcoming its presumptive validity. 38 A foreign
judgment or final order may only be repelled on grounds external to its merits, particularly,
want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
The fact of a foreign final order in this case is not disputed. It was duly established by
evidence submitted to the RTC that the U.S. District Court issued an Order on March 13,
1990 in Civil Action No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay respondent
the sum of US$49,450.00 as sanction for filing a frivolous suit against respondent, in violation
of Rule 11 of the U.S. Federal Rules of Civil Procedure. The said Order became final when its
reinstatement in the Order dated December 31, 1991 of the U.S. District Court was no longer
appealed by petitioner, AIFL, and/or ATHONA.
The Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440 is
presumptive evidence of the right of respondent to demand from petitioner the payment of
US$49,450.00 even in this jurisdiction. The next question then is whether petitioner was
able to discharge the burden of overcoming the presumptive validity of said Order.
The Court rules in the negative.
In complete disregard of the limited review by Philippine courts of foreign judgments or final
orders, petitioner opposes the enforcement of the Order dated March 13, 1990 of the U.S.
District Court on the very same allegations, arguments, and evidence presented before and
considered by the U.S. District Court when it rendered its verdict imposing the Rule 11
sanction against petitioner. Petitioner attempts to convince the Court that it is necessary to
look into the merits of the Order dated March 13, 1990 because the U.S. District Court
committed clear mistake of law and fact in issuing the same. The Court, however, is not
convinced. A Philippine court will not substitute its own interpretation of any provision of
the law or rules of procedure of another country, nor review and pronounce its own
judgment on the sufficiency of evidence presented before a competent court of another
jurisdiction. Any purported mistake petitioner attributes to the U.S. District Court in the
latter’s issuance of the Order dated March 13, 1990 would merely constitute an error of
judgment in the exercise of its legitimate jurisdiction, which could have been corrected by a
timely appeal before the U.S. Court of Appeals.
Petitioner cannot insist that the RTC and the Court of Appeals resolve the issue of whether or
not petitioner, AIFL, and ATHONA had reasonable grounds to implead respondent as a
counter-defendant in Civil Action No. H-86-440. Although petitioner submitted such an issue
for resolution by the RTC in its Pre-Trial Brief, the RTC did not issue any pre-trial order
actually adopting the same. In addition, petitioner was also unable to lay the basis, whether
in U.S. or Philippine jurisdiction, for the use of the “reasonable grounds standard” for
determining a party’s liability for or exemption from the sanctions imposed for violations of
Rule 11 of the U.S. Federal Rules of Civil Procedure. Equally baseless is petitioner’s assertion
that the Rule 11 sanction is contrary to public policy and in effect, puts a premium on the
right to litigate. It bears to stress that the U.S. District Court imposed the Rule 11 sanction
upon petitioner, AIFL, and ATHONA for their frivolous counterclaims against respondent
intended to simply humiliate and embarrass respondent; and not because petitioner, AIFL,
and ATHONA impleaded but lost to respondent.
Contrary to the claims of petitioner, both the RTC and the Court of Appeals carefully
considered the allegations, arguments, and evidence presented by petitioner to repel the
Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440. Worthy of
reproducing herein are the following portions of the RTC judgment:
[Petitioner’s] contention that the judgment sought to be enforced herein is violative of its
right to due process and contrary to public policy because the Houston Court relied upon
Exhibit 91 (which is [petitioner BPI Securities’] Exh. “1” in this case) and the US Court
disregarded the evidence on record in the Houston Action is unavailing. Whether or not said
Exhibit 91 (petitioner’s Exh. “1”) is inadmissible or is not entitled to any weight is a
question which should have been addressed to the US of Court of Appeals by [petitioner].
To ask a Philippine court to pass upon the admissibility or weight of Exh. 91 is violative of
our public policy not to substitute our judgment for that of a competent court of another
jurisdiction.
[Petitioner] does not deny the fact that the judgment awarding sanctions based on [Rule 11
of the U.S.] Federal Rules of Civil Procedure was elevated to the United States Court of
Appeals for the Fifth Circuit which remanded the case to the District Court precisely to give
[petitioner] a reasonable opportunity to be heard. After remand, the District Court ordered
[petitioner] to file its response to the motion of [respondent] for sanctions and after the
filing of their respective briefs, the District Court reinstated the former judgment.
Certainly, under these circumstances, the claim of violation of due process cannot be
sustained since [petitioner] was given reasonable opportunity to present its side before the
imposition of sanctions.
x x x x
[Petitioner] likewise argued that the US District Court committed a clear mistake of law or
fact and in support thereof presented Exhibits “10” to “18” to establish that the fair market
value of the Houston property in January 1983 was no longer US$800,000.00 by the
admissions against interest of 1488 itself, of Craig who submitted the fraudulent appraisal,
and by the previous owners of the said property and to “show that [respondent] Guevara
was either directly involved in the conspiracy against the Houston defendants in submitting
to the latter a fraudulent appraisal of W. Craig (or was at least responsible to the Houston
defendants for the injury that they suffered) and that the Houston defendants had
reasonable basis to implead him as a defendant in the Houston Case on account of his
participation in the conspiracy or his fault of responsibility for the injury suffered by them.”
However, none of these documents show that [respondent] had any participation nor
knowledge in the execution, custody or other intervention with respect to the said. Thus,
said Exhibits “10” to “18” are irrelevant and immaterial to the issue of the enforceability of
a foreign judgment. It must be emphasized that the imposition of the sanctions under
[Rule 11 of the U.S.] Federal Rules of Civil Procedure did not flow from the merits of the
civil case in the US District Court but from the lack of even an iota of evidence against
[respondent] Guevara. To quote the US District Court:
THE COURT
x x x x
I am disturbed about that. I don’t see any evidence at all in this case, after listening to all of
this evidence, that there ever was a lawsuit that could have been brought against Guevara,
and even after all of the discovery was done, there was still no evidence of a conspiracy.
There is no evidence of any conspiracy to this good day that he could have been, but there is
no proof of it, and that’s what we base these lawsuits on. That’s what the Rule 11 is designed
to do, to deal with the circumstance.
So, I brought it up to Mr. Guevara because I know the frustration, and irrespective as to
whether or not he brought it up, it would have been my position, my own position as an
officer of this Court to sanction the defendants in this case. That is my opinion, that they are
to be sanctioned because they have brought all of the power that they have in the Philippines
to bear and put pressure on this man so that he would have to come over 10,000 miles to
defend himself or to hire lawyers to defend himself against a totally frivolous
claim.39 (Emphases supplied.)
As for petitioner’s contention that the Fifth Division of the Court of Appeals, in its Decision
dated December 19, 2003, copied verbatim or wholesale from respondent’s brief, the Court
refers to its ruling in Halley v. Printwell, Inc.,40 thus:
It is noted that the petition for review merely generally alleges that starting from its page 5,
the decision of the RTC “copied verbatim the allegations of herein Respondents in its
Memorandum before the said court,” as if “the Memorandum was the draft of the Decision
of the Regional Trial Court of Pasig,” but fails to specify either the portions allegedly lifted
verbatim from the memorandum, or why she regards the decision as copied. The omission
renders the petition for review insufficient to support her contention, considering that the
mere similarity in language or thought between Printwell’s memorandum and the trial
court’s decision did not necessarily justify the conclusion that the RTC simply lifted verbatim
or copied from the memorandum.
It is to be observed in this connection that a trial or appellate judge may occasionally view a
party’s memorandum or brief as worthy of due consideration either entirely or partly. When
he does so, the judge may adopt and incorporate in his adjudication the memorandum or the
parts of it he deems suitable, and yet not be guilty of the accusation of lifting or copying from
the memorandum. This is because of the avowed objective of the memorandum to
contribute in the proper illumination and correct determination of the controversy. Nor is
there anything untoward in the congruence of ideas and views about the legal issues
between himself and the party drafting the memorandum. The frequency of similarities in
argumentation, phraseology, expression, and citation of authorities between the decisions of
the courts and the memoranda of the parties, which may be great or small, can be fairly
attributable to the adherence by our courts of law and the legal profession to widely know
nor universally accepted precedents set in earlier judicial actions with identical factual
milieus or posing related judicial dilemmas. (Citations omitted.)
The Court is unmoved by petitioner’s allegations of denial of due process because of its U.S.
counsel’s exorbitant fees and negligence. As aptly pointed out by respondent in his
Memorandum:
On the specific claim that petitioner has been denied legal representation in the United
States in view of the exorbitant legal fees of US counsel, petitioner is now estopped from
asserting that the costs of litigation resulted in a denial of due process because it was
petitioner which impleaded Guevara. If petitioner cannot prosecute a case to its final stages,
then it should not have filed a counterclaim against Guevara in the first place. Moreover,
there is no showing that petitioner could not find a less expensive counsel. Surely, petitioner
could have secured the services of another counsel whose fees were more “affordable.”41
Moreover, petitioner is bound by the negligence of its counsel. The declarations of the Court
in Gotesco Properties, Inc. v. Moral42 is applicable to petitioner:
The general rule is that a client is bound by the acts, even mistakes, of his counsel in the
realm of procedural technique. The basis is the tenet that an act performed by counsel
within the scope of a “general or implied authority” is regarded as an act of the client. While
the application of this general rule certainly depends upon the surrounding circumstances of
a given case, there are exceptions recognized by this Court: “(1) where reckless or gross
negligence of counsel deprives the client of due process of law; (2) when its application will
result in outright deprivation of the client’s liberty or property; or (3) where the interests of
justice so require.”
The present case does not fall under the said exceptions. In Amil v. Court of Appeals, the
Court held that “to fall within the exceptional circumstance relied upon x x x, it must be
shown that the negligence of counsel must be so gross that the client is deprived of his day in
court. Thus, “where a party was given the opportunity to defend [its] interests in due course,
[it] cannot be said to have been denied due process of law, for this opportunity to be heard
is the very essence of due process.” To properly claim gross negligence on the part of the
counsel, the petitioner must show that the counsel was guilty of nothing short of a clear
abandonment of the client’s cause. (Citations omitted.)
Finally, it is without question that the U.S. District Court, in its Order dated March 13, 1990 in
Civil Action No. H-86-440, ordered petitioner, AIFL, and ATHONA to pay respondent
US$49,450.00 as sanction for violating Rule 11 of the U.S. Federal Rules of Civil Procedure.
The Court noticed that throughout its Decision dated September 11, 2000 in Civil Case No.
92-1445, the RTC variably mentioned the amount of Rule 11 sanction imposed by the U.S.
District Court as US$49,450.00 and US$49,500.00, the latter obviously being a typographical
error. In the dispositive portion, though, the RTC ordered petitioner to pay respondent
US$49,500.00, which the Court hereby corrects motu proprio to US$49,450.00 in conformity
with the U.S. District Court Order being enforced.
The Court notes that during the pendency of the instant Petition before this Court,
respondent passed away on August 17, 2007, and is survived and substituted by his heirs,
namely: Ofelia B. Guevara, Ma. Leticia G. Allado, Jose Edgardo B. Guevara, Jose Emmanuel B.
Guevara, and Ma. Joselina G. Gepuela.
WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The Decision dated
December 19, 2003 and Resolution dated February 9, 2005 of the Court Appeals in CA-G.R.
CV No. 69348, affirming the Decision dated September 11, 2000 of the Regional Trial Court of
Makati City, Branch 57 in Civil Case No. 92-1445, is hereby AFFIRMED with
MODIFICATION that petitioner BPI Securities Corporation is ordered to pay respondent
Edgardo V. Guevara the sum of US$49,450.00 or its equivalent in Philippine Peso, with
interest at six percent (6%) per annum from the filing of the case before the trial court on
May 28, 1992 until fully paid. 43
SO ORDERED.
Sereno, C.J., (Chairperson), Bersamin, Perez, and Perlas-Bernabe, JJ., concur.
FIRST DIVISION
G.R. No. 128803. September 25, 1998
ASIAVEST LIMITED, Petitioner, v. THE COURT OF APPEALS AND ANTONIO
HERAS, Respondents.
DECISION
DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision1 of Branch 107 of the Regional Trial Court of
Quezon City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant
Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts
awarded by the Hong Kong Court Judgment dated December 28, 1984 and amended on April
13, 1987, to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at
the time of payment with legal interest from
December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum
from October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorneys fees, litigation
expenses and cost, with interest thereon from the
date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could
resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11,
1988 totally destroyed the office of this Court, together with all its records, equipment and
properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution
of Case Records. The Court, after allowing the defendant to react thereto, granted the said
Motion and admitted the annexes attached thereto as the reconstituted records of this case
per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of
which had been deferred, was denied by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial
conference. At the conference, the parties could not arrive at any settlement. However, they
agreed on the following stipulations of facts:
1) The defendant admits the existence of the judgment dated
December 28, 1984 as well as its amendment dated
April 13, 1987, but not necessarily the authenticity or
validity thereof;
2) The plaintiff is not doing business and is not licensed to do
business in the Philippines;
3) The residence of defendant, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong Kong
Court has been repelled by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud or clear mistake of law or fact, such as to overcome the presumption
established in Section 50, Rule 39 of the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the aforementioned judgment
(Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of
January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in
paragraph (b), Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper officials concerned
(Pls. See Exhibits A thru B, with their submarkings). In addition, the plaintiff presented
testimonial and documentary evidence to show its entitlement to attorneys fees and other
expenses of litigation.
On the other hand, the defendant presented two witnesses, namely, Fortunata dela Vega
and Russel Warren Lousich.
The gist of Ms. dela Vegas testimony is to the effect that no writ of summons or copy of a
statement of claim of Asiavest Limited was ever served in the office of the Navegante
Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of
summons was either served on the defendant at his residence in New Manila, Quezon City.
Her knowledge is based on the fact that she was the personal secretary of Mr. Heras during
his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping
business in Hong Kong; that she was in-charge of all his letters and correspondence, business
commitments, undertakings, conferences and appointments, until October 1984 when Mr.
Heras left Hong Kong for good; that she was also the Officer-in-Charge or Office Manager of
Navegante Shipping Agency LTD, a Hong Kong registered and based company acting as ships
agent, up to and until the company closed shop sometime in the first quarter of 1985, when
shipping business collapsed worldwide; that the said company held office at 34-35
Connaught Road, Central Hong Kong and later transferred to Caxton House at Duddel Street,
Hong Kong, until the company closed shop in 1985; and that she was certain of such facts
because she held office at Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of
the law office of the defendants counsel who made a verification of the record of the case
filed by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving
Court processes in Hong Kong.
In his affidavit (Exh. 2) which constitutes his direct testimony, the said witness stated that:
The defendant was sued on the basis of his personal guarantee
of the obligations of Compania Hermanos de Navegacion S.A.
There is no record that a writ of summons was served on the
person of the defendant in Hong Kong, or that any such
attempt at service was made. Likewise, there is no record that
a copy of the judgment of the High Court was furnished or
served on the defendant; anyway, it is not a legal requirement
to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the
solicitor (lawyer) of the claimant or plaintiff. In
Hong Kong there are no Court personnel who
serve writs of summons and/or most other
processes.
b) If the writ of summons or claim (or complaint) is not
contested, the claimant or the plaintiff is not
required to present proof of his claim or
complaint nor present evidence under oath of
the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment
or decision rendered by the Court in Hong Kong
[to] make a recitation of the facts or the law
upon which the claim is based.
d) There is no necessity to furnish the defendant with a
copy of the Judgment or decision rendered
against him.
e) In an action based on a guarantee, there is no
established legal requirement or obligation
under Hong Kong laws that the creditor must
first bring proceedings against the principal
debtor. The creditor can immediately go against
the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned
by the law firm of the defendants counsel as an expert witness and to verify
the records of the Hong Kong case, he had been acting as counsel for the
defendant in a number of commercial matters; that there was an application
for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras
outside of Hong Kong, particularly in Manila or any other place in the
Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of service
of summons, otherwise the Hong Kong Court will refuse to render judgment
(p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment,
it can be presumed that there was service of summons; that in this case, it is
not just a presumption because there was an affidavit stating that service was
effected in [sic] a particular man here in Manila; that such affidavit was filed
by one Jose R. Fernandez of the firm Sycip Salazar on the 21 st of December
1984, and stated in essence that on Friday, the 23rd of November 1984 he
served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that
address with Mr. Dionisio Lopez, the son-in-law of the 4th defendant the copy
of the writ and Mr. Lopez informed me and I barely believed that he would
bring the said writ to the attention of the 4th defendant (pp. 11-12, ibid.); that
upon filing of that affidavit, the Court was asked and granted judgment
against the 4th defendant; and that if the summons or claim is not contested,
the claimant of the plaintiff is not required to present proof of his claim or
complaint or present evidence under oath of the claim in order to obtain
judgment; and that such judgment can be enforced in the same manner as a
judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had
the burden to prove want of jurisdiction over his person. HERAS failed to discharge that
burden. He did not testify to state categorically and under oath that he never received
summons. Even his own witness Lousich admitted that HERAS was served with summons in
his Quezon City residence. As to De la Vegas testimony regarding non-service of summons,
the same was hearsay and had no probative value.
As to HERAS contention that the Hong Kong court judgment violated the Constitution and
the procedural laws of the Philippines because it contained no statements of the facts and
the law on which it was based, the trial court ruled that since the issue related to procedural
matters, the law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert
witness Lousich, such legalities were not required under Hong Kong laws. The trial court also
debunked HERAS contention that the principle of excussion under Article 2058 of the Civil
Code of the Philippines was violated. It declared that matters of substance are subject to the
law of the place where the transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given
effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of
the foreign judgment. It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to
the plaintiff the following sums or their equivalents in Philippine currency at
the time of payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December
28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorneys fees in the sum
of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs
and an increase in attorneys fees in the amount of US$19,346.45 with interest until full
payment of the said obligations. On the other hand, HERAS no longer opposed the motion
and instead appealed the decision to the Court of Appeals, which docketed the appeal as CA-
G.R. CV No. 29513.
In its order2 November 1990, the trial court granted ASIAVESTs motion for reconsideration by
increasing the award of attorneys fees to US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE
CURRENCY, AND TO PAY THE COSTS OF THIS SUIT, provided that ASIAVEST would pay the
corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior
payment of filing fees. However, it later withdrew its appeal and paid the additional filing
fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial
court and dismissing ASIAVESTs complaint without prejudice. It underscored the fact that a
foreign judgment does not of itself have any extraterritorial application. For it to be given
effect, the foreign tribunal should have acquired jurisdiction over the person and the subject
matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such
as those relating to service of summons upon the defendant are governed by the lex fori,
which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousichs
testimony that under the Hong Kong law, the substituted service of summons upon HERAS
effected in the Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would
be valid provided that it was done in accordance with Philippine laws. It then stressed that
where the action is in personam and the defendant is in the Philippines, the summons should
be personally served on the defendant pursuant to Section 7, Rule 14 of the Rules of
Court.4 Substituted service may only be availed of where the defendant cannot be promptly
served in person, the fact of impossibility of personal service should be explained in the
proof of service. It also found as persuasive HERAS argument that instead of directly using
the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by
the judge of the court issuing the summons, ASIAVEST should have asked for leave of the
local courts to have the foreign summons served by the sheriff or other court officer of the
place where service was to be made, or for special reasons by any person authorized by the
judge.
The Court of Appeals agreed with HERAS that notice sent outside the state to a non-resident
is unavailing to give jurisdiction in an action against him personally for money recovery.
Summons should have been personally served on HERAS in Hong Kong, for, as claimed by
ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was
not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme
Court did not acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the
claim of ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVESTs]
claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the
foregoing discussion, there is a need to deviate from the findings of the lower court in the
interest of justice and fair play. This, however, is without prejudice to whatever action
[ASIAVEST] might deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted, and that our courts are not
bound to give effect to foreign judgments which contravene our laws and the principle of
sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling
that
I.
IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE SUPPORTING THE
VALIDITY OF THE JUDGMENT;
II.
THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINE
LAW;
III.
SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG
KONG;
IV.
THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF
PHILIPPINE COURTS;
V.
THE FOREIGN JUDGMENT CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES
OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing
law at the time this case was decided by the trial court and respondent Court of Appeals, a
foreign judgment against a person rendered by a court having jurisdiction to pronounce the
judgment is presumptive evidence of a right as between the parties and their successors in
interest by the subsequent title. However, the judgment may be repelled by evidence of
want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of
proof to the contrary, a court, or judge acting as such, whether in the Philippines or
elsewhere, is presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on
grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the
party challenging the foreign judgment -- HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On
the other hand, ASIAVEST presented evidence to prove rendition, existence, and
authentication of the judgment by the proper officials. The judgment is thus presumed to be
valid and binding in the country from which it comes, until the contrary is
shown.6 Consequently, the first ground relied upon by ASIAVEST has merit. The presumption
of validity accorded foreign judgment would be rendered meaningless were the party
seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme
Court did not acquire jurisdiction over the person of HERAS. This involves the issue of
whether summons was properly and validly served on HERAS. It is settled that matters of
remedy and procedure such as those relating to the service of process upon the defendant
are governed by the lex fori or the law of the forum,7 i.e., the law of Hong Kong in this case.
HERAS insisted that according to his witness Mr. Lousich, who was presented as an expert on
Hong Kong laws, there was no valid service of summons on him.
In his counter-affidavit,8 which served as his direct testimony per agreement of the
parties,9 Lousich declared that the record of the Hong Kong case failed to show that a writ of
summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither
did the record show that a copy of the judgment of the court was served on HERAS. He
stated further that under Hong Kong laws (a) a writ of summons could be served by the
solicitor of the claimant or plaintiff; and (b) where the said writ or claim was not contested,
the claimant or plaintiff was not required to present proof under oath in order to obtain
judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court
authorized service of summons on HERAS outside of its jurisdiction, particularly in the
Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the
Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons
on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERASs
son-in-law Dionisio Lopez.10 On redirect examination, Lousich declared that such service of
summons would be valid under Hong Kong laws provided that it was in accordance with
Philippine laws.11cräläwvirtualibräry
We note that there was no objection on the part of ASIAVEST on the qualification of Mr.
Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New
Rules of Evidence, the record of public documents of a sovereign authority, tribunal, official
body, or public officer may be proved by (1) an official publication thereof or (2) a copy
attested by the officer having the legal custody thereof, which must be accompanied, if the
record is not kept in the Philippines, with a certificate that such officer has the custody. The
certificate may be issued by a secretary of the embassy or legation, consul general, consul,
vice consul, or consular agent, or any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and authenticated by the seal of
his office. The attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under the official seal of
the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An
authority12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v.
Muzzal,13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does
not exclude the presentation of other competent evidence to prove the existence of a
foreign law. In that case, the Supreme Court considered the testimony under oath of an
attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil
Code and who stated that the same was in force at the time the obligations were contracted,
as sufficient evidence to establish the existence of said law. Accordingly, in line with this
view, the Supreme Court in the Collector of Internal Revenue v. Fisher et al.,14 upheld the Tax
Court in considering the pertinent law of California as proved by the respondents witness. In
that case, the counsel for respondent testified that as an active member of the California Bar
since 1951, he is familiar with the revenue and taxation laws of the State of California. When
asked by the lower court to state the pertinent California law as regards exemption of
intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the
California Internal and Revenue Code as published in Derrings California Code, a publication
of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited
section was offered in evidence by respondents. Likewise, in several naturalization cases, it
was held by the Court that evidence of the law of a foreign country on reciprocity regarding
the acquisition of citizenship, although not meeting the prescribed rule of practice, may be
allowed and used as basis for favorable action, if, in the light of all the circumstances, the
Court is satisfied of the authenticity of the written proof offered. 15 Thus, in a number of
decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate
General of Manila was held to be competent proof of that law. 16cräläwvirtualibräry
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law
of Hong Kong in respect of service of summons either in actions in rem or in personam, and
where the defendant is either a resident or nonresident of Hong Kong. In view of the
absence of proof of the Hong Kong law on this particular issue, the presumption of identity
or similarity or the so-called processual presumption shall come into play. It will thus be
presumed that the Hong Kong law on the matter is similar to the Philippine
law.17cräläwvirtualibräry
As stated in Valmonte vs. Court of Appeals,18 it will be helpful to determine first whether the
action is in personam, in rem, or quasi in rem because the rules on service of summons under
Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person. 19 An
action quasi in rem is one wherein an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation or lien burdening the
property.20cräläwvirtualibräry
In an action in personam, jurisdiction over the person of the defendant is necessary for the
court to validly try and decide the case. Jurisdiction over the person of a resident defendant
who does not voluntarily appear in court can be acquired by personal service of summons as
provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served
with summons within a reasonable time, substituted service may be made in accordance
with Section 8 of said Rule. If he is temporarily out of the country, any of the following
modes of service may be resorted to: (1) substituted service set forth in Section 8; 21 (2)
personal service outside the country, with leave of court; (3) service by publication, also with
leave of court;22 or (4) any other manner the court may deem sufficient. 23cräläwvirtualibräry
However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons within
the state is essential to the acquisition of jurisdiction over her person. 24 This method of
service is possible if such defendant is physically present in the country. If he is not found
therein, the court cannot acquire jurisdiction over his person and therefore cannot validly try
and decide the case against him.25 An exception was laid down in Gemperle v.
Schenker26 wherein a non-resident was served with summons through his wife, who was a
resident of the Philippines and who was his representative and attorney-in-fact in a prior civil
case filed by him; moreover, the second case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court
acquires jurisdiction over the res. Nonetheless, summons must be served upon the
defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying
the due process requirements.27 Thus, where the defendant is a non-resident who is not
found in the Philippines and (1) the action affects the personal status of the plaintiff; (2) the
action relates to, or the subject matter of which is property in the Philippines in which the
defendant has or claims a lien or interest; (3) the action seeks the exclusion of the defendant
from any interest in the property located in the Philippines; or (4) the property of the
defendant has been attached in the Philippines -- service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of
court; or (c) any other manner the court may deem sufficient. 28cräläwvirtualibräry
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was
based on his personal guarantee of the obligation of the principal debtor. Before we can
apply the foregoing rules, we must determine first whether HERAS was a resident of Hong
Kong.
Fortunata de la Vega, HERASs personal secretary in Hong Kong since 1972 until
1985,29 testified that HERAS was the President and part owner of a shipping company in
Hong Kong during all those times that she served as his secretary. He had in his employ a
staff of twelve.30 He had business commitments, undertakings, conferences, and
appointments until October 1984 when [he] left Hong Kong for good. 31 HERASs other
witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS for a
number of commercial matters.32 ASIAVEST then infers that HERAS was a resident of Hong
Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss,33 as well as in his Answer34 to ASIAVESTs
complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the fundamental rule is that
jurisdiction in personam over non-resident defendants, so as to sustain a money judgment,
must be based upon personal service of summons within the state which renders the
judgment.35cräläwvirtualibräry
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: The question
of Hong Kong courts want of jurisdiction is therefore a triable issue if it is to be pleaded by
the defendant to repel the foreign judgment. Facts showing jurisdictional lack (e.g. that the
Hong Kong suit was in personam, that defendant was not a resident of Hong Kong when the
suit was filed or that he did not voluntarily submit to the Hong Kong courts jurisdiction)
should be alleged and proved by the defendant. 37chanroblesvirtuallawlibrary
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of
jurisdiction over his person was corroborated by ASIAVESTs allegation in the complaint that
he has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines. He then
concluded that such judicial admission amounted to evidence that he was and is not a
resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts,
among which was that the residence of defendant, Antonio Heras, is New Manila, Quezon
City.39cräläwvirtualibräry
We note that the residence of HERAS insofar as the action for the enforcement of the Hong
Kong court judgment is concerned, was never in issue. He never challenged the service of
summons on him through a security guard in his Quezon City residence and through a lawyer
in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the
Philippine court over his person on the ground of invalid service of summons. What was in
issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude
that the stipulated fact that HERAS is a resident of New Manila, Quezon City, Philippines
refers to his residence at the time jurisdiction over his person was being sought by the Hong
Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was a
resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was,
indisputably, one in personam, summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer
on the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court
judgment cannot be given force and effect here in the Philippines for having been rendered
without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in
November 1984 when the extraterritorial service of summons was attempted to be made on
him. As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left
Hong Kong in October 1984 for good.40 His absence in Hong Kong must have been the reason
why summons was not served on him therein; thus, ASIAVEST was constrained to apply for
leave to effect service in the Philippines, and upon obtaining a favorable action on the
matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the
summons here in the Philippines.
In Brown v. Brown,41 the defendant was previously a resident of the Philippines. Several days
after a criminal action for concubinage was filed against him, he abandoned the Philippines.
Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was
served on the defendants attorney-in-fact at the latters address. The Court held that under
the facts of the case, it could not be said that the defendant was still a resident of the
Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the
Philippines. As such, he should have been summoned in the same manner as one who does
not reside and is not found in the Philippines.
Similarly, HERAS, who was also an absentee, should have been served with summons in the
same manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of
Court providing for extraterritorial service will not apply because the suit against him was in
personam. Neither can we apply Section 18, which allows extraterritorial service on a
resident defendant who is temporarily absent from the country, because even if HERAS be
considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong
not only temporarily but for good.
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this
case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.
Bellosillo, Vitug, and Panganiban, JJ., concur.
Quisumbing, J., no part., former partner of a counsel.
SECOND DIVISION
G.R. No. 114323 July 23, 1998
OIL AND NATURAL GAS COMMISSION, Petitioner, v. COURT OF APPEALS and PACIFIC
CEMENT COMPANY, INC., Respondents.
MARTINEZ, J.:
This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge
of Dehra Dun, India in favor of the petitioner, OIL AND NATURAL GAS COMMISSION and
against the private respondent, PACIFIC CEMENT COMPANY, INCORPORATED.
The petitioner is a foreign corporation owned and controlled by the Government of India
while the private respondent is a private corporation duly organized and existing under the
laws of the Philippines. The present conflict between the petitioner and the private
respondent has its roots in a contract entered into by and between both parties on February
26, 1983 whereby the private respondent undertook to supply the petitioner FOUR
THOUSAND THREE HUNDRED (4,300) metric tons of oil well cement. In consideration
therefor, the petitioner bound itself to pay the private respondent the amount of FOUR
HUNDRED SEVENTY-SEVEN THOUSAND THREE HUNDRED U.S. DOLLARS ($477,300.00) by
opening an irrevocable, divisible, and confirmed letter of credit in favor of the latter. The oil
well cement was loaded on board the ship MV SURUTANA NAVA at the port of Surigao City,
Philippines for delivery at Bombay and Calcutta, India. However, due to a dispute between
the shipowner and the private respondent, the cargo was held up in Bangkok and did not
reach its point destination. Notwithstanding the fact that the private respondent had already
received payment and despite several demands made by the petitioner, the private
respondent failed to deliver the oil well cement. Thereafter, negotiations ensued between
the parties and they agreed that the private respondent will replace the entire 4,300 metric
tons of oil well cement with Class "G" cement cost free at the petitioner's designated port.
However, upon inspection, the Class "G" cement did not conform to the petitioner's
specifications. The petitioner then informed the private respondent that it was referring its
claim to an arbitrator pursuant to Clause 16 of their contract which stipulates:
Except where otherwise provided in the supply order/contract all questions and disputes,
relating to the meaning of the specification designs, drawings and instructions herein before
mentioned and as to quality of workmanship of the items ordered or as to any other
question, claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions or otherwise
concerning the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof shall be referred
to the sole arbitration of the persons appointed by Member of the Commission at the time of
dispute. It will be no objection to any such appointment that the arbitrator so appointed is a
Commission employer (sic) that he had to deal with the matter to which the supply or
contract relates and that in the course of his duties as Commission's employee he had
expressed views on all or any of the matter in dispute or difference.
The arbitrator to whom the matter is originally referred being transferred or vacating his
office or being unable to act for any reason the Member of the Commission shall appoint
another person to act as arbitrator in accordance with the terms of the contract/supply
order. Such person shall be entitled to proceed with reference from the stage at which it was
left by his predecessor. Subject as aforesaid the provisions of the Arbitration Act, 1940, or
any Statutory modification or re-enactment there of and the rules made there under and for
the time being in force shall apply to the arbitration proceedings under this clause.
The arbitrator may with the consent of parties enlarge the time, from time to time, to make
and publish the award.
The venue for arbitration shall be at Dehra dun. 1*
On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in
petitioner's favor setting forth the arbitral award as follows:
NOW THEREFORE after considering all facts of the case, the evidence, oral and documentarys
adduced by the claimant and carefully examining the various written statements,
submissions, letters, telexes, etc. sent by the respondent, and the oral arguments addressed
by the counsel for the claimants, I, N.N. Malhotra, Sole Arbitrator, appointed under clause 16
of the supply order dated 26.2.1983, according to which the parties, i.e. M/S Oil and Natural
Gas Commission and the Pacific Cement Co., Inc. can refer the dispute to the sole arbitration
under the provision of the Arbitration Act. 1940, do hereby award and direct as follows: -
The Respondent will pay the following to the claimant: -
1. Amount received by the Respondent
against the letter of credit No. 11/19
dated 28.2.1983 US $ 477,300.00
2. Re-imbursement of expenditure incurred
by the claimant on the inspection team's
visit to Philippines in August 1985 US $ 3,881.00
3. L.C. Establishment charges incurred
by the claimant US $ 1,252.82
4. Loss of interest suffered by claimant
from 21.6.83 to 23.7.88 US $ 417,169.95
Total amount of award US $ 899,603.77
In addition to the above, the respondent would also be liable to pay to the claimant the
interest at the rate of 6% on the above amount, with effect from 24.7.1988 up to the actual
date of payment by the Respondent in full settlement of the claim as awarded or the date of
the decree, whichever is earlier.
I determine the cost at Rs. 70,000/- equivalent to US $5,000 towards the expenses on
Arbitration, legal expenses, stamps duly incurred by the claimant. The cost will be shared by
the parties in equal proportion.
Pronounced at Dehra Dun to-day, the 23rd of July 1988. 2
To enable the petitioner to execute the above award in its favor, it filed a Petition before the
Court of the Civil Judge in Dehra Dun. India (hereinafter referred to as the foreign court for
brevity), praying that the decision of the arbitrator be made "the Rule of Court" in India. The
foreign court issued notices to the private respondent for filing objections to the petition.
The private respondent complied and sent its objections dated January 16, 1989.
Subsequently, the said court directed the private respondent to pay the filing fees in order
that the latter's objections could be given consideration. Instead of paying the required filing
fees, the private respondent sent the following communication addressed to the Civil judge
of Dehra Dun:
The Civil Judge
Dehra Dun (U.P.) India
Re: Misc. Case No. 5 of 1989
M/S Pacific Cement Co.,
Inc. vs. ONGC Case
Sir:
1. We received your letter dated 28 April 1989 only last 18 May 1989.
2. Please inform us how much is the court fee to be paid. Your letter did not mention the
amount to be paid.
3. Kindly give us 15 days from receipt of your letter advising us how much to pay to comply
with the same.
Thank you for your kind consideration.
Pacific Cement Co., Inc.
By:
Jose Cortes, Jr.
President 3
Without responding to the above communication, the foreign court refused to admit the
private respondent's objections for failure to pay the required filing fees, and thereafter
issued an Order on February 7, 1990, to wit:
ORDER
Since objections filed by defendant have been rejected through Misc. Suit No. 5 on 7.2.90,
therefore, award should be made Rule of the Court.
ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions
of award decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff
shall also be entitled to get from defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine
thousand six hundred and three point seventy seven only) along with 9% interest per annum
till the last date of realisation. 4
Despite notice sent to the private respondent of the foregoing order and several demands by
the petitioner for compliance therewith, the private respondent refused to pay the amount
adjudged by the foreign court as owing to the petitioner. Accordingly, the petitioner filed a
complaint with Branch 30 of the Regional Trial Court (RTC) of Surigao City for the
enforcement of the aforementioned judgment of the foreign court. The private respondent
moved to dismiss the complaint on the following grounds: (1) plaintiffs lack of legal capacity
to sue; (2) lack of cause of action; and (3) plaintiffs claim or demand has been waived,
abandoned, or otherwise extinguished. The petitioner filed its opposition to the said motion
to dismiss, and the private respondent, its rejoinder thereto. On January 3, 1992, the RTC
issued an order upholding the petitioner's legal capacity to sue, albeit dismissing the
complaint for lack of a valid cause of action. The RTC held that the rule prohibiting foreign
corporations transacting business in the Philippines without a license from maintaining a suit
in Philippine courts admits of an exception, that is, when the foreign corporation is suing on
an isolated transaction as in this case. 5 Anent the issue of the sufficiency of the petitioner's
cause of action, however, the RTC found the referral of the dispute between the parties to
the arbitrator under Clause 16 of their contract erroneous. According to the RTC,
[a] perusal of the shove-quoted clause (Clause 16) readily shows that the matter covered by
its terms is limited to "ALL QUESTIONS AND DISPUTES, RELATING TO THE MEANING OF THE
SPECIFICATION, DESIGNS, DRAWINGS AND INSTRUCTIONS HEREIN BEFORE MENTIONED and
as to the QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or as to any other questions,
claim, right or thing whatsoever, but qualified to "IN ANY WAY ARISING OR RELATING TO THE
SUPPLY ORDER/CONTRACT, DESIGN, DRAWING, SPECIFICATION, etc.," repeating the
enumeration in the opening sentence of the clause.
The court is inclined to go along with the observation of the defendant that the breach,
consisting of the non-delivery of the purchased materials, should have been properly
litigated before a court of law, pursuant to Clause No. 15 of the Contract/Supply Order,
herein quoted, to wit:
"JURISDICTION
All questions, disputes and differences, arising under out of or in connection with this supply
order, shall be subject to the EXCLUSIVE JURISDICTION OF THE COURT, within the local limits
of whose jurisdiction and the place from which this supply order is situated." 6
The RTC characterized the erroneous submission of the dispute to the arbitrator as a
"mistake of law or fact amounting to want of jurisdiction". Consequently, the proceedings
had before the arbitrator were null and void and the foreign court had therefore, adopted no
legal award which could be the source of an enforceable right. 7
The petitioner then appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court concurred with the RTC's ruling
that the arbitrator did not have jurisdiction over the dispute between the parties, thus, the
foreign court could not validly adopt the arbitrator's award. In addition, the appellate court
observed that the full text of the judgment of the foreign court contains the dispositive
portion only and indicates no findings of fact and law as basis for the award. Hence, the said
judgment cannot be enforced by any Philippine court as it would violate the constitutional
provision that no decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based. 8 The appellate court ruled further
that the dismissal of the private respondent's objections for non-payment of the required
legal fees, without the foreign court first replying to the private respondent's query as to the
amount of legal fees to be paid, constituted want of notice or violation of due process. Lastly,
it pointed out that the arbitration proceeding was defective because the arbitrator was
appointed solely by the petitioner, and the fact that the arbitrator was a former employee of
the latter gives rise to a presumed bias on his part in favor of the petitioner. 9
A subsequent motion for reconsideration by the petitioner of the appellate court's decision
was denied, thus, this petition for review on certiorari citing the following as grounds in
support thereof:
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE LOWER COURT'S
ORDER OF DISMISSAL SINCE:
A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY COGNIZABLE BY THE
PROVISIONS OF CLAUSE 16 OF THE CONTRACT;
B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS AN AFFIRMATION OF
THE FACTUAL AND LEGAL FINDINGS OF THE ARBITRATOR AND THEREFORE ENFORCEABLE IN
THIS JURISDICTION;
C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A PRESUMPTIVE RIGHT UNDER A
FOREIGN JUDGMENT. 10
The threshold issue is whether or not the arbitrator had jurisdiction over the dispute
between the petitioner and the private respondent under Clause 16 of the contract. To
reiterate, Clause 16 provides as follows:
Except where otherwise provided in the supply order/contract all questions and disputes,
relating to the meaning of the specification designs, drawings and instructions herein before
mentioned and as to quality of workmanship of the items ordered or as to any other
question, claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions or otherwise
concerning the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof shall be referred
to the sole arbitration of the persons appointed by Member of the Commission at the time of
dispute. It will be no objection to any such appointment that the arbitrator so appointed is a
Commission employer (sic) that he had to deal with the matter to which the supply or
contract relates and that in the course of his duties as Commission's employee he had
expressed views on all or any of the matter in dispute or difference. 11
The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons of
oil well cement to the petitioner. The primary question that may be posed, therefore, is
whether or not the non-delivery of the said cargo is a proper subject for arbitration under
the above-quoted Clause 16. The petitioner contends that the same was a matter within the
purview of Clause 16, particularly the phrase, ". . . or as to any other questions, claim, right or
thing whatsoever, in any way arising or relating to the supply order/contract, design,
drawing, specification, instruction . . .". 12 It is argued that the foregoing phrase allows
considerable latitude so as to include non-delivery of the cargo which was a "claim, right or
thing relating to the supply order/contract". The contention is bereft of merit. First of all, the
petitioner has misquoted the said phrase, shrewdly inserting a comma between the words
"supply order/contract" and "design" where none actually exists. An accurate reproduction
of the phrase reads, ". . . or as to any other question, claim, right or thing whatsoever, in any
way arising out of or relating to the supply order/contract design, drawing, specification,
instruction or these conditions . . .". The absence of a comma between the words "supply
order/contract" and "design" indicates that the former cannot be taken separately but
should be viewed in conjunction with the words "design, drawing, specification, instruction
or these conditions". It is thus clear that to fall within the purview of this phrase, the "claim,
right or thing whatsoever" must arise out of or relate to the design, drawing, specification, or
instruction of the supply order/contract. The petitioner also insists that the non-delivery of
the cargo is not only covered by the foregoing phrase but also by the phrase, ". . . or
otherwise concerning the materials or the execution or failure to execute the same during the
stipulated/extended period or after completion/abandonment thereof . . .".
The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally
applicable in the ascertainment of the meaning and scope of vague contractual stipulations,
such as the aforementioned phrase. According to the maxim noscitur a sociis, where a
particular word or phrase is ambiguous in itself or is equally susceptible of various meanings,
its correct construction may be made clear and specific by considering the company of the
words in which it is found or with which it is associated, or stated differently, its obscurity or
doubt may be reviewed by reference to associated words. 13 A close examination of Clause
16 reveals that it covers three matters which may be submitted to arbitration namely,
(1) all questions and disputes, relating to the meaning of the specification designs, drawings
and instructions herein before mentioned and as to quality of workmanship of the items
ordered; or
(2) any other question, claim, right or thing whatsoever, in any way arising out of or relating
to the supply order/contract design, drawing, specification, instruction or these conditions;
or
(3) otherwise concerning the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof.
The first and second categories unmistakably refer to questions and disputes relating to the
design, drawing, instructions, specifications or quality of the materials of the supply/order
contract. In the third category, the clause, "execution or failure to execute the same", may
be read as "execution or failure to execute the supply order/contract". But in accordance
with the doctrine of noscitur a sociis, this reference to the supply order/contract must be
construed in the light of the preceding words with which it is associated, meaning to say, as
being limited only to the design, drawing, instructions, specifications or quality of the
materials of the supply order/contract. The non-delivery of the oil well cement is definitely
not in the nature of a dispute arising from the failure to execute the supply order/contract
design, drawing, instructions, specifications or quality of the materials. That Clause 16 should
pertain only to matters involving the technical aspects of the contract is but a logical
inference considering that the underlying purpose of a referral to arbitration is for such
technical matters to be deliberated upon by a person possessed with the required skill and
expertise which may be otherwise absent in the regular courts.
This Court agrees with the appellate court in its ruling that the non-delivery of the oil well
cement is a matter properly cognizable by the regular courts as stipulated by the parties in
Clause 15 of their contract:
All questions, disputes and differences, arising under out of or in connection with this supply
order, shall be subject to the exclusive jurisdiction of the court, within the local limits of
whose jurisdiction and the place from which this supply order is situated. 14
The following fundamental principles in the interpretation of contracts and other
instruments served as our guide in arriving at the foregoing conclusion:
Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual. 15
Art. 1374. The various stipulations of a contract shall be interpreted together, attributing the
doubtful ones that sense which may result from all of them taken jointly. 16
Sec. 11. Instrument construed so as to give effect to all provisions. In the construction of an
instrument, where there are several provisions or particulars, such a construction is, if
possible, to be adopted as will give effect to all. 17
Thus, this Court has held that as in statutes, the provisions of a contract should not be read
in isolation from the rest of the instrument but, on the contrary, interpreted in the light of
the other related provisions. 18 The whole and every part of a contract must be considered in
fixing the meaning of any of its harmonious whole. Equally applicable is the canon of
construction that in interpreting a statute (or a contract as in this case), care should be taken
that every part thereof be given effect, on the theory that it was enacted as an integrated
measure and not as a hodge-podge of conflicting provisions. The rule is that a construction
that would render a provision inoperative should be avoided; instead, apparently
inconsistent provisions should be reconciled whenever possible as parts of a coordinated and
harmonious whole. 19
The petitioner's interpretation that Clause 16 is of such latitude as to contemplate even the
non-delivery of the oil well cement would in effect render Clause 15 a mere superfluity. A
perusal of Clause 16 shows that the parties did not intend arbitration to be the sole means of
settling disputes. This is manifest from Clause 16 itself which is prefixed with the proviso,
"Except where otherwise provided in the supply order/contract . . .", thus indicating that the
jurisdiction of the arbitrator is not all encompassing, and admits of exceptions as may be
provided elsewhere in the supply order/contract. We believe that the correct interpretation
to give effect to both stipulations in the contract is for Clause 16 to be confined to all claims
or disputes arising from or relating to the design, drawing, instructions, specifications or
quality of the materials of the supply order/contract, and for Clause 15 to cover all other
claims or disputes.
The petitioner then asseverates that granting, for the sake of argument, that the non-
delivery of the oil well cement is not a proper subject for arbitration, the failure of the
replacement cement to conform to the specifications of the contract is a matter clearly
falling within the ambit of Clause 16. In this contention, we find merit. When the 4,300
metric tons of oil well cement were not delivered to the petitioner, an agreement was forged
between the latter and the private respondent that Class "G" cement would be delivered to
the petitioner as replacement. Upon inspection, however, the replacement cement was
rejected as it did not conform to the specifications of the contract. Only after this latter
circumstance was the matter brought before the arbitrator. Undoubtedly, what was referred
to arbitration was no longer the mere non-delivery of the cargo at the first instance but also
the failure of the replacement cargo to conform to the specifications of the contract, a
matter clearly within the coverage of Clause 16.
The private respondent posits that it was under no legal obligation to make replacement and
that it undertook the latter only "in the spirit of liberality and to foster good business
relationship". 20 Hence, the undertaking to deliver the replacement cement and its
subsequent failure to conform to specifications are not anymore subject of the supply
order/contract or any of the provisions thereof. We disagree.
As per Clause 7 of the supply order/contract, the private respondent undertook to deliver
the 4,300 metric tons of oil well cement at "BOMBAY (INDIA) 2181 MT and CALCUTTA 2119
MT". 21 The failure of the private respondent to deliver the cargo to the designated places
remains undisputed. Likewise, the fact that the petitioner had already paid for the cost of the
cement is not contested by the private respondent. The private respondent claims, however,
that it never benefited from the transaction as it was not able to recover the cargo that was
unloaded at the port of Bangkok. 22 First of all, whether or not the private respondent was
able to recover the cargo is immaterial to its subsisting duty to make good its promise to
deliver the cargo at the stipulated place of delivery. Secondly, we find it difficult to believe
this representation. In its Memorandum filed before this Court, the private respondent
asserted that the Civil Court of Bangkok had already ruled that the non-delivery of the cargo
was due solely to the fault of the carrier. 23 It is, therefore, but logical to assume that the
necessary consequence of this finding is the eventual recovery by the private respondent of
the cargo or the value thereof. What inspires credulity is not that the replacement was done
in the spirit of liberality but that it was undertaken precisely because of the private
respondent's recognition of its duty to do so under the supply order/contract, Clause 16 of
which remains in force and effect until the full execution thereof.
We now go to the issue of whether or not the judgment of the foreign court is enforceable in
this jurisdiction in view of the private respondent's allegation that it is bereft of any
statement of facts and law upon which the award in favor of the petitioner was based. The
pertinent portion of the judgment of the foreign court reads:
ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions of
award decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff
shall also be entitled to get from defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine
thousand six hundred and three point seventy seven only) along with 9% interest per annum
till the last date of realisation. 24
As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a
part of the decree". This is a categorical declaration that the foreign court adopted the
findings of facts and law of the arbitrator as contained in the latter's Award Paper. Award
Paper No. 3/B-1, contains an exhaustive discussion of the respective claims and defenses of
the parties, and the arbitrator's evaluation of the same. Inasmuch as the foregoing is
deemed to have been incorporated into the foreign court's judgment the appellate court was
in error when it described the latter to be a "simplistic decision containing literally, only the
dispositive portion". 25
The constitutional mandate that no decision shall be rendered by any court without
expressing therein dearly and distinctly the facts and the law on which it is based does not
preclude the validity of "memorandum decisions" which adopt by reference the findings of
fact and conclusions of law contained in the decisions of inferior tribunals. In Francisco v.
Permskul, 26 this Court held that the following memorandum decision of the Regional Trial
Court of Makati did not transgress the requirements of Section 14, Article VIII of the
Constitution:
MEMORANDUM DECISION
After a careful perusal, evaluation and study of the records of this case, this Court hereby
adopts by reference the findings of fact and conclusions of law contained in the decision of
the Metropolitan Trial Court of Makati, Metro Manila, Branch 63 and finds that there is no
cogent reason to disturb the same.
WHEREFORE, judgment appealed from is hereby affirmed in toto. 27 (Emphasis supplied.)
This Court had occasion to make a similar pronouncement in the earlier case of Romero v.
Court of Appeals, 28 where the assailed decision of the Court of Appeals adopted the findings
and disposition of the Court of Agrarian Relations in this wise:
We have, therefore, carefully reviewed the evidence and made a re-assessment of the same,
and We are persuaded, nay compelled, to affirm the correctness of the trial court's factual
findings and the soundness of its conclusion. For judicial convenience and expediency,
therefore, We hereby adopt by way of reference, the findings of facts and conclusions of the
court a quo spread in its decision, as integral part of this Our decision. 29 (Emphasis supplied)
Hence, even in this jurisdiction, incorporation by reference is allowed if only to avoid the
cumbersome reproduction of the decision of the lower courts, or portions thereof, in the
decision of the higher court. 30 This is particularly true when the decision sought to be
incorporated is a lengthy and thorough discussion of the facts and conclusions arrived at, as
in this case, where Award Paper No. 3/B-1 consists of eighteen (18) single spaced pages.
Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected
by the fact that the procedure in the courts of the country in which such judgment was
rendered differs from that of the courts of the country in which the judgment is relied
on. 31 This Court has held that matters of remedy and procedure are governed by the lex
fori or the internal law of the forum. 32 Thus, if under the procedural rules of the Civil Court
of Dehra Dun, India, a valid judgment may be rendered by adopting the arbitrator's findings,
then the same must be accorded respect. In the same vein, if the procedure in the foreign
court mandates that an Order of the Court becomes final and executory upon failure to pay
the necessary docket fees, then the courts in this jurisdiction cannot invalidate the order of
the foreign court simply because our rules provide otherwise.
The private respondent claims that its right to due process had been blatantly violated, first
by reason of the fact that the foreign court never answered its queries as to the amount of
docket fees to be paid then refused to admit its objections for failure to pay the same, and
second, because of the presumed bias on the part of the arbitrator who was a former
employee of the petitioner.
Time and again this Court has held that the essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one may have in support of
one's defense 33 or stated otherwise, what is repugnant to due process is the denial of
opportunity to be heard. 34 Thus, there is no violation of due process even if no hearing was
conducted, where the party was given a chance to explain his side of the controversy and he
waived his right to do so. 35
In the instant case, the private respondent does not deny the fact that it was notified by the
foreign court to file its objections to the petition, and subsequently, to pay legal fees in order
for its objections to be given consideration. Instead of paying the legal fees, however, the
private respondent sent a communication to the foreign court inquiring about the correct
amount of fees to be paid. On the pretext that it was yet awaiting the foreign court's reply,
almost a year passed without the private respondent paying the legal fees. Thus, on February
2, 1990, the foreign court rejected the objections of the private respondent and proceeded
to adjudicate upon the petitioner's claims. We cannot subscribe to the private respondent's
claim that the foreign court violated its right to due process when it failed to reply to its
queries nor when the latter rejected its objections for a clearly meritorious ground. The
private respondent was afforded sufficient opportunity to be heard. It was not incumbent
upon the foreign court to reply to the private respondent's written communication. On the
contrary, a genuine concern for its cause should have prompted the private respondent to
ascertain with all due diligence the correct amount of legal fees to be paid. The private
respondent did not act with prudence and diligence thus its plea that they were not
accorded the right to procedural due process cannot elicit either approval or sympathy from
this Court. 36
The private respondent bewails the presumed bias on the part of the arbitrator who was a
former employee of the petitioner. This point deserves scant consideration in view of the
following stipulation in the contract:
. . . . It will be no objection any such appointment that the arbitrator so appointed is a
Commission employer (sic) that he had to deal with the matter to which the supply or
contract relates and that in the course of his duties as Commission's employee he had
expressed views on all or any of the matter in dispute or difference. 37 (Emphasis supplied.)
Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines,
Inc. v. Court of Appeals 38 that:
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until the contrary is shown. It is also proper to presume the regularity of the proceedings and
the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a
tribunal of a foreign country having jurisdiction to pronounce the same is presumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent
title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of
Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presumption that it
was acting in the lawful exercise of jurisdiction and has regularly performed its official
duty. 39
Consequently, the party attacking a foreign judgment, the private respondent herein, had
the burden of overcoming the presumption of its validity which it failed to do in the instant
case.
The foreign judgment being valid, there is nothing else left to be done than to order its
enforcement, despite the fact that the petitioner merely prays for the remand of the case to
the RTC for further proceedings. As this Court has ruled on the validity and enforceability of
the said foreign judgment in this jurisdiction, further proceedings in the RTC for the
reception of evidence to prove otherwise are no longer necessary.
WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court of
Appeals sustaining the trial court's dismissal of the OIL AND NATURAL GAS COMMISSION's
complaint in Civil Case No. 4006 before Branch 30 of the RTC of Surigao City is REVERSED,
and another in its stead is hereby rendered ORDERING private respondent PACIFIC CEMENT
COMPANY, INC. to pay to petitioner the amounts adjudged in the foreign judgment subject
of said case.
SO ORDERED.
Regalado, Melo and Puno, JJ., concur.
Mendoza, J., took no part.
SECOND DIVISION
[G.R. No. 110263. July 20, 2001.]
ASIAVEST MERCHANT BANKERS (M) BERHAD, Petitioner, v. COURT OF APPEALS and
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated
May 19, 1993 in CA-G.R. CV No. 35871 affirming the Decision 2 dated October 14, 1991 of
the Regional Trial Court of Pasig, Metro Manila, Branch 168 in Civil Case No. 56368 which
dismissed the complaint of petitioner Asiavest Merchant Bankers (M) Berhad for the
enforcement of the money judgment of the High Court of Malaya in Kuala Lumpur against
private respondent Philippine National Construction Corporation.chanrob1es virtua1 1aw
1ibrary
The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under the ORDER
laws of Malaysia while private respondent Philippine National Construction Corporation is a
corporation duly incorporated and existing under Philippine laws. Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this action
AND UPON READING the Summons in Chambers dated the 16th day of August, 1984 and the
It appears that sometime in 1983, petitioner initiated a suit for collection against private Affidavit of Lee Foong Mee affirmed on the 14th day of August 1984 both filed herein AND
respondent, then known as Construction and Development Corporation of the Philippines, UPON HEARING Mr. T. Thomas of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of
before the High Court of Malaya in Kuala Lumpur entitled "Asiavest Merchant Bankers (M) Counsel for the 2nd Defendant abovenamed on the 26th day of December 1984 IT WAS
Berhad v. Asiavest — CDCP Sdn. Bhd. and Construction and Development Corporation of the ORDERED that the Plaintiffs be at liberty to sign final judgment against the 2nd Defendant for
Philippines." 3 the sum of $5,108.290.23 AND IT WAS ORDERED that the 2nd Defendant do pay the Plaintiffs
the costs of suit at $350.00 AND IT WAS FURTHER ORDERED that the plaintiffs be at liberty to
Petitioner sought to recover the indemnity of the performance bond it had put up in favor of apply for payment of interest AND upon the application of the Plaintiffs for payment of
private respondent to guarantee the completion of the Felda Project and the non-payment interest coming on for hearing on the 1st day of August in the presence of Mr. Palpanaban
of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion of Paloh Hanai and Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd
Kuantan By-Pass Project. Defendant above-named AND UPON HEARING Counsel as aforesaid BY CONSENT IT WAS
ORDERED that the 2nd Defendant do pay the Plaintiffs interest at a rate to be assessed AND
On September 13, 1985, the High Court of Malaya (Commercial Division) rendered judgment the same coming on for assessment this day in the presence of Mr. Palpanaban Devarajoo of
in favor of the petitioner and against the private respondent which is also designated therein Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant AND
as the "2nd Defendant." The judgment reads in full:chanrob1es virtual 1aw library UPON HEARING Counsel as aforesaid BY CONSENT IT IS ORDERED that the 2nd Defendant do
pay the Plaintiffs interest at the rate of 12% per annum on:chanrob1es virtual 1aw library
SUIT NO. C638 of 1983
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; and
Between
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of
Asiavest Merchant Bankers (M) Berhad Plaintiffs Payment.chanrob1es virtua1 1aw 1ibrary

And Dated the 13th day of September, 1985.

1. Asiavest-CDCP Sdn. Bhd. Senior Assistant Registrar,

2. Construction & Development High Court, Kuala Lumpur. 5

Corporation of the Philippines Defendant Following unsuccessful attempts 6 to secure payment from private respondent under the
judgment, petitioner initiated on September 5, 1988 the complaint before Regional Trial
JUDGMENT Court of Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya. 7

The 2nd Defendant having entered appearance herein and the Court having under Order 14, Private respondent sought the dismissal of the case via a Motion to Dismiss filed on October
rule 3 ordered that judgment as hereinafter provided be entered for the Plaintiffs against the 5, 1988, contending that the alleged judgment of the High Court of Malaya should be denied
2nd Defendant. recognition or enforcement since on its face, it is tainted with want of jurisdiction, want of
notice to private respondent, collusion and/or fraud, and there is a clear mistake of law or
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of fact. 8 Dismissal was, however, denied by the trial court considering that the grounds relied
$5,108,290.23 (Ringgit Five million one hundred and eight thousand two hundred and ninety upon are not the proper grounds in a motion to dismiss under Rule 16 of the Revised Rules of
and Sen twenty-three) together with interest at the rate of 12% per annum on:chanrob1es Court. 9
virtual 1aw library
On May 22, 1989, private respondent filed its Answer with Compulsory Counterclaim 10 and
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; therein raised the grounds it brought up in its motion to dismiss. In its Reply 11 filed on June
andchanrob1es virtua1 1aw 1ibrary 8, 1989, the petitioner contended that the High Court of Malaya acquired jurisdiction over
the person of private respondent by its voluntary submission to the courts jurisdiction
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of payment; and through its appointed counsel, Mr. Khay Chay Tee. Furthermore, private respondent’s
$350.00 (Ringgit Three Hundred and Fifty) costs. counsel waived any and all objections to the High Court’s jurisdiction in a pleading filed
before the court.chanrob1es virtua1 1aw 1ibrary
Dated the 13th day of September, 1985.
In due time, the trial court rendered its Decision dated October 14, 1991 dismissing
Senior Assistant Registrar, petitioner’s complaint. Petitioner interposed an appeal with the Court of Appeals, but the
appellate court dismissed the same and affirmed the decision of the trial court in a Decision
High Court, Kuala Lumpur dated May 19, 1993.

This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building, No. 4, Hence, the instant petition which is anchored on two (2) assigned errors, 12 to
Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed. wit:chanrob1es virtual 1aw library
(VP/Ong/81194.7/83) 4
I
On the same day, September 13, 1985, the High Court of Malaya issued an Order directing
the private respondent (also designated therein as the "2nd Defendant") to pay petitioner
interest on the sums covered by the said Judgment, thus:chanrob1es virtual 1aw library
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN COURT DID NOT
ACQUIRE PERSONAL JURISDICTION OVER PNCC, NOTWITHSTANDING THAT (a) THE FOREIGN
SUIT NO. C638 OF 1983
COURT HAD SERVED SUMMONS ON PNCC AT ITS MALAYSIA OFFICE, AND (b) PNCC ITSELF
APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT.
Between

Asiavest Merchant Bankers (M) Berhad Plaintiffs II

And
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND ENFORCEMENT TO (SIC) THE
1. Asiavest-CDCP Sdn. Bhd. MALAYSIAN COURT JUDGMENT.chanrob1es virtua1 1aw 1ibrary

2. Construction & Development Generally, in the absence of a special compact, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country; 13 however, the rules of
Corporation of the Philippines Defendants comity, utility and convenience of nations have established a usage among civilized states by
which final judgments of foreign courts of competent jurisdiction are reciprocally respected
BEFORE THE SENIOR ASSISTANT REGISTRAR and rendered efficacious under certain conditions that may vary in different countries. 14

CIK SUSILA S. PARAM In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar
as the immediate parties and the underlying cause of action are concerned so long as it is
THIS 13th DAY OF SEPTEMBER 1985 IN CHAMBERS convincingly shown that there has been an opportunity for a full and fair hearing before a
court of competent jurisdiction; that the trial upon regular proceedings has been conducted,
following due citation or voluntary appearance of the defendant and under a system of
jurisprudence likely to secure an impartial administration of justice; and that there is nothing
to indicate either a prejudice in court and in the system of laws under which it is sitting or
fraud in procuring the judgment. 15
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until a contrary showing, on the basis of a presumption of regularity of proceedings and the
giving of due notice in the foreign forum. Under Section 50(b), 16 Rule 39 of the Revised
Rules of Court, which was the governing law at the time the instant case was decided by the
trial court and respondent appellate court, a judgment, against a person, of a tribunal of a
foreign country having jurisdiction to pronounce the same is presumptive evidence of a right
as between the parties and their successors in interest by a subsequent title. The judgment
may, however, be assailed by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. In addition, under Section 3(n), Rule 131 of
the Revised Rules of Court, a court, whether in the Philippines or elsewhere, enjoys the
presumption that it was acting in the lawful exercise of its jurisdiction. Hence, once the
authenticity of the foreign judgment is proved, the party attacking a foreign judgment, is
tasked with the burden of overcoming its presumptive validity.chanrob1es virtua1 1aw
1ibrary
In the instant case, petitioner sufficiently established the existence of the money judgment
of the High Court of Malaya by the evidence it offered. Vinayak Prabhakar Pradhan,
presented as petitioner’s sole witness, testified to the effect that he is in active practice of
the law profession in Malaysia; 17 that he was connected with Skrine and Company as Legal
Assistant up to 1981; 18 that private respondent, then known as Construction and
Development Corporation of the Philippines, was sued by his client, Asiavest Merchant
Bankers (M) Berhad, in Kuala Lumpur; 19 that the writ of summons were served on March
17, 1983 at the registered office of private respondent and on March 21, 1983 on Cora S.
Deala, a financial planning officer of private respondent for Southeast Asia operations; 20
that upon the filing of the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with
address at 24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur, entered their
conditional appearance for private respondent questioning the regularity of the service of
the writ of summons but subsequently withdrew the same when it realized that the writ was
properly served; 21 that because private respondent failed to file a statement of defense
within two (2) weeks, petitioner filed an application for summary judgment and submitted
affidavits and documentary evidence in support of its claim; 22 that the matter was then
heard before the High Court of Kuala Lumpur in a series of dates where private respondent
was represented by counsel; 23 and that the end result of all these proceedings is the
judgment sought to be enforced.chanrob1es virtua1 1aw 1ibrary
In addition to the said testimonial evidence, petitioner offered the following documentary
evidence:chanrob1es virtual 1aw library
(a) A certified and authenticated copy of the Judgment promulgated by the Malaysian High
Court dated September 13, 1985 directing private respondent to pay petitioner the sum of
$5,108,290.23 Malaysian Ringgit plus interests from March 1983 until fully paid; 24
(b) A certified and authenticated copy of the Order dated September 13, 1985 issued by the
Malaysian High Court in Civil Suit No. C638 of 1983;25cralaw:red
(c) Computation of principal and interest due as of January 31, 1990 on the amount adjudged
payable to petitioner by private respondent; 26
clear and convincing evidence the grounds which it relied upon to prevent enforcement of
the Malaysian High Court judgment, namely, (a) that jurisdiction was not acquired by the
Malaysian Court over the person of private respondent due to alleged improper service of
summons upon private respondent and the alleged lack of authority of its counsel to appear
and represent private respondent in the suit; (b) the foreign judgment is allegedly tainted by
evident collusion, fraud and clear mistake of fact or law; and (c) not only were the requisites
for enforcement or recognition allegedly not complied with but also that the Malaysian
judgment is allegedly contrary to the Constitutional prescription that the "every decision
must state the facts and law on which it is based." 36
Private respondent relied solely on the testimony of its two (2) witnesses, namely, Mr.
Alfredo N. Calupitan, an accountant of private respondent, and Virginia Abelardo, Executive
Secretary and a member of the staff of the Corporate Secretariat Section of the Corporate
Legal Division, of private respondent, both of whom failed to shed light and amplify its
defense or claim for non-enforcement of the foreign judgment against it.chanrob1es virtua1
1aw 1ibrary
Mr. Calupitan’s testimony centered on the following: that from January to December 1982
he was assigned in Malaysia as Project Comptroller of the Pahang Project Package A and B
for road construction under the joint venture of private respondent and Asiavest Holdings;
37 that under the joint venture, Asiavest Holdings would handle the financial aspect of the
project, which is fifty-one percent (51%) while private respondent would handle the
technical aspect of the project, or forty-nine percent (49%); 38 and, that Cora Deala was not
authorized to receive summons for and in behalf of the private Respondent. 39 Ms.
Abelardo’s testimony, on the other hand, focused on the following: that there was no board
resolution authorizing Allen and Gledhill to admit all the claims of petitioner in the suit
brought before the High Court of Malaya, 40 though on cross-examination she admitted that
Allen and Gledhill were the retained lawyers of private respondent in Malaysia. 41
The foregoing reasons or grounds relied upon by private respondent in preventing
enforcement and recognition of the Malaysian judgment primarily refer to matters of
remedy and procedure taken by the Malaysian High Court relative to the suit for collection
initiated by petitioner. Needless to stress, the recognition to be accorded a foreign judgment
is not necessarily affected by the fact that the procedure in the courts of the country in
which such judgment was rendered differs from that of the courts of the country in which
the judgment is relied on. 42 Ultimately, matters of remedy and procedure such as those
relating to the service of summons or court process upon the defendant, the authority of
counsel to appear and represent a defendant and the formal requirements in a decision are
governed by the lex fori or the internal law of the forum, 43 i.e., the law of Malaysia in this
case.chanrob1es virtua1 1aw 1ibrary
In this case, it is the procedural law of Malaysia where the judgment was rendered that
determines the validity of the service of court process on private respondent as well as other
matters raised by it. As to what the Malaysian procedural law is, remains a question of fact,
not of law. It may not be taken judicial notice of and must be pleaded and proved like any
other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may
be evidenced by an official publication or by a duly attested or authenticated copy thereof. It
was then incumbent upon private respondent to present evidence as to what that Malaysian
procedural law is and to show that under it, the assailed service of summons upon a financial
officer of a corporation, as alleged by it, is invalid. It did not. Accordingly, the presumption of
validity and regularity of service of summons and the decision thereafter rendered by the
High Court of Malaya must stand. 44

(d) Letter and Statement of Account of petitioner’s counsel in Malaysia indicating the costs On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent
for prosecuting and implementing the Malaysian High Court’s Judgment; 27 private respondent, not only did the private respondent’s witnesses admit that the said law
firm of Allen and Gledhill were its counsels in its transactions in Malaysia, 45 but of greater
(e) Letters between petitioner’s Malaysian counsel, Skrine and Co., and its local counsel, significance is the fact that petitioner offered in evidence relevant Malaysian jurisprudence
Sycip Salazar Law Offices, relative to institution of the action in the Philippines; 28 46 to the effect that (a) it is not necessary under Malaysian law for counsel appearing before
the Malaysian High Court to submit a special power of attorney authorizing him to represent
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990 showing a client before said court, (b) that counsel appearing before the Malaysian High Court has full
attorney’s fees paid by and due from petitioner; 29 authority to compromise the suit, and (c) that counsel appearing before the Malaysian High
Court need not comply with certain pre-requisites as required under Philippine law to appear
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such writ in petitioner’s and compromise judgments on behalf of their clients before said court. 47
suit against private respondent before the Malaysian High Court; 30
Furthermore, there is no basis for or truth to the appellate court’s conclusion that the
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed by counsel for conditional appearance of private respondent’s counsel who was allegedly not authorized to
private respondent with the Malaysian High Court; 31 appear and represent, cannot be considered as voluntary submission to the jurisdiction of
the High Court of Malaya, inasmuch as said conditional appearance was not premised on the
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, counsel for private respondent, alleged lack of authority of said counsel but the conditional appearance was entered to
submitted during the proceedings before the Malaysian High Court; 32 question the regularity of the service of the writ of summons. Such conditional appearance
was in fact subsequently withdrawn when counsel realized that the writ was properly served.
(j) Record of the Court’s Proceedings in Civil Case No. C638 of 1983; 33 48

(k) Petitioner’s verified Application for Summary Judgment dated August 14, 1984; 34 On the ground that collusion, fraud and clear mistake of fact and law tainted the judgment of
andchanrob1es virtua1 1aw 1ibrary the High Court of Malaya, no clear evidence of the same was adduced or shown. The facts
which the trial court found "intriguing" amounted to mere conjectures and specious
(l) Letter dated November 6, 1985 from petitioner’s Malaysian counsel to private observations. The trial court’s finding on the absence of judgment against Asiavest-CDCP
respondent’s counsel in Malaysia. 35 Sdn. Bhd. is contradicted by evidence on record that recovery was also sought against
Asiavest-CDCP Sdn. Bhd. but the same was found insolvent. 49 Furthermore, even when the
Having thus proven, through the foregoing evidence, the existence and authenticity of the foreign judgment is based on the drafts prepared by counsel for the successful party, such is
foreign judgment, said foreign judgment enjoys presumptive validity and the burden then fell not per se indicative of collusion or fraud. Fraud to hinder the enforcement within the
upon the party who disputes its validity, herein private respondent, to prove otherwise. jurisdiction of a foreign judgment must be extrinsic, i.e., fraud based on facts not
controverted or resolved in the case where judgment is rendered, 50 or that which would go
Private respondent failed to sufficiently discharge the burden that fell upon it — to prove by to the jurisdiction of the court or would deprive the party against whom judgment is
rendered a chance to defend the action to which he has a meritorious defense. 51 Intrinsic
fraud is one which goes to the very existence of the cause of action is deemed already
adjudged, and it, therefore, cannot militate against the recognition or enforcement of the
foreign judgment. 52 Evidence is wanting on the alleged extrinsic fraud. Hence, such
unsubstantiated allegation cannot give rise to liability therein.cralaw : red
Lastly, there is no merit to the argument that the foreign judgment is not enforceable in view
of the absence of any statement of facts and law upon which the award in favor of the
petitioner was based. As aforestated, the lex fori or the internal law of the forum governs
matters of remedy and procedure. 53 Considering that under the procedural rules of the
High Court of Malaya, a valid judgment may be rendered even without stating in the
judgment every fact and law upon which the judgment is based, then the same must be
accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the
foreign court simply because our rules provide otherwise.
All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of
such foreign judgment, being the party challenging the judgment rendered by the High Court
of Malaya. But instead of doing so, private respondent merely argued, to which the trial
court agreed, that the burden lay upon petitioner to prove the validity of the money
judgment. Such is clearly erroneous and would render meaningless the presumption of
validity accorded a foreign judgment were the party seeking to enforce it be required to first
establish its validity. 54
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated
May 19, 1993 in CA-G.R. CV No. 35871 sustaining the Decision dated October 14, 1991 in Civil
Case No. 56368 of the Regional Trial Court of Pasig, Branch 168 denying the enforcement of
the Judgment dated September 13, 1985 of the High Court of Malaya in Kuala Lumpur is
REVERSED and SET ASIDE, and another in its stead is hereby rendered ORDERING private
respondent Philippine National Construction Corporation to pay petitioner Asiavest
Merchant Bankers (M) Berhad the amounts adjudged in the said foreign Judgment, subject
of the said case.cralaw : red
Costs against the private Respondent.
SO ORDERED.
Bellosillo, Mendoza and Buena, JJ., concur.
Quisumbing, J., on official business.
FIRST DIVISION
[G.R. No. 112573. February 9, 1995.]
NORTHWEST ORIENT AIRLINES, INC., Petitioner, v. COURT OF APPEALS and C.F. SHARP &
COMPANY, INC., Respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; FOREIGN JUDGMENT; EFFECT; RULE IN CASE OF AN
ACTION IN PERSONAM. — A foreign judgment is presumed to be valid and binding in the
country from which is comes, until the contrary is shown. It is also proper to presume the
regularity of the proceedings and the giving of due notice therein. Under Section 50, Rule 39
of the Rules of Court, a judgment in an action in personam of a tribunal of a foreign country
having jurisdiction to pronounce the same is presumptive evidence of a right as between the
parties and their successors-in-interest by a subsequent title. The judgment may, however,
be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the
Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of
jurisdiction and has regularly performed its official duty. Consequently, the party attacking a
foreign judgment has the burden of overcoming the presumption of its validity. Being the
party challenging the judgment rendered by the Japanese court, SHARP had the duty to
demonstrate the invalidity of such judgment. In an attempt to discharge that burden, it
contends that the extraterritorial service of summons effected at its home office in the
Philippines was not only ineffectual but also void, and the Japanese Court did not, therefore,
acquire jurisdiction over it.
2. ID.; ID.; ID.; ID.; ID.; DUTY OF THE PARTY ASSAILING THEREOF. — It is settled that matters
of remedy and procedure such as those relating to the service of process upon a defendant
are governed by the lex fori or the internal law of the forum. In this case, it is the procedural
law of Japan where the judgment was rendered that determines the validity of the
extraterritorial service of process on SHARP. As to what this law is is a question of fact, not of
law. It may not be taken judicial notice of and must be pleaded and proved like any other
fact. Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by
an official publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon SHARP to present evidence as to what that Japanese procedural law is and
to show that under it, the assailed extraterritorial service is invalid. It did not. Accordingly,
the presumption of validity and regularity of the service of summons and the decision
thereafter rendered by the Japanese court must stand.
3. ID.; ID.; SUMMONS; SERVICE UPON PRIVATE FOREIGN CORPORATION DOING BUSINESS IN
THE PHILIPPINES; RULE; CASE AT BAR. — Alternatively, in the light of the absence of proof
regarding Japanese law, the presumption of identity or similarity or the so-called processual
presumption may be invoked. Applying it, the Japanese law on the matter is presumed to be
similar with the Philippine law on service of summons on a private foreign corporation doing
business in the Philippines. Section 14, Rule 14 of the Rules of Court provides that if the
defendant is a foreign corporation doing business in the Philippines, service may be made:
(1) on its resident agent designated in accordance with law for that purpose, or, (2) if there is
no such resident agent, on the government official designated by law to that effect, or (3) on
any of its officers or agents within the Philippines. If the foreign corporation has designated
an agent to receive summons, the designation is exclusive, and service of summons is
without force and gives the court no jurisdiction unless made upon him. Where the
corporation has no such agent, service shall be made on the government official designated
by law, to wit: (a) the Insurance Commissioner, in the case of a foreign insurance company;
(b) the Superintendent of Banks, in the case of a foreign banking corporation; and (c) the
Securities and Exchange Commission, in the case of other foreign corporations duly licensed
to do business in the Philippines. Whenever service of process is so made, the government
office or official served shall transmit by mail a copy of the summons or other legal process
to the corporation at its home or principal office. The sending of such copy is a necessary
part of the service. SHARP contends that the laws authorizing service of process upon the
Securities and Exchange Commission, the Superintendent of Banks, and the Insurance
Commissioner, as the case may be, presuppose a situation wherein the foreign corporation
doing business in the country no longer has any branches or offices within the Philippines.
Such contention is belied by the pertinent provisions of the said laws. Thus, Section 128 of
the Corporation Code and Section 190 of the Insurance Code clearly contemplate two
situations: (1) if the corporation had left the Philippines or had ceased to transact business
therein, and (2) if the corporation has no designated agent. Section 17 of the General
Banking Act does not even speak of a corporation which had ceased to transact business in
the Philippines. Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only mean, or at lest create
an impression, that it had none. Hence, service on the designated government official or on
any of SHARP’s officers or agents in Japan could be availed of. The respondent, however,
insists that only service on any of its officers or employees in its branches in Japan could be
resorted to. We do not agree. As found by the respondent court, two attempts at service
were made at SHARP’s Yokohama branch. Both were unsuccessful. On the first attempt, Mr.
Dinozo, who was believed to be the person authorized to accept court process, was in
Manila. On the second, Mr. Dinozo was present, but he refused to accept the summons
because, according to him, he was no longer an employee of SHARP. While it may be true
that service could have been made upon any of the officers or agents of SHARP at its three
other branches in Japan, the availability of such a recourse would not preclude service upon
the proper government official, as stated above. As found by the Court of Appeals, it was the
Tokyo District Court which ordered that summons for SHARP be served at its head office in
the Philippines after the two attempts of service had failed. The Tokyo District Court
requested the Supreme Court of Japan to cause the delivery of the summons and other legal
documents to the Philippines. Acting on that request, the Supreme Court of Japan sent the
summons together with the other legal documents to the Ministry of Foreign Affairs of Japan
which, in turn, forwarded the same to the Japanese Embassy in Manila. Thereafter, the court
processes were delivered to the Ministry (now Department) of Foreign Affairs of the
Philippines, then to the Executive Judge of the Court of First Instance (now Regional Trial
Court) of Manila, who forthwith ordered Deputy Sheriff Rolando Balingit to serve the same
on SHARP at its principal office in Manila. This service is equivalent to service on the proper
government official under Section 14, Rule 14 of the Rules of Court, in relation to Section 128
of the Corporation Code. Hence, SHARP’s contention that such manner of service is not valid
under Philippine laws holds no water.
4. ID.; ID.; ID.; SUBSTITUTED SERVICE; RULE; RATIONALE. — The United States Supreme Court
ruled in the 1940 case of Milliken v. Meyer (311 U.S. 457) that domicile in the state is alone
sufficient to bring an absent defendant within the reach of the state’s jurisdiction for
purposes of a personal judgment by means of appropriate substituted service or personal
service without the state. This principle is embodied in Section 18, Rule 14 of the Rules of
Court which allows service of summons on residents temporarily out of the Philippines to be
made out of the country. The rationale for this rule was explained in Milliken as follows:
[T]he authority of a state over one of its citizen is not terminated by the mere fact of his
absence from the state. The state which accords him privileges and affords protection to him
and his property by virtue of his domicile may also exact reciprocal duties. "Enjoyment of the
privileges of residence within the state, and the attendant right to invoke the protection of
its laws, are inseparable" from the various incidences of state citizenship. The responsibilities
of that citizenship arise out of the relationship to the state which domicile creates. That
relationship is not dissolved by mere absence from the state. The attendant duties, like the
rights and privileges incident to domicile, are not dependent on continuous presence in the
state. One such incident of domicile is amenability to suit within the state even during
sojourns without the state, where the state has provided and employed a reasonable
method for apprising such an absent party of the proceedings against him.
5. COMMERCIAL LAW; CORPORATION; DOMICILE ON CORPORATION FORMED IN ONE STATE
BUT HAS OFFICES AND TRANSACTING BUSINESS IN OTHER STATE; RULE. — The domicile of a
corporation belongs to the state where it was incorporated. In a strict technical sense, such
domicile as a corporation may have is single in its essence and a corporation can have only
one domicile which is the state of its creation. Nonetheless, a corporation formed in one
state may, for certain purposes, be regarded a resident in another state in which it has
offices and transacts business. This is the rule in our jurisdiction and apropos thereof, it may
be necessary to quote what we stated in State Investment House, Inc. v. Citibank, N.A., (203
SCRA 9, 18-20 [1991]) to wit: . . . This Court itself has already had occasion to hold [Claude
Neon Lights, Fed. Inc. v. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation
licitly doing business in the Philippines, which is a defendant in a civil suit, may not be
considered a non-resident within the scope of the legal provision authorizing attachment
against a defendant not residing in the Philippine Islands; [Sec. 424, in relation to Sec. 412 of
Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of the Rules of 1940; Sec. 1 (f),
Rule 57, Rules of 1964] in other words, a preliminary attachment may not be applied for and
granted solely on the asserted fact that the defendant is a foreign corporation authorized to
do business in the Philippines — and is consequently and necessarily, "a party who resides
out of the Philippines." Parenthetically, if it may not be considered as a party not residing in
the Philippines, or as a party who resides out of the country, then, logically, it must be
considered a party who does resides in the Philippines, who is a resident of the country. Be
this as it may, this Court pointed out that: ". . . Our laws and jurisprudence indicate a purpose
to assimilate foreign corporations, duly licensed to do business here, to the status of
domestic corporations. (Cf. Section 73, Act No. 1459, and Marshall Wells Co. v. Henry W.
Elser & Co., 46 Phil. 70, 76; Yu Cong Eng v. Trinidad, 47 Phil. 385, 411) We think it would be
entirely out of line with this policy should we make a discrimination against a foreign
corporation, like the petitioner, and subject its property to the harsh writ of seizure by
attachment when it has complied not only with every requirement of law made specially of
foreign corporations, but in addition with every requirement of law made of domestic
corporations. . . ." Obviously, the assimilation of foreign corporations authorized to do
business in the Philippines "to the status of domestic corporations," subsumes their being
found and operating as corporations, hence, residing, in the country. The same principle is
recognized in American law: that the "residence of a corporation, if it can be said to have a
residence, is necessarily where it exercises corporate functions . . .;" that it is considered as
dwelling "in the place where its business is done, . . .," as being "located where its franchises
are exercised . . .," and as being "present where it is engaged in the prosecution of the
corporate enterprise;" that at "foreign corporation licensed to do business in a state is a
resident of any country where it maintains an office or agent for transaction of its usual and
customary business for venue purposes;" and that the "necessary element in its signification
is locality of existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 403].
Inasmuch as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said court
lawful methods of serving process. Accordingly, the extraterritorial service of summons on it
by the Japanese Court was valid not only under the processual presumption but also because
of the presumption of regularity of performance of official duty.
DECISION
DAVIDE, J.:
This petition on certiorari seeks to set aside the decision of the court of Appeals affirming the
dismissal of the petitioner’s complaint to enforce the judgment of a Japanese court. The
principal issue here is whether a Japanese court can acquire jurisdiction over a Philippine
corporation doing business in Japan by serving summons through diplomatic channels on the
Philippine corporation at its principal office in Manila after prior attempts to serve summons
in Japan had failed.chanrobles virtual lawlibrary
Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized
under the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-
17637 of the Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor
by a Japanese court against private respondent C.F. Sharp & Company, Inc., (hereinafter
SHARP), a corporation incorporated under Philippine laws.chanrobles law library : red
As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the
following are the factual and procedural antecedents of this controversy:chanrob1es virtual
1aw library
On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through
its Japan branch, entered into an International Passenger Sales Agency Agreement, whereby
the former authorized the latter to sell its air transportation tickets. Unable to remit the
proceeds of the ticket sales made by defendant on behalf of the plaintiff under the said
agreement, plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of the
unremitted proceeds of the ticket sales, with claim for damages.
On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District
Court of Japan against defendant at its office at the Taiheiyo Building, 3rd floor, 132,
Yamashita-cho, Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt to serve the
summons was unsuccessful because the bailiff was advised by a person in the office that Mr.
Dinozo, the person believed to be authorized to receive court processes was in Manila and
would be back on April 24, 1980.
On April 24, 1980, bailiff returned to the defendant’s office to serve the summons. Dr.
Dinozo refused to accept the same claiming that he was no longer an employee of the
defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo District Court
decided to have the complaint and the writs of summons served at the head office of the
defendant in Manila. On July 11, 1980, the Director of the Tokyo District Court requested the
Supreme Court of Japan to serve the summons through diplomatic channels upon the
defendant’s head office in Manila.
On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of
summons (p. 276, Records). Despite receipt of the same, defendant failed to appear at the
scheduled hearing. Thus, the Tokyo Court proceeded to hear the plaintiff’s complaint and on
[January 29, 1981], rendered judgment ordering the defendant to pay the plaintiff the sum of
83,158,195 Yen and damages for delay at the rate of 6% per annum from August 28, 1980 up
to and until payment is completed (pp. 12-14, Records).
On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the judgment.
Defendant not having appealed the judgment, the same became final and executory.
Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for
enforcement of the judgment was filed by plaintiff before the Regional Trial Court of Manila,
Branch 54. 2
On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese
Court sought to be enforced is null and void and unenforceable in this jurisdiction having
been rendered without due and proper notice to the defendant and/or with collusion or
fraud and/or upon a clear mistake of law and fact (pp. 41-45,
Rec.).chanrobles.com:cralaw:red
Unable to settle the case amicably, the case was tried on the merits. After the plaintiff rested
its case, defendant on April 21, 1989, filed a Motion for Judgment on a Demurrer to Evidence
based on two grounds: (1) the foreign judgment sought to be enforced is null and void for
want of jurisdiction and (2) the said judgment is contrary to Philippine law and public policy
and rendered without due process of law. Plaintiff filed its opposition after which the court a
quo rendered without due process of law. Plaintiff filed its opposition after which the court a
quo rendered the now assailed decision dated June 21, 1989 granting the demurrer motion
and dismissing the complaint (Decision, pp. 376-378, Records). In granting the demurrer
motion, the trial court held that:jgc:chanrobles.com.ph
"The foreign judgment in the Japanese Court sought in this action is null and void for want of
jurisdiction over the person of the defendant considering that this is an action in personam;
the Japanese Court did not acquire jurisdiction over the person of the defendant because
jurisprudence requires that the defendant be served with summons in Japan in order for the
Japanese Court to acquire jurisdiction over it, the process of the Court in Japan sent to the
Philippines which is outside Japanese jurisdiction cannot confer jurisdiction over the
defendant in the case before the Japanese court of the case at bar. Boudard versus Tait 67
Phil. 170. The plaintiff contends that the Japanese Court acquired jurisdiction because the
defendant is a resident of Japan, having four (4) branches doing business therein and in fact
had a permit from the Japanese government to conduct business in Japan (citing the exhibits
presented by the plaintiff); if this is so then service of summons should have been made
upon the defendant in Japan in any of these alleged four branches; as admitted by the
plaintiff the service of the summons issued by the Japanese Court was made in the
Philippines thru a Philippine sheriff. This Court agrees that if the defendant in a foreign court
is a resident in the court of that foreign court such court could acquire jurisdiction over the
person of the defendant but it must be served upon the defendant in the territorial
jurisdiction of the foreign court. Such is not the case here because the defendant was served
with summons in the Philippines and not in Japan."cralaw virtua1aw library
Unable to accept the said decision, plaintiff on July 11, 1989 moved for reconsideration of
the decision, filing at the same time a conditional Notice of Appeal, asking the court to treat
the said notice of appeal "as in effect after and upon issuance of the court’s denial of the
motion for reconsideration." chanroblesvirtuallawlibrary
Defendant opposed the motion for reconsideration to which a Reply dated August 28, 1989
was filed by the plaintiff.
On October 16, 1989, the lower court disregarded the Motion for Reconsideration and gave
due course to the plaintiff’s Notice of Appeal. 3
In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its
reliance upon Boudard v. Tait 4 wherein it was held that "the process of the court has no
extraterritorial effect and no jurisdiction is acquired over the person of the defendant by
serving him beyond the boundaries of the state." To support its position, the Court of
Appeals further stated:chanrob1es virtual 1aw library
In an action strictly in personam, such as the instant case, personal service of summons
within the forum is required for the court to acquire jurisdiction over the defendant
(Magdalena Estate Inc. v. Nieto, 125 SCRA 230). To confer jurisdiction on the court, personal
or substituted service of summons on the defendant not extraterritorial service is necessary
(Dial Corpo. v. Soriano, 161 SCRA 739).chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
But while plaintiff-appellant concedes that the collection suit filed is an action in personam, it
is its theory that a distinction must be made between an action in personam against a
resident defendant and an action in personam against a non-resident defendant. Jurisdiction
is acquired over a non-resident defendant only if he is served personally within the
jurisdiction of the court, and over a resident defendant if by personal, substituted or
constructive service conformably to statutory authorization. Plaintiff-appellant argues that
since the defendant-appellee maintains branches in Japan, it is considered a resident
defendant. Corollarily, personal substituted or constructive service of summons when made
in compliance with the procedural rules is sufficient to give the court jurisdiction to render
judgment in personam.
Such an argument does not persuade.
It is general rule that processes of the court cannot lawfully be served outside the territorial
limits of the jurisdiction of the court from which it issues (Carter v. Carter, 41 S.E. 2d 532,
201) and this is regardless of the residence or citizenship of the party thus served (Iowa-Rahr,
129 NW 494, 150 Iowa 511, 35 LRC, NS 292, am. Case 1912 D680). There must be actual
service within the proper territorial limits on defendant or someone authorized to accept
service for him. Thus, a defendant, whether a resident or not in the forum where the action
is filed, must be served with summons within the forum.chanroblesvirtuallawlibrary
But even assuming a distinction between a resident defendant and non-resident defendant
were to be adopted, such distinction applies only to natural persons and not to corporations.
This finds support in the concept that "a corporation has no home or residence in the sense
in which those terms are applied to natural persons" (Claude Neon Lights v. Phil. Advertising
Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in its
brief:jgc:chanrobles.com.ph
"Residence is said to be an attribute of a natural person, and can be predicated on an
artificial being only by more or less imperfect analogy. Strictly speaking, therefore, a
corporation can have no local residence or habitation. It has been said that a corporation is a
mere ideal existence, subsisting only in contemplation of law — an invisible being which can
have, in fact, no locality and can occupy no space, and therefore cannot have a dwelling
place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v. Topeka, 88 370, 128 p. 367; wood v. Hartfold
F. Ins. Co., 13 Conn 202)"
Jurisprudence so holds that the foreign or domestic character of a corporation is to be
determined by the place of its origin, where its charter was granted and not by the location
of its charter was granted and not by the location of its business activities (Jennings v. Idaho
Rail Light & P. Co., 26 Idaho 703, 146 p. 101). A corporation is a "resident" and an inhabitant
of the state in which it is incorporated and no other (36 Am. Jur. 2d, p. 49).
Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws.
Clearly, its residence is the Philippines, the place of its incorporation, and not Japan. While
defendant-appellee maintains branches in Japan, this will not make it a resident of Japan. A
corporation does not become a resident of another by engaging in business there even
though licensed by that state and in terms given all the rights and privileges of a domestic
corporation (Galveston H. & S.A.R. Co. v. Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct.
401).chanroblesvirtuallawlibrary
On this premise, defendant appellee is a non-resident corporation. As such, court processes
must be served upon it at a place within the state in which the action is brought and not
elsewhere (St. Clair v. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct. 354). 5
It then concluded that the service of summons effected in Manila or beyond the territorial
boundaries of Japan was null and did not confer jurisdiction upon the Tokyo District Court
over the person of SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this
Court contending that the respondent court erred in holding that SHARP was not a resident
of Japan and that summons on SHARP could only be validly served within the country.
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until the contrary is shown. It is also proper to presume the regularity of the proceedings and
the giving of due notice therein. 6 Ministry (now Department) of Foreign Affairs of the Philippines, then to the executive Judge
Under Section 50, Rule 39 of the rules of court, a judgment in an action in personam of a
tribunal of a foreign country having jurisdiction to pronounce the same is presumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent
title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of
Rule 131, a court, whether of the Philippines or elsewhere, enjoins the presumption that it
was acting in the lawful exercise of jurisdiction and has regularly performed its official
duty.chanroblesvirtuallawlibrary
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity. 7 Being the party challenging the judgment rendered by the
Japanese court, SHARP had the duty to demonstrate the invalidity of such judgment. In
attempt to discharge that burden, it contends that the extraterritorial was not only
ineffectual but also void, and the Japanese Court did not, therefore, acquire jurisdiction over
it.
It is settled that matters of remedy and procedure such as those relating to the service of
process upon a defendant are governed by the lex forti or the internal law of the forum. 8 In
this case, it is the procedural law of Japan where the judgment was rendered that
determines the validity of the extraterritorial service of process on SHARP. As to what this
law is a question of fact, not of law. It may not be taken judicial notice of and must be
pleaded and proved like any other fact. 9 Sections 24 and 25, rule 132 of the Rules of Court
provide that it may be evidenced by an official publication or by a duly attested or
authenticated copy thereof. It was then incumbent upon SHARP to present evidence as to
what that Japanese procedural law is and to show that under it, the assailed extraterritorial
service is invalid. It did not. Accordingly, the presumption of validity and regularity of the
service of summons and the decision thereafter rendered by the Japanese court must stand.
Alternatively, in the light of the absence of proof regarding Japanese law, the presumption of
identity or similarity or the so-called processual presumption 10 may be invoked. applying it,
the Japanese law on the matter is presumed to be similar with the Philippine law on service
of summons on a private foreign corporation doing business in the Philippines. Section 14,
Rule 14 of the rules of Court provides that if the defendant is a foreign corporation doing
business in the Philippines, service may be made: (1) on its resident agent designated in
accordance with law for that purpose, or, (2) if there is no such resident agent, on the
government official designated by law to that effect, or (3) on any of its officers or agents
within the Philippines.chanroblesvirtuallawlibrary
If the foreign corporation has designated an agent to receive summons, the designation is
exclusive, and service of summons is without force and gives the court no jurisdiction unless
made upon him. 11
Where the corporation has no such agent, service shall be made on the government official
designated by law, to wit: (a) the Insurance Commissioner, in the case of a foreign insurance
company; (b) the Superintendent of Banks, in the case of a foreign banking corporation; and
(c) the Securities and Exchange Commission, in the case of other foreign corporations duly
licensed to do business in the Philippines. whenever service of process is so made, the
government office or official served shall transmit by mail a copy of the summons or other
legal process to the corporation at its home or principal office. The sending of such copy is a
necessary part of the service. 12
SHARP contends that the laws authorizing service of process upon the Securities and
Exchange commission, the Superintendent of Banks, and the Insurance Commissioner, as the
case may be, presuppose a situation wherein the foreign corporation doing business in the
country no longer has any branches or offices within the Philippines. Such contention is
belied by the pertinent provisions of the said laws. Thus, Section 128 of the Corporation code
13 and Section 190 of the Insurance Code 14 clearly contemplate two situations: (1) if the
corporation had left the Philippines or had ceased to transact business therein, and (2) if the
corporation has no designated agent. Section 17 of the General Banking Act 15 does not
speak of a corporation which had ceased to transact business in the Philippines.
Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to
receive court processes in Japan. This silence could only mean, or at least create an
impression, that it had none. Hence, service on the designated government official or on any
of SHARP’s officers or agents in Japan could be availed of. The respondent, however, insists
that only service on any of its officers or employees in its branches in Japan could be
resorted to. We do not agree. As found by the respondent court, two attempts at service
were made at SHARP’s Yokohoma branch. Both were unsuccessful. On the first attempt, Mr.
Dinozo, who was believed to be the person authorized to accept court process, was in
Manila. On the second, Mr. Dinozo was present, but he refused to accept the summons
because, according to him, he was no longer an employee of SHARP. While it may be true
that service could have been made upon any of the officers or agents of SHARP at its three
other branches in Japan, the availability of such a recourse would not preclude service upon
the proper government official, as stated above.chanroblesvirtuallawlibrary
As found by the Court of Appeals, it was the Tokyo District Court which ordered that
summons for SHARP be served at its head office in the Philippines after the two attempts of
service had failed. 16 The Tokyo District Court requested the Supreme Court of Japan to
cause the delivery of the summons and other legal documents to the Philippines. Acting on
that request, the Supreme Court of Japan sent the summons together with the other legal
documents to the Ministry of Foreign Affairs of Japan which, in turn forwarded the same to
the Japanese Embassy in Manila. Thereafter, the court processes were delivered to the
of the Court of First Instance (now Regional Trial Court) of Manila, who forthwith ordered
Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila.
This service is equivalent to service on the proper government official under Section 14, Rule
14 of the Rules of Court, in relation to Section 128 of the Corporation Code. Hence, SHARP’s
contention that such manner of service is not valid under Philippine laws holds no water. 17
In deciding against the petitioner, the respondent court sustained the trial court’s reliance on
Boudard v. Tait 18 where this Court held:jgc:chanrobles.com.ph
"The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a
money judgment, must be based upon personal service within the state which renders the
judgment."cralaw virtua1aw library
x x x
"The process of a court has no extraterritorial effect, and no jurisdiction is acquired over the
person of the defendant by serving him beyond the boundaries of the state. Nor has a
judgment of a court of a foreign country against a resident of this country having no property
in such foreign country based on process served here, any effect here against either the
defendant personally or his property situated here."cralaw virtua1aw library
"Process issuing from the courts of one state or country cannot run into another, and
although a nonresident defendant may have been personally served with such process in the
state or country of his domicile, it will not give such jurisdiction as to authorize a personal
judgment against him." chanroblesvirtuallawlibrary
It further availed of the ruling in Magdalena Estate, Inc. v. Nieto 19 and Dial Corp. v. Soriano,
20 as well as the principle laid down by the Iowa Supreme Court in the 1911 case of Raher v.
Raher. 21
The first three cases are, however, inapplicable. Boudard involved the enforcement of a
judgment of the civil division of the Court of First Instance of Hanoi, French Indo-China. The
trial court dismissed the case because the Hanoi court never acquired jurisdiction over the
person of the defendant considering that" [t]he evidence adduced at the trial conclusively
proves that neither the appellee [the defendant] nor his agent or employees were ever in
Hanoi, French Indo-China; and that the deceased Marie Theodore Jerome Boudard had
never, at any time, been his employee." In Magdalena Estate, what was declared invalid
resulting in the failure of the court to acquire jurisdiction over the person of the defendants
in an action in personam was the service of summons through publication against non-
appearing resident defendants. It was claimed that the latter concealed themselves to avoid
personal service of summons upon them. In Dial, the defendants were foreign corporations
which were not domiciled and licensed to engage in business in the Philippines and which did
not have officers or agents, places of business, or properties here. On the other hand, in the
instant case, SHARP was doing business in Japan and was maintaining four branches therein.
Insofar as the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court
of a territory to render a personal judgment against anyone upon service made outside its
limits was applicable alike to cases of residents and non-residents. The principle was put at
rest by the United States Supreme Court when it ruled in the 1940 case of Milliken v. Meyer
22 that domicile in the state is alone sufficient to bring an absent defendant within the reach
of the state’s jurisdiction for purposes of a personal judgment by means of appropriate
substituted service or personal service without the state. This principle is embodied in
Section 18, Rule 14 of the Rules of Court which allows service of summons on residents
temporarily out of the Philippines to be made out of the country. The rationale for this rule
was explained in Milliken as follows:chanroblesvirtuallawlibrary
[T]he authority of a state over one of its citizens is not terminated by the mere fact of his
absence from the state. The state which accords him privileges and affords protection to him
and his property by virtue of his domicile may also exact reciprocal duties. "Enjoyment of the
privileges of residence within the state, and the attendant right to invoke the protection of
its laws, are inseparable" from the various incidences of state citizenship. The responsibilities
of that citizenship arise out of the relationship to the state which domicile creates. That
relationship is not dissolved by mere absence from the state. The attendant duties, like the
rights and privileges incident to domicile, are not dependent on continuous presence in the
state. One such incident of domicile is amenability to suit within the state even during
sojourns without the state, where the state has provided and employed a reasonable
method for apprising such an absent party of the proceedings against him. 23
The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict
technical sense, such domicile as a corporation may have is single in its essence and a
corporation can have only one domicile which is the state of its creation.25cralaw:red
Nonetheless, a corporation formed in one state may, for certain purposes, be regarded a
resident in another state in which it has offices and transacts business. This is the rule in our
jurisdiction and apropos thereto, it may be necessary to quote what we stated in State
Investment House, Inc. v. Citibank, N.A., 26 to wit:chanrob1es virtual 1aw library
The issue whether these Philippine branches or units may be considered "residents of the
Philippine Islands" as that term is used in Section 20 of the Insolvency Law . . . or residents of
the state under the laws of which they were respectively incorporated. The answer cannot
be found in the Insolvency Law itself, which contains no definition of the term, resident, or
any clear indication of its meaning. There are however other statutes, albeit of subsequent
enactment and effectivity, from which enlightening notions of the term may be
derived.chanroblesvirtuallawlibrary
The National Internal Revenue Code declares that the term" ‘resident foreign corporation’
applies to a foreign corporation engaged in trade or business within the Philippines," as
distinguished from a" ‘non-resident foreign corporation’ . . . (which is one) not engaged in
trade or business within the Philippines." [Sec. 20, pars. (h) and (i)].
The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries,
affiliation, extension offices or any other units of corporation or juridical person organized
under the laws of any foreign country operating in the Philippines shall be considered
residents of the Philippines." [Sec. 1 (e)].
The General Banking Act, Republic Act No. 337, places "branches and agencies in the
Philippines of foreign banks . . . (which are) called Philippine branches, in the same category
as "commercial banks, savings associations, mortgage banks, development banks, rural
banks, stock savings and loan associations" (which have been formed and organized under
Philippine laws), making no distinction between the former and the latter in so far as the
terms "banking institutions" and "bank" are used in the Act [Sec. 2], declaring on the
contrary that in "all matters not specifically covered by special provisions applicable only to
foreign banks, or their branches and agencies in the Philippines, said foreign banks or their
branches and agencies in the Philippines, said foreign banks or their branches and agencies
lawfully doing business in the Philippines "shall be bound by all laws, rules and regulations
applicable to domestic banking corporations of the same class, except such laws, rules and
regulations as provided for the creation, formation, organization, or dissolution of
corporations or as fix the relation, liabilities, responsibilities, or duties of members,
stockholders or offices of corporation." [Sec. 18].chanroblesvirtuallawlibrary
This Court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. v. Philippine
Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing business in the
Philippines, which is a defendant in a civil suit, may not be considered a non-resident within
the scope of the legal provision authorizing attachment against a defendant not residing in
the Philippine Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil
Procedure; Sec. 1 (f), Rule 59 of the Rules of 1940; Sec. 1(f), Rule 57, rules of 1964] in other
words, a preliminary attachment may not be applied for and granted solely on the asserted
fact that the defendant is a foreign corporation authorized to do business in the Philippines
— and is consequently and necessarily, "a party who resides out of the Philippines."
Parenthetically, if it may no be considered as a party who resides out of the country , then
logically, it must be considered a party who does reside in the Philippines, who is a resident
of the country. Be this as it may, this Court pointed out that:jgc:chanrobles.com.ph
". . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations, duly
licensed to do business here, to the status of domestic corporations. (Cf. Section 73, Act No.
1459, and Marshall Wells Co. v. henry W. Elser & Co., 46 Phil. 70, 76; Yu Cong Eng v. Trinidad,
47 Phil. 385, 411) We think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, and subject its property to
the harsh writ of seizure by attachment when it has complied not only with every
requirement of law made specially of foreign corporations, but in addition with every
requirement of law made of domestic corporations. . . ."cralaw virtua1aw library
Obviously, the assimilation of foreign corporations authorized to do business in the
Philippines "to the status of domestic corporations," subsumes their being found and
operating as corporations, hence, residing, in the country.chanroblesvirtuallawlibrary
The same principle is recognized in American law: that the "residence of a corporation, if it
can be said to have a residence, is necessarily where it exercises corporate functions . . .;"
that it is considered as dwelling "in the place where its business is done . . ." as being
"located where its franchises are exercised . . .," and as being "present where it is engaged in
the prosecution of the corporate enterprise;" that a "foreign corporation licensed to do
business in a state is a resident of any country where it maintains an office or agent for
transaction of its usual and customary business for venue purposes;" and that the "necessary
element in its signification is locality of existence." [Words and Phrases, Permanent Ed., vol.
37, pp. 394, 412, 403].
Inasmuch as SHARP was admittedly doing business in Japan through its four duly registered
branches at the time the collection suit against it was filed, then in the light of the processual
presumption, SHARP may be deemed a resident of Japan, and, as such, was amenable to the
jurisdiction of the courts therein and may be deemed to have assented to the said courts’
lawful methods of serving process. 27
Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid
not only under the processual presumption but also because of the presumption of
regularity of performance of official duty.
We find NORTHWEST’s claim for attorney’s fees, litigation expenses, and exemplary damages
to be without merit. We find no evidence that would justify an award for attorney’s fees and
litigation expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for
exemplary damages warranted. Under Article 2234 of the Civil Code, before the court may
consider the question of whether or not exemplary damages should be awarded, the plaintiff
must show that he is entitled to moral, temperate, or compensatory damages. There being
no such proof presented by NORTHWEST, no exemplary damages may be adjudged in its
favor.chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST’s claims for attorney’s fees, litigation expenses,
and exemplary damages but REVERSED insofar as it sustained the trial court’s dismissal of
NORTHWEST’s complaint in Civil Case No. 83-17637 of Branch 54 of the Regional Trial Court
of Manila, and another in its stead is hereby rendered ORDERING private respondent C.F.
SHARP & COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign
judgment subject of said case, with interest thereon at the legal rate from the filing of the
complaint therein until the said foreign judgment is fully satisfied.
Costs against the private Respondent.
SO ORDERED.
Padilla, Bellosillo, Quiason and Kapunan, JJ., concur.
FIRST DIVISION
[G.R. No. L-57338. July 23, 1987.]
WILLIAM B. BORTHWICK, Petitioner, v. HON. FLORELIANA CASTRO-BARTOLOME, Presiding
Judge, Br. XV, Makati, of the Court of First Instance of Rizal; JOSEPH E. SCALLON, and
JEWELL C. SCALLON, Respondents.
SYLLABUS
1. REMEDIAL LAW; EFFECT OF FOREIGN JUDGMENT; JUDGMENT IS PRESUMPTIVE EVIDENCE the Defendant WILLIAM B. BORTHWICK is indebted to said Plaintiff in the sum of
OF A RIGHT BETWEEN PARTIES. — It is true that a foreign judgment against a person is $104,817.48.
merely "presumptive evidence of a right as between the parties," and rejection thereof may
be justified, among others, by "evidence of a want of jurisdiction" of the issuing authority, "IT IS HEREBY ORDERED, ADJUDGED, and decreed that Plaintiff JOSEPH E. SCALLON recover
under Rule 39 of the Rules of Court. In the case at bar, the jurisdiction of the Circuit Court of from Defendant WILLIAM B. BORTHWICK the sum of $104,817.48 together with.
Hawaii hinged entirely on the existence of either of two facts in accordance with its State
laws, i.e., either Borthwick owned real property in Hawaii, or the promissory notes sued "(1) The transaction of any business within the State;
upon resulted from his business transactions therein. Scallon’s complaint clearly alleged both
facts. Borthwick was accorded opportunity to answer the complaint and impugn those facts, x x x
but he failed to appear and was in consequence declared in default. There thus exists no
evidence in the record of the Hawaii case upon which to lay a conclusion of lack of
jurisdiction. The opportunity to negate the foreign court’s competence by proving the non-
"(3) The ownership, use or possession of any real estate situated in this State;
existence of said jurisdictional facts established in the original action, was again afforded to
Borthwick in the Court of First Instance of Makati, where enforcement of the Hawaii
judgment was sought. This time it was the summons of the domestic court which Borthwick x x x
chose to ignore, but with the same result: he was declared in default. And in the default
judgment subsequently promulgated, the Court a quo decreed enforcement of the judgment
affirming among others the jurisdictional facts, that Borthwick owned real property in Hawaii (b) Service of process upon any person who is subject to the jurisprudence of the courts of
and transacted business therein. It is plain that what Borthwick seeks in essence is one more this State, as provided in this section, may be made as provided by sections 634-36, if he
opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the merits of the cannot be found in the State, with the same force and effect as though summons had been
cause of action which that Court had adjudged to have been established against him. This he personally served within this State.
may obtain only if he succeed in showing that the declaration of his default was incorrect. He
has unfortunately not been able to do that; hence, the verdict must go against him. " [§634-36] Manner of service under sections 634-33 to 35.

2. ID.; EVIDENCE; FINDINGS OF FACT OF THE TRIAL COURT UPHELD ON APPEAL. — It is not When service of summons is provided for by sections 634-33, 634-34, or 634-35, service shall
for this Court to disturb the express finding of the Court of First Instance that Daniel was be made by leaving a certified copy thereof with the director of regulatory agencies or his
Borthwick’s resident domestic houseboy, and of sufficient age and discretion to accept deputy, . . . provided that notice of the service and a certified copy of the summons are
substituted service of summons for Borthwick. In any case, a review of the records shows served upon the defendant personally by any person authorized to serve process in the place
that the Trial Court was correct in refusing to believe Borthwick’s representation that "Daniel which he may be found or appointed by the court for that purpose, or sent by certified or
gardens at the residence of Borthwick, then goes home to La Union after gardening registered mail . . . The service shall be deemed complete upon delivery of the required
itinerantly." As said Court observed, that situation is "ridiculous," it being "queer and hardly papers to the defendant outside the State, personally or by mail as provided;" Rollo, pp. 143-
coincidental why on all papers served on the defendant, it was Fred Daniel who signed and 144.
acknowledged receipt." There was therefore no error committed by the Trial Court when it
denied Borthwick’s motion to lift the order of default (which is what the motion for new trial interest in the sum of $41,807.93, costs of Court in the sum of $37.00 and attorney’s fees in
actually is) because Borthwick had failed to establish any proper ground therefor. the sum of $4,290.64 for a total sum of $150,963.05.

3. ID.; CIVIL PROCEDURE; APPEAL FROM A DECISION OF THE COURT OF FIRST INSTANCE TO DATED: Honolulu, Hawaii, APR. 30, 1987.
THE SUPREME COURT; MAY RAISE ONLY QUESTION OF LAW. — Under Rule 42 of the Rules of
Court, a party appealing from the Courts of First Instance (now the Regional Trial Courts) to "(Sgd.)
the Supreme Court may "raise only questions of law, (and) no other question . . .," and is
thus precluded from impugning the factual findings of the trial court, being deemed to have V. CHING
admitted the correctness of such findings and waived his right to open them to question.
Clerk of the above-entitled Court" 7

However, Scallon’s attempts to have the judgment executed in Hawaii and California failed,
DECISION because no assets of Borthwick could be found in those states. 8 Scallon and his wife, Jewell,
then came to the Philippines and on March 15, 1980 brought suit against Borthwick in the
Court of First Instance of Makati, 9 seeking enforcement of the default judgment of the
NARVASA, J.: Hawaii Court and asserting two other alternative causes of action. 10

By action commenced in the Circuit Court of the First Circuit, State of Hawaii, U.S.A., 1 Joseph
E. Scallon sought to compel payment by William B. Borthwick on four (4) promissory notes 2
in the amounts of $32,408.95, $29,584.94, $2,832.59 and $40,000.00, plus stipulated
interest. Scallon’s complaint alleged, inter alia that Borthwick, an American citizen living in
the Philippines, owned real property interests in Hawaii where he last resided and transacted
business therein; that business dealings which transpired in Honolulu, Hawaii had given rise
to the promissory notes sued upon, and Borthwick had failed to pay the sums thereunder
owing upon maturity and despite demand. 3 Attached to the complaint were the promissory
notes, which although uniformly specifying the city of Palos Verdes, Los Angeles, California as
the place of payment, also provided that — "WHEREFORE, judgment is hereby rendered as follows:chanrob1es virtual 1aw library
The sheriff’s initial efforts to serve summons on Borthwick personally at his address at 861
Richmond St., Greenhills, Mandaluyong, Metro Manila having been unsuccessful —
Borthwick was "always out on official business" — the sheriff effected substituted service by
leaving a copy of the summons and the complaint with Borthwick’s "house caretaker," a man
named Fred Daniel. 11
Borthwick filed no answer to the Scallons’ complaint. He was declared in default. After due
proceedings judgment by default was rendered against him, the dispositive portion of which
reads:chanroblesvirtualawlibrary

"in the event that payment . . . shall not have been made in full on or before the maturity 1. The decision of the Court of Hawaii in Civil Case No. 56660 reading:chanrob1es virtual 1aw
date . . . at . . . (such) place . . ., payee may select, at his option, Manila, Philippines, or library
Honolulu, Hawaii as additional places for payment . . . and . . . any court in any of said places
having jurisdiction over the subject matter shall be a proper Court for the trial of any action ‘IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff JOSEPH E. SCALLON recover
brought to enforce payment of this note and the law of the place in which said action is from Defendant WILLIAM B. BORTHWICK the sum of $104,817.48 together with interest in
brought shall apply." 4 the sum of $41,807.93, costs of Court in the sum of $37.00 and attorney’s fees in the sum of
$4,290.64 for a total sum of $160,53.05.’
Borthwick being then in Monterey, California, summons 5 was served upon him personally in
that place, pursuant to Hawaiian law allowing service of process on a person outside the may be, as it is hereby ordered, enforced in the Philippines.
territorial confines of the State, if he had otherwise submitted himself to the jurisdiction of
its courts as to causes of action arising from, among others, the act of transacting any 2. The second alternative cause of action in the event that the satisfaction of the said
business within Hawaii 6 — alleged to consist as to Borthwick in the negotiation and dealings judgment becomes impossible, the rescission of the agreement (Exh. L) of the parties is
regarding the promissory notes. Borthwick ignored the summons. Default was entered hereby granted. Defendant Borthwick is hereby ordered:jgc:chanrobles.com.ph
against him, and in due course a default judgment was rendered as
follows:jgc:chanrobles.com.ph "(a) To return and deliver to plaintiffs Joseph and Jewell Scallon their 800 shares of stock of
Manila Memorial Park Cemetery, Inc. and 180 shares of stock of Trans-Pacific Development
"DEFAULT JUDGMENT Management Corporation, together with any and or all stock dividends, cash dividends and
similar corporate distributions accruing to said shares of stock from and after December 3,
"That Defendant WILLIAM B. BORTHWICK having failed to plead or otherwise defend in the 1973 (the date of the Agreement, Exh. L);
above-entitled action and his default having been duly entered herein;
"(b) In the event that such shares cannot be returned and delivered, to pay to plaintiff
"Now, upon the application of the Plaintiff JOSEPH E. SCALLON and upon the affidavit that Scallon the value of the same from the execution of the agreement, Exh. L, together with any
increase in value from the said date to the `finality of this judgment. Borthwick had failed to establish any proper ground therefor.

"SO ORDERED. 12 WHEREFORE, the petition for review is denied, with costs against petitioner.

Again, it was with Fred Daniel, identifying himself as Borthwick’s "houseboy," that a copy of
the decision was left. 13
No response from Borthwick was forthcoming until after the Court subsequently amended
its judgment so as to make the sums due under the Hawaii Court decision payable in their
equivalent in Philippine currency. 14 Notice of this amendatory order was somehow
personally accepted by Borthwick at this time. Borthwick then moved for a new trial,
claiming that it was by accident, mistake and excusable negligence that his "off and on
itinerant gardener," Daniel, failed to transmit the summons to him, which omission
consequently prevented Borthwick from knowing of the judicial proceedings against him.,
Alleging too that "the promissory notes did not arise from business dealings in Hawaii," nor
"did (he) own real estate" therein, 15 Borthwick contended that the judgment sought to be
enforced was invalid for want of jurisdiction of the Hawaii Court over the cause of action and
over his person.chanrobles virtual lawlibrary
The motion for new trial was denied by the Trial Court upon the factual finding that "Fred
Daniel is a responsible person" "of suitable age and discretion" "resident of the address . . .
(of the) defendant" on whom substituted service of summons had been duly made. 16 As to
Borthwick’s attack on the validity of the foreign judgment, the Trial Court ruled that "under
the . . . (Hawaii Revised Statute) cited by the defendant the Hawaii Court has jurisdiction"
because the factual premises upon which the exercise of such jurisdiction was based "had
not been refuted by the defendant" although he "appears to be a lawyer, and the summons
in the Hawaii case was served personally on him." 17 Finally, the Trial Court disposed of
Borthwick’s other defenses 18 saying that the present action "is (for) the enforcement of a
foreign judgment" where the validity of his defenses to the original action is immaterial. 19
Borthwick proceeded directly to this Court and filed a petition for review, 20 raising issues of
law, framed as follows:jgc:chanrobles.com.ph
SO ORDERED.
Teehankee, C.J., Cruz, Paras and Gancayco, JJ., concur.
THIRD DIVISION
[G.R. No. 137378. October 12, 2000.]
PHILIPPINE ALUMINUM WHEELS, INC., Petitioner, v. FASGI ENTERPRISES, INC., Respondent.
DECISION
VITUG, J.:
On 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a corporation organized and
existing under and by virtue of the laws of the State of California, United States of America,
entered into a distributorship arrangement with Philippine Aluminum Wheels, Incorporated
("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an Italian
corporation. The agreement provided for the purchase, importation and distributorship in
the United States of aluminum wheels manufactured by PAWI. Pursuant to the contract,
PAWI shipped to FASGI a total of eight thousand five hundred ninety four (8,594) wheels,
with an FOB value of US$216,444.30 at the time of shipment, the first batch arriving in two
containers and the second in three containers. Thereabouts, FASGI paid PAWI the FOB value
of the wheels. Unfortunately, FASGI later found the shipment to be defective and in non-
compliance with stated requirements, viz;chanrob1es virtua1 1aw 1ibrary

"1. Is a foreign judgment against a person rendered without jurisdiction over the cause of "A. contrary to the terms of the Distributorship Agreement and in violation of U.S. law, the
action and without proper summons to the defendant enforceable in the Philippines? country of origin (the Philippines) was not stamped on the wheels;

"2. Has the respondent Judge acquired jurisdiction over the person of defendant when "B. the wheels did not have weight load limits stamped on them as required to avoid
summons was served on an itinerant gardener who did not reside in defendant’s house? mounting on excessively heavy vehicles, resulting in risk of damage or bodily injury to
consumers arising from possible shattering of the wheels;
"3. Where a motion for new trial was filed on time, duly supported with affidavits to prove
the grounds relied upon, should not the Court grant the same? 21 "C many of the wheels did not have an indication as to which models of automobile they
would fit;
It is true that a foreign judgment against a person is merely "presumptive evidence of a right
as between the parties," and rejection thereof may be justified, among others, by "evidence "D. many of the wheels did not fit the model automobiles for which they were purportedly
of a want of jurisdiction" of the issuing authority, under Rule 39 of the Rules of Court. 22 In designed;
the case at bar, the jurisdiction of the Circuit Court of Hawaii hinged entirely on the existence
of either of two facts in accordance with its State laws, i.e., either Borthwick owned real "E. some of the wheels did not fit any model automobile in use in the United States;
property in Hawaii, or the promissory notes sued upon resulted from his business
transactions therein. Scallon’s complaint clearly alleged both facts. Borthwick was accorded "F. most of the boxes in which the wheels were packed indicated that the wheels were
opportunity to answer the complaint and impugn those facts, but he failed to appear and approved by the Specialty Equipment Manufacturer’s Association (hereafter, SEMA’); in fact
was in consequence declared in default. There thus exists no evidence in the record of the no SEMA approval has been obtained and this indication was therefore false and could result
Hawaii case upon which to lay a conclusion of lack of jurisdiction, as Borthwick now urges. in fraud upon retail customers purchasing the wheels." 1

The opportunity to negate the foreign court’s competence by proving the non-existence of On 21 September 1979, FASGI instituted an action against PAWI and FPS for breach of
said jurisdictional facts established in the original action, was again afforded to Borthwick in contract and recovery of damages in the amount of US$2,316,591.00 before the United
the Court of First Instance of Makati, where enforcement of the Hawaii judgment was States District Court for the Central District of California. In January 1980, during the
sought. This time it was the summons of the domestic court which Borthwick chose to pendency of the case, the parties entered into a settlement, entitled "Transaction" with the
ignore, but with the same result: he was declared in default. And in the default judgment corresponding Italian translation "Convenzione Transsativa," where it was stipulated that FPS
subsequently promulgated, the Court a quo decreed enforcement of the judgment affirming and PAWI would accept the return of not less than 8,100 wheels after restoring to FASGI the
among others the jurisdictional facts, that Borthwick owned real property in Hawaii and purchase price of US$268,750.00 via four (4) irrevocable letters of credit ("LC"). The
transacted business therein.cralawnad rescission of the contract of distributorship was to be effected within the period starting
January up until April 1980. 2
In the light of these antecedents, it is plain that what Borthwick seeks in essence is one more
opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the merits of the In a telex message, dated 02 March 1980, PAWI president Romeo Rojas expressed the
cause of action which that Court had adjudged to have been established against him. This he company’s inability to comply with the foregoing agreement and proposed a revised
may obtain only if he succeed in showing that the declaration of his default was incorrect. He schedule of payment. The message, in part read:jgc:chanrobles.com.ph
has unfortunately not been able to do that; hence, the verdict must go against him.
"We are most anxious in fulfilling all our obligations under compromise agreement executed
It is not for this Court to disturb the express finding of the Court of First Instance that Daniel by our Mr. Giancarlo Dallera and your Van Curen. We have tried our best to comply with our
was Borthwick’s resident domestic houseboy, and of sufficient age and discretion to accept commitments, however, because of the situation as mentioned in the foregoing and
substituted service of summons for Borthwick. Under Rule 42 of the Rules of Court, a party currency regulations and restrictions imposed by our government on the outflow of foreign
appealing from the Courts of First Instance (now the Regional Trial Courts) to the Supreme currency from our country, we are constrained to request for a revised schedule of shipment
Court may "raise only questions of law (and) no other question . . .," 23 and is thus precluded and opening of LCS.
from impugning the factual findings of the trial court, being deemed to have admitted the
correctness of such findings 24 and waived his right to open them to question.25cralaw:red "After consulting with our bank and government monetary agencies and on the assumption
that we submit the required pro-forma invoices we can open the letters of credit in your
In any case, a review of the records shows that the Trial Court was correct in refusing to favor under the following schedule:jgc:chanrobles.com.ph
believe Borthwick’s representation that "Daniel gardens at the residence of Borthwick, then
goes home to La Union after gardening itinerantly." As said Court observed, that situation is "A) First L/C — it will be issued in April 1980 payable 90 days thereafter
"ridiculous," it being "queer and hardly coincidental why on all papers served on the
defendant, it was Fred Daniel who signed and acknowledged receipt." 26 "B) Second L/C — it will be issued in June 1980 payable 90 days thereafter

There was therefore no error committed by the Trial Court when it denied Borthwick’s "C) Third L/C — it will be issued in August 1980 payable 90 days thereafter
motion to lift the order of default (which is what the motion for new trial actually is) because

"D) Fourth L/C — it will be issued in November 1980 payable 90 days thereafter
"We understand your situation regarding the lease of your warehouse. For this reason, we
are willing to defray the extra storage charges resulting from this new schedule. If you
cannot renew the lease [of] your present warehouse, perhaps you can arrange to transfer to
another warehouse and storage charges transfer thereon will be for our account. We hope
you understand our position. The delay and the revised schedules were caused by
circumstances totally beyond our control." 3 the full amount thereof, less credit for any payments made by Sellers pursuant to this
On 21 April 1980, again through a telex message, PAWI informed FASGI that it was
impossible to open a letter of credit on or before April 1980 but assured that it would do its
best to comply with the suggested schedule of payments. 4 In its telex reply of 29 April 1980,
FASGI insisted that PAWI should meet the terms of the proposed schedule of payments,
specifically its undertaking to open the first LC within April of 1980, and that "If the letter of
credit is not opened by April 30, 1980, then . . . [it would] immediately take all necessary
legal action to protect [its] position."
Despite its assurances, and FASGI’s insistence, PAWI failed to open the first LC in April 1980
allegedly due to Central Bank "inquiries and restrictions," prompting FASGI to pursue its
complaint for damages against PAWI before the California district court. Pre-trial conference
was held on 24 November 1980. In the interim, the parties, realizing the protracted process
of litigation, resolved to enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the covenant provided that
FASGI would deliver to PAWI a container of wheels for every LC opened and paid by
PAWI:jgc:chanrobles.com.ph
"3. Agreement
"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand, Seven Hundred Fifty and
00/100 Dollars ($268,750.00), plus interest and storage costs as described below. Sellers
shall pay such amount by delivering to FASGI the following four (4) irrevocable letters of
credit, confirmed by Crocker Bank, Main Branch, Fresno, California, as set forth
below:jgc:chanrobles.com.ph
"(i) on or before June 30, 1980, a documentary letter of credit in the amount of (a) Sixty-Five
Thousand, Three Hundred Sixty-nine and 00/100 Dollars ($65,369.00), (b) plus interest on
that amount at the annual rate of 16.25% from January 1, 1980 until July 31, 1980, (c) plus
Two Thousand Nine Hundred Forty Dollars and 00/100 ($2,940.00) and (d) with interest on
that sum at the annual rate of 16.25% from May 1, 1980 to July 31, 1980, payable on or after
August 31, 1980;
"(ii) on or before September 1, 1980, a documentary letter of credit in the amount of (a)
Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,940.00),
plus (c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in
effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until
December 21, 1980, and on the amount set forth in (b) from May 1, 1980 until December 21,
1980, payable ninety days after the date of the bill of lading under the letter of credit;
"(iii) on or before November 1, 1980, a documentary letter of credit in the amount of (a)
Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,490.00),
plus (c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in
effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until
February 21, 1981, and on the amount set forth in (b) from May 1, 1980 until February 21,
1981, payable ninety days after the date of the bill of lading under the letter of credit;
"(iv) on or before January 1, 1981, a documentary letter of credit in the amount of (a) Sixty-
Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67)
plus (b) Five Thousand, Eight Hundred Eighty and 00/100 Dollars ($5,880.00), plus (c) interest
at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in effect from time
to time, plus two percent on the amount in (a) from January 1, 1980 until April 21, 1981, and
on the amount set forth in (b) from May 1, 1980 until April 21, 1981, payable ninety days
after the date of the bill of lading under the letter of credit." 6
Anent the wheels still in the custody of FASGI, the supplemental settlement agreement
provided that —chanrob1es virtua1 1aw 1ibrary
"3.4 (a) Upon execution of this Supplemental Settlement Agreement, the obligations of
FASGI to store or maintain the Containers and Wheels shall be limited to (i) storing the
Wheels and Containers in their present warehouse location and (ii) maintaining in effect
FASGI’s current insurance in favor of FASGI, insuring against usual commercial risks for such
storage in the principal amount of the Letters of Credit described in Paragraph 3.1. FASGI
shall bear no liability, responsibility or risk for uninsurable risks or casualties to the
Containers or Wheels.
"x x x
"(e) From and after February 28, 1981, unless delivery of the Letters of Credit are delayed
past such date pursuant to the penultimate Paragraph 3.1, in which case from and after such
later date, FASGI shall have no obligation to maintain, store or deliver any of the Containers
or Wheels." 7 Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a
The deal allowed FASGI to enter before the California court the foregoing stipulations in the
event of the failure of PAWI to make good the scheduled payments; thus —
"3.5 Concurrently with execution and delivery hereof, the parties have executed and
delivered a Mutual Release (the ‘Mutual Release’), and a Stipulation for Judgment (the
‘Stipulation for Judgment’) with respect to the Action. In the event of breach of this
Supplemental Settlement Agreement by Sellers, FASGI shall have the right to apply
immediately to the Court for entry of Judgment pursuant to the Stipulation for Judgment in
Supplemental Settlement Agreement. FASGI shall have the right thereafter to enforce the
Judgment against PAWI and FPS in the United States and in any other country where assets
of FPS or PAWI may be located, and FPS and PAWI hereby waive all defenses in any such
country to execution or enforcement of the Judgment by FASGI. Specifically, FPS and PAWI
each consent to the jurisdiction of the Italian and Philippine courts in any action brought by
FASGI to seek a judgment in those countries based upon a Judgment against FPS or PAWI in
the Action." 8
5
In accordance with the aforementioned paragraph 3.5 of the agreement, the parties made
the following stipulation before the California court:jgc:chanrobles.com.ph
"The undersigned parties hereto, having entered into a Supplemental Settlement Agreement
in this action,
"IT IS HEREBY STIPULATED by and between plaintiff FASGI Enterprises, Inc. (’FASGI’) and
defendants Philippine Aluminum Wheels, Inc., (’PAWI’), and each of them, that judgment
may be entered in favor of plaintiff FASGI and against PAWI, in the amount of Two Hundred
Eighty Three Thousand Four Hundred Eighty And 01/100ths Dollars ($283,480.01).
"Plaintiff FASGI shall also be entitled to its costs of suit, and to reasonable attorneys’ fees as
determined by the Court added to the above judgment amount." 9
The foregoing supplemental settlement agreement, as well as the motion for the entry of
judgment, was executed by FASGI president Elena Buholzer and PAWI counsel Mr. Thomas
Ready.
PAWI, again, proved to be remiss in its obligation under the supplemental settlement
agreement. While it opened the first LC on 19 June 1980, it, however, only paid on it nine (9)
months after, or on 20 March 1981, when the letters of credit by then were supposed to
have all been already posted. This lapse, notwithstanding, FASGI promptly shipped to PAWI
the first container of wheels. Again, despite the delay incurred by PAWI on the second LC,
FASGI readily delivered the second container. Later, PAWI totally defaulted in opening and
paying the third and the fourth LCs, scheduled to be opened on or before, respectively, 01
September 1980 and 01 November 1980, and each to be paid ninety (90) days after the date
of the bill of lading under the LC. As so expressed in their affidavits, FASGI counsel Frank Ker
and FASGI president Elena Buholzer were more inclined to believe that PAWl’s failure to pay
was due not to any restriction by the Central Bank or any other cause than its inability to pay.
These doubts were based on the telex message of PAWI president Romeo Rojas who
attached a copy of a communication from the Central Bank notifying PAWI of the bank’s
approval of PAWI’s request to open LCs to cover payment for the re-importation of the
wheels. The communication having been sent to FASGI before the supplemental settlement
agreement was executed, FASGI speculated that at the time PAWI subsequently entered into
the supplemental settlement agreement, its request to open LCs had already been approved
by the Central Bank. Irked by PAWI’s persistent default, FASGI filed with the US District Court
of the Central District of California the following stipulation for judgment against PAWI.
"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the Courtroom of the
Honorable Laughlin E. Waters of the above court, plaintiff FASGI ENTERPRISES, INC.
(hereinafter ‘FASGI’) will move the Court for entry of Judgment against defendant PHILIPPINE
ALUMINUM WHEELS, INC. (hereinafter ‘PAWI’), pursuant to the Stipulation for Judgment
filed concurrently herewith, executed on behalf of FASGI and PAWI by their respective
attorneys, acting as their authorized agents.
"Judgment will be sought in the total amount of P252,850.60, including principal and interest
accrued through May 17, 1982, plus the sum of $17,500.00 as reasonable attorneys’ fees for
plaintiff in prosecuting this action.
"The Motion will be made under Rule 54 of the Federal Rules of Civil Procedure, pursuant to
and based upon the Stipulation for Judgment, the Supplemental Settlement Agreement filed
herein on or about November 21, 1980, the Memorandum of Points and Authorities and
Affidavits of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed herewith, and upon all
the records, files and pleadings in this action.
"The Motion is made on the grounds that defendant PAWI has breached its obligations as set
forth in the Supplemental Settlement Agreement, and that the Supplemental Settlement
Agreement expressly permits FASGI to enter the Stipulation for Judgment in the event that
PAWI has not performed under the Supplemental Settlement Agreement." 10
On 24 August 1982, FASGI filed a notice of entry of judgment. A certificate of finality of
judgment was issued, on 07 September 1982, by the US District Judge of the District Court
for the Central District of California. PAWI, by this time, was approximately twenty (20)
months in arrears in its obligation under the supplemental settlement agreement.
complaint for "enforcement of foreign judgment" in February 1983, before the Regional Trial
Court, Branch 61, of Makati, Philippines. The Makati court, however, in an order of 11
September 1990, dismissed the case, thereby denying the enforcement of the foreign
judgment within Philippine jurisdiction, on the ground that the decree was tainted with
collusion, fraud, and clear mistake of law and fact. 11 The lower court ruled that the foreign
judgment ignored the reciprocal obligations of the parties. While the assailed foreign
judgment ordered the return by PAWI of the purchase amount, no similar order was made
requiring FASGI to return to PAWI the third and fourth containers of wheels. 12 This
situation, the trial court maintained, amounted to an unjust enrichment on the part of FASGI.
Furthermore, the trial court said, the supplemental settlement agreement and the
subsequent motion for entry of judgment upon which the California court had based its
judgment were a nullity for having been entered into by Mr. Thomas Ready, counsel for
PAWI, without the latter’s authorization.
FASGI appealed the decision of the trial court to the Court of Appeals. In a decision, 13 dated
30 July 1997, the appellate court reversed the decision of the trial court and ordered the full
enforcement of the California judgment.
Hence this appeal.
Generally, in the absence of a special compact, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country; 14 however, the rules of
comity, utility and convenience of nations have established a usage among civilized states by
which final judgments of foreign courts of competent jurisdiction are reciprocally respected
and rendered efficacious under certain conditions that may vary in different countries. 15
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar
as the immediate parties and the underlying cause of action are concerned so long as it is
convincingly shown that there has been an opportunity for a full and fair hearing before a
court of competent jurisdiction; that trial upon regular proceedings has been conducted,
following due citation or voluntary appearance of the defendant and under a system of
jurisprudence likely to secure an impartial administration of justice; and that there is nothing
to indicate either a prejudice in court and in the system of laws under which it is sitting or
fraud in procuring the judgment. 16 A foreign judgment is presumed to be valid and binding
in the country from which it comes, until a contrary showing, on the basis of a presumption
of regularity of proceedings and the giving of due notice in the foreign forum. Rule 39,
section 48 of the Rules of Court of the Philippines provides:chanrob1es virtual 1aw library
Sec. 48. Effect of foreign judgments or final orders — The effect of a judgment or final order
of a tribunal of a foreign country, having jurisdiction to render the judgment or final order is
as follows:chanrob1es virtual 1aw library
x x x separateness between these defendants has ceased, if it ever existed, and defendant FPS is
(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors-in-interest by a
subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
In Soorajmull Nagarmull v. Binalbagan-Isabela Sugar Co. Inc., 17 one of the early Philippine
cases on the enforcement of foreign judgments, this Court has ruled that a judgment for a
sum of money rendered in a foreign court is presumptive evidence of a right between the
parties and their successors in-interest by subsequent title, but when suit for its enforcement
is brought in a Philippine court, such judgment may be repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. In
Northwest Orient Airlines, Inc., v. Court of Appeals, 18 the Court has said that a party
attacking a foreign judgment is tasked with the burden of overcoming its presumptive
validity.chanrob1es virtua1 1aw 1ibrary
PAWI claims that its counsel, Mr. Ready, has acted without its authority. Verily, in this
jurisdiction, it is clear that an attorney cannot, without a client’s authorization, settle the
action or subject matter of the litigation even when he honestly believes that such a
settlement will best serve his client’s interest. 19
In the instant case, the supplemental settlement agreement was signed by the parties,
including Mr. Thomas Ready, on 06 October 1980. The agreement was lodged in the
California case on 26 November 1980 or two (2) days after the pre-trial conference held on
24 November 1980. If Mr. Ready was indeed not authorized by PAWI to enter into the
supplemental settlement agreement, PAWI could have forthwith signified to FASGI a
disclaimer of the settlement. Instead, more than a year after the execution of the
supplemental settlement agreement, particularly on 09 October 1981, PAWI President
Romeo S. Rojas sent a communication to Elena Buholzer of FASGI that failed to mention Mr.
Ready’s supposed lack of authority. On the contrary, the letter confirmed the terms of the
agreement when Mr. Rojas sought forbearance for the impending delay in the opening of the
first letter of credit under the schedule stipulated in the agreement.
It is an accepted rule that when a client, upon becoming aware of the compromise and the
judgment thereon, fails to promptly repudiate the action of his attorney, he will not
afterwards be heard to complain about it. 20
Nor could PAWI claim any prejudice by the settlement. PAWI was spared from possibly
paying FASGI substantial amounts of damages and incurring heavy litigation expenses
normally generated in a full-blown trial. PAWI, under the agreement was afforded time to
reimburse FASGI the price it had paid for the defective wheels. PAWI, should not, after its
opportunity to enjoy the benefits of the agreement, be allowed to later disown the
arrangement when the terms thereof ultimately would prove to operate against its hopeful
expectations.
PAWI assailed not only Mr. Ready’s authority to sign on its behalf the Supplemental
Settlement Agreement but denounced likewise his authority to enter into a stipulation for
judgment before the California court on 06 August 1982 on the ground that it had by then
already terminated the former’s services. For his part, Mr. Ready admitted that while he did
receive a request from Manuel Singson of PAWI to withdraw from the motion of judgment,
the request unfortunately came too late. In an explanatory telex, Mr. Ready told Mr. Singson
that under American Judicial Procedures when a motion for judgment had already been filed
a counsel would not be permitted to withdraw unilaterally without a court order. From the
time the stipulation for judgment was entered into on 26 April 1982 until the certificate of
finality of judgment was issued by the California court on 07 September 1982, no notification
was issued by PAWI to FASGI regarding its termination of Mr. Ready’s services. If PAWI were
indeed hoodwinked by Mr. Ready who purportedly acted in collusion with FASGI, it should
have aptly raised the issue before the forum which issued the judgment in line with the
principle of international comity that a court of another jurisdiction should refrain, as a
matter of propriety and fairness, from so assuming the power of passing judgment on the
correctness of the application of law and the evaluation of the facts of the judgment issued
by another tribunal. 21
Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be
extrinsic, i.e., fraud based on facts not controverted or resolved in the case where judgment
is rendered, 22 or that which would go to the jurisdiction of the court or would deprive the
party against whom judgment is rendered a chance to defend the action to which he has a
meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes to the very
existence of the cause of action – such as fraud in obtaining the consent to a contract – is
deemed already adjudged, and it, therefore, cannot militate against the recognition or
enforcement of the foreign judgment. 23
Even while the US judgment was against both FPS and PAWI, FASGI had every right to seek
enforcement of the judgment solely against PAWI or, for that matter, only against FPS.
FASGI, in its complaint, explained:jgc:chanrobles.com.ph
"17. There exists, and at all times relevant herein there existed, a unity of interest and
ownership between defendant PAWI and defendant FPS, in that they are owned and
controlled by the same shareholders and managers, such that any individuality and
the alter ego of defendant PAWI. The two entities are used interchangeably by their
shareholders and managers, and plaintiff has found it impossible to ascertain with which
entity it is dealing at any one time. Adherence to the fiction of separate existence of these
defendant corporations would permit an abuse of the corporate privilege and would
promote injustice against this plaintiff because assets can easily be shifted between the two
companies thereby frustrating plaintiff’s attempts to collect on any judgment rendered by
this Court." 24
Paragraph 14 of the Supplemental Settlement Agreement fixed the liability of PAWI and FPS
to be "joint and several" or solidary. The enforcement of the judgment against PAWI alone
would not, of course, preclude it from pursuing and recovering whatever contributory
liability FPS might have pursuant to their own agreement.
PAWI would argue that it was incumbent upon FASGI to first return the second and the third
containers of defective wheels before it could be required to return to FASGI the purchase
price therefor, 25 relying on their original agreement (the "Transaction"). 26 Unfortunately,
PAWI defaulted on its covenants thereunder that thereby occasioned the subsequent
execution of the supplemental settlement agreement. This time the parties agreed, under
paragraph 3.4(e) 27 thereof, that any further default by PAWI would release FASGI from any
obligation to maintain, store or deliver the rejected wheels. The supplemental settlement
agreement evidently superseded, at the very least on this point, the previous arrangements
made by the parties.
PAWI cannot, by this petition for review, seek refuge over a business dealing and decision
gone awry. Neither do the courts function to relieve a party from the effects of an unwise or
unfavorable contract freely entered into. As has so aptly been explained by the appellate
court, the over-all picture might, indeed, appear to be onerous to PAWI but it should bear
emphasis that the settlement which has become the basis for the foreign judgment has not
been the start of a business venture but the end of a failed one, and each party, naturally,
has had to negotiate from either position of strength or weakness depending on its own
perception of who might have to bear the blame for the failure and the consequence of loss.
28chanrob1es virtua1 1aw 1ibrary
Altogether, the Court finds no reversible error on the part of the appellate court in its
appealed judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
No costs.
SO ORDERED.

Melo, Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.
SECOND DIVISION
G.R. No. 140288 October 23, 2006
ST. AVIATION SERVICES CO., PTE., LTD., petitioner,
vs.
GRAND INTERNATIONAL AIRWAYS, INC., respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Challenged in the instant Petition for Review on Certiorari are the Decision of the Court of
Appeals dated July 30, 1999 and its Resolution dated September 29, 1999 in CA-G.R. SP No.
51134 setting aside the Orders dated October 30, 1998 and December 16, 1998 of the
Regional Trial Court (RTC), Branch 117, Pasay City in Civil Case No. 98-1389.
St. Aviation Services Co., Pte., Ltd., petitioner, is a foreign corporation based in Singapore. It
is engaged in the manufacture, repair, and maintenance of airplanes and aircrafts. Grand
International Airways, Inc., respondent, is a domestic corporation engaged in airline
operations.
Sometime in January 1996, petitioner and respondent executed an "Agreement for the
Maintenance and Modification of Airbus A 300 B4-103 Aircraft Registration No. RP-C8882"
(First Agreement). Under this stipulation, petitioner agreed to undertake maintenance and
modification works on respondent's aircraft. The parties agreed on the mode and manner of
payment by respondent of the contract price, including interest in case of default. They also
agreed that the "construction, validity and performance thereof" shall be governed by the
laws of Singapore. They further agreed to submit any suit arising from their agreement to the
non-exclusive jurisdiction of the Singapore courts.
At about the same time, or on January 12, 1996, the parties verbally agreed that petitioner
will repair and undertake maintenance works on respondent's other aircraft, Aircraft No. RP-
C8881; and that the works shall be based on a General Terms of Agreement (GTA). The GTA
terms are similar to those of their First Agreement.
Petitioner undertook the contracted works and thereafter promptly delivered the aircrafts to
respondent. During the period from March 1996 to October 1997, petitioner billed
respondent in the total amount of US$303,731.67 or S$452,560.18. But despite petitioner's
repeated demands, respondent failed to pay, in violation of the terms agreed upon.
On December 12, 1997, petitioner filed with the High Court of the Republic of Singapore an
action for the sum of S$452,560.18, including interest and costs, against respondent,
docketed as Suit No. 2101. Upon petitioner's motion, the court issued a Writ of Summons to
be served extraterritorially or outside Singapore upon respondent. The court sought the
assistance of the sheriff of Pasay City to effect service of the summons upon respondent.
However, despite receipt of summons, respondent failed to answer the claim.
On February 17, 1998, on motion of petitioner, the Singapore High Court rendered a
judgment by default against respondent.
On August 4, 1998, petitioner filed with the RTC, Branch 117, Pasay City, a Petition for
Enforcement of Judgment, docketed as Civil Case No. 98-1389.
Respondent filed a Motion to Dismiss the Petition on two grounds: (1) the Singapore High
Court did not acquire jurisdiction over its person; and (2) the foreign judgment sought to be
enforced is void for having been rendered in violation of its right to due process.
On October 30, 1998, the RTC denied respondent's motion to dismiss, holding that "neither
one of the two grounds (of Grand) is among the grounds for a motion to dismiss under Rule
16 of the 1997 Rules of Civil Procedure."
Respondent filed a motion for reconsideration but was denied by the RTC in its Order dated
December 16, 1998.
On February 15, 1999, respondent filed with the Court of Appeals a Petition for Certiorari
assailing the RTC Order denying its motion to dismiss. Respondent alleged that the
extraterritorial service of summons on its office in the Philippines is defective and that the
Singapore court did not acquire jurisdiction over its person. Thus, its judgment sought to be
enforced is void. Petitioner, in its comment, moved to dismiss the petition for being
unmeritorious.
On July 30, 1999, the Court of Appeals issued its Decision granting the petition and setting
aside the Orders dated October 30, 1998 and December 16, 1998 of the RTC "without
prejudice to the right of private respondent to initiate another proceeding before the proper
court to enforce its claim." It found:
In the case at bar, the complaint does not involve the personal status of plaintiff,
nor any property in which the defendant has a claim or interest, or which the
private respondent has attached but purely an action for collection of debt. It is
a personal action as well as an action in personam, not an action in rem or quasi
in rem. As a personal action, the service of summons should be personal or
substituted, not extraterritorial, in order to confer jurisdiction on the court.
Petitioner seasonably filed a motion for reconsideration but it was denied on September 29,
1999.
Hence, the instant Petition for Review on Certiorari.
The issues to be resolved are: (1) whether the Singapore High Court has acquired jurisdiction
over the person of respondent by the service of summons upon its office in the Philippines;
and (2) whether the judgment by default in Suit No. 2101 by the Singapore High Court is
enforceable in the Philippines.
Generally, in the absence of a special contract, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country; however, under the rules
of comity, utility and convenience, nations have established a usage among civilized states by
which final judgments of foreign courts of competent jurisdiction are reciprocally respected
and rendered efficacious under certain conditions that may vary in different
countries.1 Certainly, the Philippine legal system has long ago accepted into its jurisprudence
and procedural rules the viability of an action for enforcement of foreign judgment, as well
as the requisites for such valid enforcement, as derived from internationally accepted
doctrines.2
The conditions for the recognition and enforcement of a foreign judgment in our legal
system are contained in Section 48, Rule 39 of the 1997 Rules of Civil Procedure, as
amended, thus:
SEC. 48. Effect of foreign judgments. – The effect of a judgment or final order of
a tribunal of a foreign country, having jurisdiction to render the judgment or
final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the
judgment or final order is conclusive upon the title to the thing; and
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a right as
between the parties and their successors in interest by a
subsequent title;
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
Under the above Rule, a foreign judgment or order against a person is merely presumptive
evidence of a right as between the parties. It may be repelled, among others, by want of
jurisdiction of the issuing authority or by want of notice to the party against whom it is
enforced. The party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.3
Respondent, in assailing the validity of the judgment sought to be enforced, contends that
the service of summons is void and that the Singapore court did not acquire jurisdiction over
it.
Generally, matters of remedy and procedure such as those relating to the service of process
upon a defendant are governed by the lex fori or the internal law of the forum,4 which in this
case is the law of Singapore. Here, petitioner moved for leave of court to serve a copy of the
Writ of Summons outside Singapore. In an Order dated December 24, 1997, the Singapore
High Court granted "leave to serve a copy of the Writ of Summons on the Defendant by a
method of service authorized by the law of the Philippines for service of any originating
process issued by the Philippines at ground floor, APMC Building, 136 Amorsolo corner
Gamboa Street, 1229 Makati City, or elsewhere in the Philippines."5 This service of summons
outside Singapore is in accordance with Order 11, r. 4(2) of the Rules of Court 19966 of
Singapore, which provides.
(2) Where in accordance with these Rules, an originating process is to be served
on a defendant in any country with respect to which there does not subsist a
Civil Procedure Convention providing for service in that country of process of
the High Court, the originating process may be served –
a) through the government of that country, where that government is willing to
effect service;
b) through a Singapore Consular authority in that country, except where service
through such an authority is contrary to the law of the country; or
c) by a method of service authorized by the law of that country for service of
any originating process issued by that country.
In the Philippines, jurisdiction over a party is acquired by service of summons by the
sheriff,7 his deputy or other proper court officer either personally by handing a copy thereof
to the defendant8 or by substituted service.9 In this case, the Writ of Summons issued by the
Singapore High Court was served upon respondent at its office located at Mercure Hotel
(formerly Village Hotel), MIA Road, Pasay City. The Sheriff's Return shows that it was
received on May 2, 1998 by Joyce T. Austria, Secretary of the General Manager of
respondent company.10 But respondent completely ignored the summons, hence, it was
declared in default.
Considering that the Writ of Summons was served upon respondent in accordance with our
Rules, jurisdiction was acquired by the Singapore High Court over its person. Clearly, the
judgment of default rendered by that court against respondent is valid.
WHEREFORE, we GRANT the petition. The challenged Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 51134 are set aside.
The RTC, Branch 117, Pasay City is hereby DIRECTED to hear Civil Case No. 98-1389 with
dispatch.
SO ORDERED.
Puno, J., Chairperson, Corona, Azcuna, and Garcia, JJ., concur.
THIRD DIVISION
G.R. No. 206284, February 28, 2018
REDANTE SARTO Y MISALUCHA, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
MARTIRES, J.:
This is a petition for review on certiorari seeking to reverse and set aside the 31 July 2012
Decision1 and the 6 March 2013 Resolution2 of the Court of Appeals (CA), in CA-G.R. CR No.
32635, which affirmed the 18 May 2009 Decision3 of the Regional Trial Court, Branch 26,
Naga City (RTC), in Criminal Case No. 2007-0400 finding petitioner Redante Sarto y Misalucha
(Redante) guilty beyond reasonable doubt of Bigamy.
THE FACTS
On 3 October 2007, Redante was charged with the crime of bigamy for allegedly contracting
two (2) marriages: the first, with Maria Socorro G. Negrete (Maria Socorro), and the second,
without having the first one legally terminated, with private complainant Fe R. Aguila (Fe).
The charge stemmed from a criminal complaint filed by Fe against Redante on 4 June 2007.
The accusatory portion of the Information reads:
That on or about December 29, 1998, in the City of Naga, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, having been previously
united in lawful marriage with one Ma. Socorro G. Negrete, as evidenced by hereto attached
Certificate of Marriage mark as Annex "A," and without said marriage having been legally
dissolved, did then and there, willfully and feloniously contract a second marriage with FE R.
AGUILA-SARTO, herein complaining witness, to her damage and prejudice.
CONTRARY TO LAW.4
During his arraignment on 3 December 2007, Redante entered a plea of "not guilty." Pre-trial
ensued wherein Redante admitted that he had contracted two marriages but interposed the
defense that his first marriage had been legally dissolved by divorce obtained in a foreign
country.
On 22 May 2008, the defense filed a motion to allow the taking of Maria Socorro's deposition
considering that she was set to leave the country on the first week of June 2008. 5 This was
granted by the RTC in its Order,6 dated 26 May 2008.
Maria Socorro's deposition was taken on 28 May 2008. On 22 August 2008, the prosecution
moved for a modified or reverse trial on the basis of Redante's admissions.7 The RTC granted
the motion in its Order,8 dated 27 August 2008, wherein the defense was directed to present
its case ahead of the prosecution.
Evidence for the Defense
The defense presented Redante and Maria Socorro as witnesses. Their testimonies, taken
together, tended to establish the following:
Redante and Maria Socorro, both natives of Buhi, Camarines Sur, were married on 31 August
1984 in a ceremony held in Angono, Rizal. 9 Sometime thereafter, Maria Socorro left for
Canada to work as a nurse. While in Canada, she applied for Canadian citizenship. The
application was eventually granted and Ma. Socorro acquired Canadian citizenship on 1 April
1988.10 Maria Socorro then filed for divorce in British Columbia, Canada, to sever her marital
ties with Redante. The divorce was eventually granted by the Supreme Court of British
Columbia on 1 November 1988.11
Maria Socorro came back to Buhi, Camarines Sur, sometime in 1992 for a vacation. While
there Redante's mother and grandparents, who were against the divorce, convinced her and
Redante to give their marriage a second chance to which they acceded. Their attempts to
rekindle their romance resulted in the birth of their daughter on 8 March 1993 in
Mandaluyong City. In spite of this, Redante and Maria Socorro's efforts to save their
marriage were futile.12
Sometime in February 1998, Redante met Fe to whom he admitted that he was previously
married to Maria Socorro who, however, divorced him. 13 Despite this admission, their
romance blossomed and culminated in their marriage on 29 December 1998 at the
Peñafrancia Basilica Minore in Naga City. 14 They established a conjugal home in Pasay City
and had two children. Their relationship, however, turned sour when Ma. Socorro returned
to the Philippines and met with Redante to persuade him to allow their daughter to apply for
Canadian citizenship. After learning of Redante and Maria Socorro's meeting and believing
that they had reconciled, Fe decided to leave their conjugal home on 31 May 2007. 15 On 4
June 2007, Fe filed a complaint for bigamy against Redante. 16
Meanwhile, Maria Socorro married a certain Douglas Alexander Campbell, on 5 August 2000,
in Chilliwack, British Columbia, Canada. 17
The defense presented a Certificate of Divorce 18 issued on 14 January 2008, to prove the fact
of divorce.
Evidence for the Prosecution
The prosecution waived the presentation of testimonial evidence and presented instead, the
Marriage Contract19 between Redante and Maria Socorro, to prove the solemnization of
their marriage on 31 August 1984, in Angono, Rizal; and the Marriage Contract 20 of Redante
and Fe to prove the solemnization of Redante's second marriage on 29 December 1998, in
Naga City. The prosecution also adopted the Certificate of Divorce 21 as its own exhibit for the
purpose of proving that the same was secured only on 14 January 2008.
The RTC Ruling
In its judgment, the RTC found Redante guilty beyond reasonable doubt of the crime of
bigamy. The trial court ratiocinated that Redante's conviction is the only reasonable
conclusion for the case because of his failure to present competent evidence proving the
alleged divorce decree; his failure to establish the naturalization of Maria Socorro; and his
admission that he did not seek judicial recognition of the alleged divorce decree. The
dispositive portion of the decision reads:
WHEREFORE, finding the accused Redante Sarto y Misalucha guilty beyond reasonable doubt
for the crime of Bigamy punishable under Article 349 of the Revised Penal Code, and after
applying the Indeterminate Sentence Law, this Court hereby sentenced him an imprisonment
of two (2) years, four (4) months and one (1) day of prision correccional, as minimum, to
eight (8) years and one (1) day of prision mayor, as maximum.22
Aggrieved, Redante appealed before the CA.
The CA Ruling
In its assailed decision, the CA affirmed the RTC's Judgment. The appellate court ratiocinated
that assuming the authenticity and due execution of the Certificate of Divorce, since the
order of divorce or the divorce decree was not presented, it could not ascertain whether said
divorce capacitated Maria Socorro, and consequently Redante, to remarry. It continued that
Redante failed to present evidence that he had filed and had secured a judicial declaration
that his first marriage had been dissolved in accordance with Philippine laws prior to the
celebration of his subsequent marriage to Fe. The dispositive portion of the assailed decision
provides:
WHEREFORE, the Judgment of the Regional Trial Court convicting appellant Redante Sarto y
Misalucha of Bigamy in Criminal Case No. 2007-0400, is AFFIRMED.23
Redante moved for reconsideration, but the same was denied by the CA in its 6 March 2013
resolution.
Hence, the present petition.
On 26 June 2013, the Court issued a Resolution24 requiring the respondent Republic of the
Philippines to file its comment.
The OSG's Manifestation
In compliance with this Court's resolution, the respondent, through the Office of the Solicitor
General (OSG), filed its Manifestation (in lieu of Comment) 25 advocating Redante's acquittal.
The OSG argued that the RTC had convicted Redante solely because of his failure to provide
evidence concerning the date when Maria Socorro acquired Canadian citizenship. It observed
that Maria Socorro failed to provide the exact date when she acquired Canadian citizenship
because of the loss of her citizenship certificate at the time she took the witness stand. The
OSG claimed, however, that Redante was able to submit, although belatedly, a photocopy of
Maria Socorro's Canadian citizenship certificate as an attachment to his appellant's brief. The
said certificate stated that Maria Socorro was already a Canadian citizen as early as 1 April
1988; hence, the divorce decree which took effect on 1 November 1988 is valid. The OSG
further averred that substantial rights must prevail over the application of procedural rules.
ISSUE
WHETHER THE TRIAL AND APPELLATE COURTS ERRED WHEN THEY FOUND PETITIONER
REDANTE SARTO y MISALUCHA GUILTY BEYOND REASONABLE DOUBT OF BIGAMY.
THE COURT'S RULING
The petition is bereft of merit.
Elements of bigamy; burden of proving the termination of the first marriage.
For a person to be convicted of bigamy, the following elements must concur: (1) that the
offender has been legally married; (2) that the first marriage has not been legally dissolved
or, in case of an absentee spouse, the absent spouse could not yet be presumed dead
according to the provisions of the Civil Code; (3) that the offender contracts a second or
subsequent marriage; and (4) that the second or subsequent marriage has all the essential
requisites for validity.26
Redante admitted that he had contracted two marriages. He, however, put forth the defense
of the termination of his first marriage as a result of the divorce obtained abroad by his alien
spouse.
It is a fundamental principle in this jurisdiction that the burden of proof lies with the party
who alleges the existence of a fact or thing necessary in the prosecution or defense of an
action.27 Since the divorce was a defense raised by Redante, it is incumbent upon him to
show that it was validly obtained in accordance with Maria Socorro's country's national
law.28 Stated differently, Redante has the burden of proving the termination of the first
marriage prior to the celebration of the second.29
Redante failed to prove his capacity to contract a subsequent marriage.
A divorce decree obtained abroad by an alien spouse is a foreign judgment relating to the
status of a marriage. As in any other foreign judgment, a divorce decree does not have an
automatic effect in the Philippines. Consequently, recognition by Philippine courts may be
required before the effects of a divorce decree could be extended in this
jurisdiction.30 Recognition of the divorce decree, however, need not be obtained in a
separate petition filed solely for that purpose. Philippine courts may recognize the foreign
divorce decree when such was invoked by a party as an integral aspect of his claim or
defense.31
Before the divorce decree can be recognized by our courts, the party pleading it must prove
it as a fact and demonstrate its conformity to the foreign law allowing it. Proving the foreign
law under which the divorce was secured is mandatory considering that Philippine courts
cannot and could not be expected to take judicial notice of foreign laws.32 For the purpose of
establishing divorce as a fact, a copy of the divorce decree itself must be presented and
admitted in evidence. This is in consonance with the rule that a foreign judgment may be
given presumptive evidentiary value only after it is presented and admitted in evidence. 33
In particular, to prove the divorce and the foreign law allowing it, the party invoking them
must present copies thereof and comply with Sections 24 and 25, Rule 132 of the Revised
Rules of Court.34 Pursuant to these rules, the divorce decree and foreign law may be proven
through (1) an official publication or (2) or copies thereof attested to by the officer having
legal custody of said documents. If the office which has custody is in a foreign country, the
copies of said documents must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign
country in which the record is kept; and (b) authenticated by the seal of his office.35
Applying the foregoing, the Court is convinced that Redante failed to prove the existence of
the divorce as a fact or that it was validly obtained prior to the celebration of his subsequent
marriage to Fe.
Aside from the testimonies of Redante and Maria Socorro, the only piece of evidence
presented by the defense to prove the divorce, is the certificate of divorce allegedly issued
by the registrar of the Supreme Court of British Columbia on 14 January 2008. Said certificate
provides:
In the Supreme Court of British Columbia
Certificate of Divorce
This is to certify that Ma. Socorro Negrete SARTO and Redante M SARTO who were married
at ANGONO, RIZAL, PHILIPPINES on August 31, 1984 were divorced under the Divorce Act
(Canada) by an order of this Court which took effect and dissolved the marriage on
November 1, 1988.
Given under my hand and the Seal of this Court January 14, 2008
(SGD.)
__________________
REGISTRAR
This certificate of divorce, however, is utterly insufficient to rebut the charge against
Redante. First, the certificate of divorce is not the divorce decree required by the rules and
jurisprudence. As discussed previously, the divorce decree required to prove the fact of
divorce is the judgment itself as rendered by the foreign court and not a mere
certification. Second, assuming the certificate of divorce may be considered as the divorce
decree, it was not accompanied by a certification issued by the proper Philippine diplomatic
or consular officer stationed in Canada, as required under Section 24 of Rule 132. Lastly, no
copy of the alleged Canadian law was presented by the defense. Thus, it could not be
reasonably determined whether the subject divorce decree was in accord with Maria
Socorro's national law.
Further, since neither the divorce decree nor the alleged Canadian law was satisfactorily
demonstrated, the type of divorce supposedly secured by Maria Socorro - whether an
absolute divorce which terminates the marriage or a limited divorce which merely suspends
it36 - and whether such divorce capacitated her to remarry could not also be ascertained. As
such, Redante failed to prove his defense that he had the capacity to remarry when he
contracted a subsequent marriage to Fe. His liability for bigamy is, therefore, now beyond
question.
This Court is not unmindful of the second paragraph of Article 26 of the Family Code. Indeed,
in Republic v. Orbecido,37 a case invoked by Redante to support his cause, the Court
recognized that the legislative intent behind the said provision is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after obtaining
a divorce, is no longer married to the Filipino spouse under the laws of his or her country.
The Court is also not oblivious of the fact that Maria Socorro had already remarried in
Canada on 5 August 2000. These circumstances, however, can never justify the reversal of
Redante's conviction.
In Orbecido, as in Redante's case, the alien spouse divorced her Filipino spouse and
remarried another. The Filipino spouse then filed a petition for authority to remarry under
paragraph 2 of Article 26. His petition was granted by the RTC. However, this Court set aside
said decision by the trial court after finding that the records were bereft of competent
evidence concerning the divorce decree and the naturalization of the alien spouse. The Court
reiterated therein the rules regarding the recognition of the foreign divorce decree and the
foreign law allowing it, as well as the necessity to show that the divorce decree capacitated
his former spouse to remarry.38
Finally, the Court notes that the OSG was miserably misguided when it claimed that the sole
reason for the RTC's judgment of conviction was Redante's failure to provide evidence,
during trial, of the date Maria Socorro acquired Canadian citizenship.
An examination of the 18 May 2009 judgment would reveal that the trial court rendered the
said decision after finding that there was lack of any competent evidence with regard to the
divorce decree39 and the national law governing his first wife,40 not merely because of the
lack of evidence concerning the effectivity date of Maria Socorro's naturalization. Thus, even
if the Court were to indulge the OSG and consider Maria Socorro's citizenship certificate,
which was a mere photocopy and filed belatedly, it would not have any effect significant
enough to produce a judgment of acquittal. The fact that Redante failed to prove the
existence of the divorce and that it was validly acquired prior to the celebration of the
second marriage still subsists.
WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision, dated
31 July 2012, of the Court of Appeals in CA G.R. CR No. 32635 which affirmed the 18 May
2009 Judgment of the Regional Trial Court, Branch 26, Naga City, in Criminal Case No. 2007-
0400 is hereby AFFIRMED. Petitioner Redante Sarto y Misalucha is found GUILTY beyond
reasonable doubt of the crime of bigamy and is sentenced to suffer the indeterminate
penalty of two (2) years, four (4) months and one (1) day of prision correccional, as
minimum, to eight (8) years and one (1) day of prision mayor, as maximum.
SO ORDERED.
Velasco, Jr., J., (Chairperson), Bersamin, Leonen, and Gesmundo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 155635 November 7, 2008
MARIA REBECCA MAKAPUGAY BAYOT, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and VICENTE MADRIGAL BAYOT, respondents.
x-------------------------------------------x
G.R. No. 163979 November 7, 2008
MARIA REBECCA MAKAPUGAY BAYOT, petitioner,
vs.
VICENTE MADRIGAL BAYOT, respondent.
DECISION
VELASCO, JR., J.:
The Case
Before us are these two petitions interposed by petitioner Maria Rebecca Makapugay Bayot
impugning certain issuances handed out by the Court of Appeals (CA) in CA-G.R. SP No.
68187.
In the first, a petition for certiorari1 under Rule 65 and docketed as G.R. No.
155635, Rebecca assails and seeks to nullify the April 30, 2002 Resolution 2 of the CA, as
reiterated in another Resolution of September 2, 2002,3 granting a writ of preliminary
injunction in favor of private respondent Vicente Madrigal Bayot staving off the trial court's
grant of support pendente lite to Rebecca.
The second, a petition for review under Rule 45,4 docketed G.R. No. 163979, assails the
March 25, 2004 Decision5 of the CA, (1) dismissing Civil Case No. 01-094, a suit for
declaration of absolute nullity of marriage with application for support commenced by
Rebecca against Vicente before the Regional Trial Court (RTC) in Muntinlupa City; and (2)
setting aside certain orders and a resolution issued by the RTC in the said case.
Per its Resolution of August 11, 2004, the Court ordered the consolidation of both cases.
The Facts
Vicente and Rebecca were married on April 20, 1979 in Sanctuario de San Jose, Greenhills,
Mandaluyong City. On its face, the Marriage Certificate 6 identified Rebecca, then 26 years
old, to be an American citizen7 born in Agaña, Guam, USA to Cesar Tanchiong Makapugay,
American, and Helen Corn Makapugay, American.
On November 27, 1982 in San Francisco, California, Rebecca gave birth to Marie Josephine
Alexandra or Alix. From then on, Vicente and Rebecca's marital relationship seemed to have
soured as the latter, sometime in 1996, initiated divorce proceedings in the Dominican
Republic. Before the Court of the First Instance of the Judicial District of Santo Domingo,
Rebecca personally appeared, while Vicente was duly represented by counsel. On February
22, 1996, the Dominican court issued Civil Decree No. 362/96,8 ordering the dissolution of
the couple's marriage and "leaving them to remarry after completing the legal
requirements," but giving them joint custody and guardianship over Alix. Over a year later,
the same court would issue Civil Decree No. 406/97,9 settling the couple's property relations
pursuant to an Agreement10 they executed on December 14, 1996. Said agreement
specifically stated that the "conjugal property which they acquired during their marriage
consist[s] only of the real property and all the improvements and personal properties therein
contained at 502 Acacia Avenue, Alabang, Muntinlupa."11
Meanwhile, on March 14, 1996, or less than a month from the issuance of Civil Decree No.
362/96, Rebecca filed with the Makati City RTC a petition12 dated January 26, 1996, with
attachments, for declaration of nullity of marriage, docketed as Civil Case No. 96-378.
Rebecca, however, later moved13 and secured approval14 of the motion to withdraw the
petition.
On May 29, 1996, Rebecca executed an Affidavit of Acknowledgment 15 stating under oath
that she is an American citizen; that, since 1993, she and Vicente have been living separately;
and that she is carrying a child not of Vicente.
On March 21, 2001, Rebecca filed another petition, this time before the Muntinlupa City RTC,
for declaration of absolute nullity of marriage 16 on the ground of Vicente's alleged
psychological incapacity. Docketed as Civil Case No. 01-094 and entitled as Maria Rebecca
Makapugay Bayot v. Vicente Madrigal Bayot, the petition was eventually raffled to Branch
256 of the court. In it, Rebecca also sought the dissolution of the conjugal partnership of
gains with application for support pendente lite for her and Alix. Rebecca also prayed that
Vicente be ordered to pay a permanent monthly support for their daughter Alix in the
amount of PhP 220,000.
On June 8, 2001, Vicente filed a Motion to Dismiss 17 on, inter alia, the grounds of lack of
cause of action and that the petition is barred by the prior judgment of divorce. Earlier, on
June 5, 2001, Rebecca filed and moved for the allowance of her application for
support pendente lite.
To the motion to dismiss, Rebecca interposed an opposition, insisting on her Filipino
citizenship, as affirmed by the Department of Justice (DOJ), and that, therefore, there is no
valid divorce to speak of.
Meanwhile, Vicente, who had in the interim contracted another marriage, and Rebecca
commenced several criminal complaints against each other. Specifically, Vicente filed
adultery and perjury complaints against Rebecca. Rebecca, on the other hand, charged
Vicente with bigamy and concubinage.
Ruling of the RTC on the Motion to Dismiss
and Motion for Support Pendente Lite
On August 8, 2001, the RTC issued an Order18 denying Vicente's motion to dismiss Civil Case
No. 01-094 and granting Rebecca's application for support pendente lite, disposing as
follows:
Wherefore, premises considered, the Motion to Dismiss filed by the respondent
is DENIED. Petitioner's Application in Support of the Motion for Support
Pendente Lite is hereby GRANTED. Respondent is hereby ordered to remit the
amount of TWO HUNDRED AND TWENTY THOUSAND PESOS (Php 220,000.00) a
month to Petitioner as support for the duration of the proceedings relative to
the instant Petition.
SO ORDERED.19
The RTC declared, among other things, that the divorce judgment invoked by Vicente as bar
to the petition for declaration of absolute nullity of marriage is a matter of defense best
taken up during actual trial. As to the grant of support pendente lite, the trial court held that
a mere allegation of adultery against Rebecca does not operate to preclude her from
receiving legal support.
Following the denial20 of his motion for reconsideration of the above August 8, 2001 RTC
order, Vicente went to the CA on a petition for certiorari, with a prayer for the issuance of a
temporary restraining order (TRO) and/or writ of preliminary injunction. 21 His petition was
docketed as CA-G.R. SP No. 68187.
Grant of Writ of Preliminary Injunction by the CA
On January 9, 2002, the CA issued the desired TRO. 22
On April 30, 2002, the appellate court
granted, via a Resolution, the issuance of a writ of preliminary injunction, the decretal
portion of which reads:
IN VIEW OF ALL THE FOREGOING, pending final resolution of the petition at bar,
let the Writ of Preliminary Injunction be ISSUED in this case, enjoining the
respondent court from implementing the assailed Omnibus Order dated August
8, 2001 and the Order dated November 20, 2001, and from conducting further
proceedings in Civil Case No. 01-094, upon the posting of an injunction bond in
the amount of P250,000.00.
SO ORDERED.23
Rebecca moved24 but was denied reconsideration of the aforementioned April 30, 2002
resolution. In the meantime, on May 20, 2002, the preliminary injunctive writ 25 was issued.
Rebecca also moved for reconsideration of this issuance, but the CA, by Resolution dated
September 2, 2002, denied her motion.
The adverted CA resolutions of April 30, 2002 and September 2, 2002 are presently being
assailed in Rebecca's petition for certiorari, docketed under G.R. No. 155635.
Ruling of the CA
Pending resolution of G.R. No. 155635, the CA, by a Decision dated March 25, 2004,
effectively dismissed Civil Case No. 01-094, and set aside incidental orders the RTC issued in
relation to the case. The fallo of the presently assailed CA Decision reads:
IN VIEW OF THE FOREGOING, the petition is GRANTED. The Omnibus Order
dated August 8, 2001 and the Order dated November 20, 2001
are REVERSED and SET ASIDE and a new one entered DISMISSING Civil Case No.
01-094, for failure to state a cause of action. No pronouncement as to costs.
SO ORDERED.26
To the CA, the RTC ought to have granted Vicente's motion to dismiss on the basis of the
following premises:
(1) As held in China Road and Bridge Corporation v. Court of Appeals, the hypothetical-
admission rule applies in determining whether a complaint or petition states a cause of
action.27 Applying said rule in the light of the essential elements of a cause of
action,28 Rebecca had no cause of action against Vicente for declaration of nullity of
marriage.
(2) Rebecca no longer had a legal right in this jurisdiction to have her marriage with Vicente
declared void, the union having previously been dissolved on February 22, 1996 by the
foreign divorce decree she personally secured as an American citizen. Pursuant to the second
paragraph of Article 26 of the Family Code, such divorce restored Vicente's capacity to
contract another marriage.
(3) Rebecca's contention about the nullity of a divorce, she being a Filipino citizen at the time
the foreign divorce decree was rendered, was dubious. Her allegation as to her alleged
Filipino citizenship was also doubtful as it was not shown that her father, at the time of her
birth, was still a Filipino citizen. The Certification of Birth of Rebecca issued by the
Government of Guam also did not indicate the nationality of her father.
(4) Rebecca was estopped from denying her American citizenship, having professed to have
that nationality status and having made representations to that effect during momentous
events of her life, such as: (a) during her marriage; (b) when she applied for divorce; and (c)
when she applied for and eventually secured an American passport on January 18, 1995, or a
little over a year before she initiated the first but later withdrawn petition for nullity of her
marriage (Civil Case No. 96-378) on March 14, 1996.
(5) Assuming that she had dual citizenship, being born of a purportedly Filipino father in
Guam, USA which follows the jus soli principle, Rebecca's representation and assertion about
being an American citizen when she secured her foreign divorce precluded her from denying
her citizenship and impugning the validity of the divorce.
Rebecca seasonably filed a motion for reconsideration of the above Decision, but this
recourse was denied in the equally assailed June 4, 2004 Resolution. 29 Hence, Rebecca's
Petition for Review on Certiorari under Rule 45, docketed under G.R. No. 163979.
The Issues
In G.R. No. 155635, Rebecca raises four (4) assignments of errors as grounds for the
allowance of her petition, all of which converged on the proposition that the CA erred in
enjoining the implementation of the RTC's orders which would have entitled her to support
pending final resolution of Civil Case No. 01-094.
In G.R. No. 163979, Rebecca urges the reversal of the assailed CA decision submitting as
follows:
I
THE COURT OF APPEALS GRAVELY ERRED IN NOT MENTIONING AND NOT
TAKING INTO CONSIDERATION IN ITS APPRECIATION OF THE FACTS THE FACT OF
PETITIONER'S FILIPINO CITIZENSHIP AS CATEGORICALLY STATED AND ALLEGED
IN HER PETITION BEFORE THE COURT A QUO.
II
THE COURT OF APPEALS GRAVELY ERRED IN RELYING ONLY ON ANNEXES TO THE
PETITION IN RESOLVING THE MATTERS BROUGHT BEFORE IT.
III
THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO CONSIDER THAT
RESPONDENT IS ESTOPPED FROM CLAIMING THAT HIS MARRIAGE TO
PETITIONER HAD ALREADY BEEN DISSOLVED BY VIRTUE OF HIS SUBSEQUENT
AND CONCURRENT ACTS.
IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THERE WAS ABUSE
OF DISCRETION ON THE PART OF THE TRIAL COURT, MUCH LESS A GRAVE
ABUSE.30
We shall first address the petition in G.R. No. 163979, its outcome being determinative of the
success or failure of the petition in G.R. No. 155635.
Three legal premises need to be underscored at the outset. First, a divorce obtained abroad
by an alien married to a Philippine national may be recognized in the Philippines, provided
the decree of divorce is valid according to the national law of the foreigner. 31 Second, the
reckoning point is not the citizenship of the divorcing parties at birth or at the time of
marriage, but their citizenship at the time a valid divorce is obtained abroad. And third, an
absolute divorce secured by a Filipino married to another Filipino is contrary to our concept
of public policy and morality and shall not be recognized in this jurisdiction. 32
 Given the foregoing perspective, the determinative issue tendered in G.R. No. 155635, i.e.,
the propriety of the granting of the motion to dismiss by the appellate court, resolves itself
into the questions of: first, whether petitioner Rebecca was a Filipino citizen at the time the
divorce judgment was rendered in the Dominican Republic on February 22, 1996;
and second, whether the judgment of divorce is valid and, if so, what are its consequent legal
effects?
The Court's Ruling
The petition is bereft of merit.
Rebecca an American Citizen in the Purview of This Case
There can be no serious dispute that Rebecca, at the time she applied for and obtained her
divorce from Vicente, was an American citizen and remains to be one, absent proof of an
effective repudiation of such citizenship. The following are compelling circumstances
indicative of her American citizenship: (1) she was born in Agaña, Guam, USA; (2) the
principle of jus soli is followed in this American territory granting American citizenship to
those who are born there; and (3) she was, and may still be, a holder of an American
passport.33
And as aptly found by the CA, Rebecca had consistently professed, asserted, and represented
herself as an American citizen, particularly: (1) during her marriage as shown in the marriage
certificate; (2) in the birth certificate of Alix; and (3) when she secured the divorce from the
Dominican Republic. Mention may be made of the Affidavit of Acknowledgment 34 in which
she stated being an American citizen.
It is true that Rebecca had been issued by the Bureau of Immigration (Bureau) of
Identification (ID) Certificate No. RC 9778 and a Philippine Passport. On its face, ID Certificate
No. RC 9778 would tend to show that she has indeed been recognized as a Filipino citizen. It
cannot be over-emphasized, however, that such recognition was given only on June 8, 2000
upon the affirmation by the Secretary of Justice of Rebecca's recognition pursuant to the
Order of Recognition issued by Bureau Associate Commissioner Edgar L. Mendoza.
For clarity, we reproduce in full the contents of ID Certificate No. RC 9778:
To Whom It May Concern:
This is to certify that *MARIA REBECCA MAKAPUGAY BAYOT* whose photograph
and thumbprints are affixed hereto and partially covered by the seal of this
Office, and whose other particulars are as follows:
Place of Birth: Guam, USA Date of Birth: March 5, 1953
Sex: female Civil Status: married Color of
Hair: brown
Color of Eyes: brown Distinguishing marks on face: none
was - r e c o g n i z e d - as a citizen of the Philippines as per pursuant to Article
IV, Section 1, Paragraph 3 of the 1935 Constitution per order of Recognition JBL
95-213 signed by Associate Commissioner Jose B. Lopez dated October 6, 1995,
and duly affirmed by Secretary of Justice Artemio G. Tuquero in his
1st Indorsement dated June 8, 2000.
Issued for identification purposes only. NOT VALID for travel purposes.
Given under my hand and seal this 11th day of October, 1995
(SGD) EDGAR L. MENDOZA
ASSO. COMMISSIONER
Official Receipt No. 5939988
issued at Manila
dated Oct. 10, 1995 for P 2,000
From the text of ID Certificate No. RC 9778, the following material facts and dates may be
deduced: (1) Bureau Associate Commissioner Jose B. Lopez issued the Order of Recognition
on October 6, 1995; (2) the 1st Indorsement of Secretary of Justice Artemio G. Tuquero
affirming Rebecca's recognition as a Filipino citizen was issued on June 8, 2000 or almost five
years from the date of the order of recognition; and (3) ID Certificate No. RC 9778 was
purportedly issued on October 11, 1995 after the payment of the PhP 2,000 fee on October
10, 1995 per OR No. 5939988.
What begs the question is, however, how the above certificate could have been issued by
the Bureau on October 11, 1995 when the Secretary of Justice issued the required
affirmation only on June 8, 2000. No explanation was given for this patent aberration. There
seems to be no error with the date of the issuance of the 1 st Indorsement by Secretary of
Justice Tuquero as this Court takes judicial notice that he was the Secretary of Justice from
February 16, 2000 to January 22, 2001. There is, thus, a strong valid reason to conclude that
the certificate in question must be spurious.
Under extant immigration rules, applications for recognition of Filipino citizenship require
the affirmation by the DOJ of the Order of Recognition issued by the Bureau. Under
Executive Order No. 292, also known as the 1987 Administrative Code, specifically in its Title
III, Chapter 1, Sec. 3(6), it is the DOJ which is tasked to "provide immigration and
naturalization regulatory services and implement the laws governing citizenship and the
admission and stay of aliens." Thus, the confirmation by the DOJ of any Order of Recognition
for Filipino citizenship issued by the Bureau is required.
Pertinently, Bureau Law Instruction No. RBR-99-00235 on Recognition as a Filipino Citizen
clearly provides:
The Bureau [of Immigration] through its Records Section shall automatically
furnish the Department of Justice an official copy of its Order of Recognition
within 72 days from its date of approval by the way of indorsement for
confirmation of the Order by the Secretary of Justice pursuant to Executive
Order No. 292. No Identification Certificate shall be issued before the date of
confirmation by the Secretary of Justice and any Identification Certificate issued
by the Bureau pursuant to an Order of Recognition shall prominently indicate
thereon the date of confirmation by the Secretary of Justice. (Emphasis ours.)
Not lost on the Court is the acquisition by Rebecca of her Philippine passport only on June
13, 2000, or five days after then Secretary of Justice Tuquero issued the 1st Indorsement
confirming the order of recognition. It may be too much to attribute to coincidence this
unusual sequence of close events which, to us, clearly suggests that prior to said affirmation
or confirmation, Rebecca was not yet recognized as a Filipino citizen. The same sequence
would also imply that ID Certificate No. RC 9778 could not have been issued in 1995, as
Bureau Law Instruction No. RBR-99-002 mandates that no identification certificate shall be
issued before the date of confirmation by the Secretary of Justice. Logically, therefore, the
affirmation or confirmation of Rebecca's recognition as a Filipino citizen through the
1st Indorsement issued only on June 8, 2000 by Secretary of Justice Tuquero corresponds to
the eventual issuance of Rebecca's passport a few days later, or on June 13, 2000 to be
exact.
When Divorce Was Granted Rebecca, She Was not a
Filipino Citizen and Was not Yet Recognized as One
The Court can assume hypothetically that Rebecca is now a Filipino citizen. But from the
foregoing disquisition, it is indubitable that Rebecca did not have that status of, or at least
was not yet recognized as, a Filipino citizen when she secured the February 22, 1996
judgment of divorce from the Dominican Republic.
The Court notes and at this juncture wishes to point out that Rebecca voluntarily withdrew
her original petition for declaration of nullity (Civil Case No. 96-378 of the Makati City RTC)
obviously because she could not show proof of her alleged Filipino citizenship then. In fact, a
perusal of that petition shows that, while bearing the date January 26, 1996, it was only filed
with the RTC on March 14, 1996 or less than a month after Rebecca secured, on February 22,
1996, the foreign divorce decree in question. Consequently, there was no mention about
said divorce in the petition. Significantly, the only documents appended as annexes to said
original petition were: the Vicente-Rebecca Marriage Contract (Annex "A") and Birth
Certificate of Alix (Annex "B"). If indeed ID Certificate No. RC 9778 from the Bureau was truly
issued on October 11, 1995, is it not but logical to expect that this piece of document be
appended to form part of the petition, the question of her citizenship being crucial to her
case?
As may be noted, the petition for declaration of absolute nullity of marriage under Civil Case
No. 01-094, like the withdrawn first petition, also did not have the ID Certificate from the
Bureau as attachment. What were attached consisted of the following material documents:
Marriage Contract (Annex "A") and Divorce Decree. It was only through her Opposition (To
Respondent's Motion to Dismiss dated 31 May 2001) 36 did Rebecca attach as Annex "C" ID
Certificate No. RC 9778.
At any rate, the CA was correct in holding that the RTC had sufficient basis to dismiss the
petition for declaration of absolute nullity of marriage as said petition, taken together with
Vicente's motion to dismiss and Rebecca's opposition to motion, with their respective
attachments, clearly made out a case of lack of cause of action, which we will expound later.
Validity of Divorce Decree
Going to the second core issue, we find Civil Decree Nos. 362/96 and 406/97 valid.
First, at the time of the divorce, as above elucidated, Rebecca was still to be recognized,
assuming for argument that she was in fact later recognized, as a Filipino citizen, but
represented herself in public documents as an American citizen. At the very least, she chose,
before, during, and shortly after her divorce, her American citizenship to govern her marital
relationship. Second, she secured personally said divorce as an American citizen, as is evident
in the text of the Civil Decrees, which pertinently declared:
IN THIS ACTION FOR DIVORCE in which the parties expressly submit to the
jurisdiction of this court, by reason of the existing incompatibility of
temperaments x x x. The parties MARIA REBECCA M. BAYOT, of United States
nationality, 42 years of age, married, domiciled and residing at 502 Acacia Ave.,
Ayala Alabang, Muntin Lupa, Philippines, x x x, who personally appeared before
this court, accompanied by DR. JUAN ESTEBAN OLIVERO, attorney, x x x and
VICENTE MADRIGAL BAYOT, of Philippine nationality, of 43 years of age, married
and domiciled and residing at 502 Acacia Ave., Ayala Alabang, Muntin Lupa,
Filipino, appeared before this court represented by DR. ALEJANDRO TORRENS,
attorney, x x x, revalidated by special power of attorney given the 19th of
February of 1996, signed before the Notary Public Enrico L. Espanol of the City
of Manila, duly legalized and authorizing him to subscribe all the acts concerning
this case.37 (Emphasis ours.)
Finally, the fact that Rebecca may have been duly recognized as a Filipino citizen by force of
the June 8, 2000 affirmation by Secretary of Justice Tuquero of the October 6, 1995 Bureau
Order of Recognition will not, standing alone, work to nullify or invalidate the foreign divorce
secured by Rebecca as an American citizen on February 22, 1996. For as we stressed at the
outset, in determining whether or not a divorce secured abroad would come within the pale
of the country's policy against absolute divorce, the reckoning point is the citizenship of the
parties at the time a valid divorce is obtained.42
Legal Effects of the Valid Divorce
Given the validity and efficacy of divorce secured by Rebecca, the same shall be given a res
judicata effect in this jurisdiction. As an obvious result of the divorce decree obtained, the
marital vinculum between Rebecca and Vicente is considered severed; they are both freed
from the bond of matrimony. In plain language, Vicente and Rebecca are no longer husband
and wife to each other. As the divorce court formally pronounced: "[T]hat the marriage
between MARIA REBECCA M. BAYOT and VICENTE MADRIGAL BAYOT is hereby dissolved x x
x leaving them free to remarry after completing the legal requirements."43
Consequent to the dissolution of the marriage, Vicente could no longer be subject to a
husband's obligation under the Civil Code. He cannot, for instance, be obliged to live with,
observe respect and fidelity, and render support to Rebecca. 44
The divorce decree in question also brings into play the second paragraph of Art. 26 of the
Family Code, providing as follows:

Third, being an American citizen, Rebecca was bound by the national laws of the United
States of America, a country which allows divorce. Fourth, the property relations of Vicente
and Rebecca were properly adjudicated through their Agreement38 executed on December
14, 1996 after Civil Decree No. 362/96 was rendered on February 22, 1996, and duly affirmed
by Civil Decree No. 406/97 issued on March 4, 1997. Veritably, the foreign divorce secured by
Rebecca was valid.
To be sure, the Court has taken stock of the holding in Garcia v. Recio that a foreign divorce
can be recognized here, provided the divorce decree is proven as a fact and as valid under
the national law of the alien spouse. 39 Be this as it may, the fact that Rebecca was clearly an
American citizen when she secured the divorce and that divorce is recognized and allowed in
any of the States of the Union,40 the presentation of a copy of foreign divorce decree duly
authenticated by the foreign court issuing said decree is, as here, sufficient.
Art. 26. x x x x
Where a marriage between a Filipino citizen and a foreigner is validly celebrated
and a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall likewise have
capacity to remarry under Philippine law. (As amended by E.O. 227)
In Republic v. Orbecido III, we spelled out the twin elements for the applicability of the
second paragraph of Art. 26, thus:
x x x [W]e state the twin elements for the application of Paragraph 2 of Article
26 as follows:

It bears to stress that the existence of the divorce decree has not been denied, but in fact
admitted by both parties. And neither did they impeach the jurisdiction of the divorce court 1. There is a valid marriage that has been celebrated between a Filipino citizen
nor challenge the validity of its proceedings on the ground of collusion, fraud, or clear and a foreigner; and
mistake of fact or law, albeit both appeared to have the opportunity to do so. The same
holds true with respect to the decree of partition of their conjugal property. As this Court
2. A valid divorce is obtained abroad by the alien spouse capacitating him or her
explained in Roehr v. Rodriguez:
to remarry.

Before our courts can give the effect of res judicata to a foreign judgment [of
The reckoning point is not the citizenship of the parties at the time of the
divorce] x x x, it must be shown that the parties opposed to the judgment had
celebration of the marriage, but their citizenship at the time a valid divorce is
been given ample opportunity to do so on grounds allowed under Rule 39,
obtained abroad by the alien spouse capacitating the latter to remarry. 45
Section 50 of the Rules of Court (now Rule 39, Section 48, 1997 Rules of Civil
Procedure), to wit:
Both elements obtain in the instant case. We need not belabor further the fact of marriage
of Vicente and Rebecca, their citizenship when they wed, and their professed citizenship
SEC. 50. Effect of foreign judgments.--The effect of a judgment of a
during the valid divorce proceedings.
tribunal of a foreign country, having jurisdiction to pronounce the
judgment is as follows:
Not to be overlooked of course is the fact that Civil Decree No. 406/97 and the Agreement
executed on December 14, 1996 bind both Rebecca and Vicente as regards their property
(a) In case of a judgment upon a specific thing, the judgment is
relations. The Agreement provided that the ex-couple's conjugal property consisted only
conclusive upon the title to the thing;
their family home, thus:

(b) In case of a judgment against a person, the judgment is

9. That the parties stipulate that the conjugal property which they acquired
presumptive evidence of a right as between the parties and their
during their marriage consists only of the real property and all the
successors in interest by a subsequent title; but the judgment may
improvements and personal properties therein contained at 502 Acacia Avenue,
be repelled by evidence of a want of jurisdiction, want of notice to
Ayala Alabang, Muntinlupa, covered by TCT No. 168301 dated Feb. 7, 1990
the party, collusion, fraud, or clear mistake of law or fact.
issued by the Register of Deeds of Makati, Metro Manila registered in the name
of Vicente M. Bayot, married to Rebecca M. Bayot, x x x. 46 (Emphasis ours.)
It is essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its
This property settlement embodied in the Agreement was affirmed by the divorce court
efficacy. In this jurisdiction, our Rules of Court clearly provide that with respect
which, per its second divorce decree, Civil Decree No. 406/97 dated March 4, 1997, ordered
to actions in personam, as distinguished from actions in rem, a foreign judgment
that, "THIRD: That the agreement entered into between the parties dated 14 th day of
|merely constitutes prima facie evidence of the justness of the claim of a party
December 1996 in Makati City, Philippines shall survive in this Judgment of divorce by
and, as such, is subject to proof to the contrary. 41
reference but not merged and that the parties are hereby ordered and directed to comply
with each and every provision of said agreement."47
As the records show, Rebecca, assisted by counsel, personally secured the foreign divorce
while Vicente was duly represented by his counsel, a certain Dr. Alejandro Torrens, in said
Rebecca has not repudiated the property settlement contained in the Agreement. She is thus
proceedings. As things stand, the foreign divorce decrees rendered and issued by the
estopped by her representation before the divorce court from asserting that her and
Dominican Republic court are valid and, consequently, bind both Rebecca and Vicente.
Vicente's conjugal property was not limited to their family home in Ayala Alabang. 48
No Cause of Action in the Petition for Nullity of Marriage
Upon the foregoing disquisitions, it is abundantly clear to the Court that Rebecca lacks, under
the premises, cause of action. Philippine Bank of Communications v. Trazo explains the
concept and elements of a cause of action, thus:
Before the Court is a petition for review assailing the 9 May 2008 Decision1 of the Court of
Appeals in CA-G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision 2 of
the Regional Trial Court (RTC) of Baler, Aurora, Branch 96.
The factual antecedents are as follow:

A cause of action is an act or omission of one party in violation of the legal right
of the other. A motion to dismiss based on lack of cause of action hypothetically
admits the truth of the allegations in the complaint. The allegations in a
complaint are sufficient to constitute a cause of action against the defendants if,
hypothetically admitting the facts alleged, the court can render a valid judgment
upon the same in accordance with the prayer therein. A cause of action exists if
the following elements are present, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation
on the part of the named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action for recovery of damages. 49
David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988
in Quezon City, Philippines. They resided in California, United States of America (USA) where
they eventually acquired American citizenship. They then begot two children, namely:
Jerome T.
Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993. David
was engaged in courier service business while Leticia worked as a nurse in San Francisco,
California.
During the marriage, they acquired the following properties in the Philippines and in the
USA:

One thing is clear from a perusal of Rebecca's underlying petition before the RTC, Vicente's
motion to dismiss and Rebecca's opposition thereof, with the documentary PHILIPPINES
evidence
attached therein: The petitioner lacks a cause of action for declaration of nullity of marriage,
a suit which presupposes the existence of a marriage.
PROPERTY FAIR MARKET VALUE

To sustain a motion to dismiss for lack of cause of action, the movant must show that the
claim for relief does not exist rather than that a claim has been defectively stated or is
House and Lot with an area of 150 sq. m. located at 1085 Norma Street, ₱1,693,125.00
ambiguous, indefinite, or uncertain.50 With the valid foreign divorce secured by Rebecca,
Sampaloc, Manila (Sampaloc property)
there is no more marital tie binding her to Vicente. There is in fine no more marriage to be
dissolved or nullified.
Agricultural land with an area of 20,742 sq. m. located at Laboy, ₱400,000.00
Dipaculao, Aurora
The Court to be sure does not lose sight of the legal obligation of Vicente and Rebecca to
support the needs of their daughter, Alix. The records do not clearly showA how parcelheofhad
land with an area of 2.5 hectares located at Maria Aurora, ₱490,000.00
discharged his duty, albeit Rebecca alleged that the support given had been insufficient.
Aurora At
any rate, we do note that Alix, having been born on November 27, 1982, reached the
majority age on November 27, 2000, or four months before her mother initiated her petition
A parcel of land with an area of 175 sq.m. located at Sabang Baler, Aurora ₱175,000.00
for declaration of nullity. She would now be 26 years old. Hence, the issue of back support,
which allegedly had been partly shouldered by Rebecca, is best litigated in a separate civil
action for reimbursement. In this way, the actual figure for the support of Alix can be proved
as well as the earning capacity of both Vicente and Rebecca. The trial court 3-has.can
coconut
thus plantation in San Joaquin Maria Aurora, Aurora ₱750,000.00
determine what Vicente owes, if any, considering that support includes provisions until the
child concerned shall have finished her education.
USA

Upon the foregoing considerations, the Court no longer need to delve into the issue
tendered in G.R. No. 155635, that is, Rebecca's right to support pendente lite. PROPERTY
As it were, her FAIR MARKET VALUE
entitlement to that kind of support hinges on the tenability of her petition under Civil Case
No. 01-094 for declaration of nullity of marriage. The dismissal of Civil Case No. 01-094 by
the CA veritably removed any legal anchorage for, and effectively mooted, the claim for
support pendente lite. House and Lot at 1155 Hanover Street, Daly City, California

$550,000.00
WHEREFORE, the petition for certiorari in G.R. No. 155635 is hereby DISMISSED on the (unpaid debt of $285,000.00)
ground of mootness, while the petition for review in G.R. No. 163979 is hereby DENIED for
lack of merit. Accordingly, the March 25, 2004 Decision and June 4, 2004 Resolution of the
CA in CA-G.R. SP No. 68187 are hereby AFFIRMED. Costs against petitioner. Furniture and furnishings $3,000

SO ORDERED.
Jewelries (ring and watch) $9,000

Republic of the Philippines

SUPREME COURT
2000 Nissan Frontier 4x4 pickup truck $13,770.00
Manila

SECOND DIVISION Bank of America Checking Account $8,000

G.R. No. 188289 August 20, 2014

Bank of America Cash Deposit

DAVID A. Life Insurance

NOVERAS, Petitioner,(Cash Value) $100,000.00
vs.
LETICIA T. NOVERAS, Respondent.
Retirement, pension, profit-sharing, annuities $56,228.00

DECISION

PEREZ, J.: The Sampaloc property used to beowned by David’s parents. The parties herein secured a
loan from a bank and mortgaged the property. When said property was about to be
foreclosed, the couple paid a total of ₱1.5 Million for the redemption of the same.
Due to business reverses, David left the USA and returned to the Philippines in 2001. In
December 2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell
the Sampaloc property for ₱2.2 Million. According to Leticia, sometime in September 2003,
David abandoned his family and lived with Estrellita Martinez in Aurora province. Leticia
claimed that David agreed toand executed a Joint Affidavit with Leticia in the presence of
David’s father, Atty. Isaias Noveras, on 3 December 2003 stating that: 1) the ₱1.1Million
proceeds from the sale of the Sampaloc property shall be paid to and collected by Leticia; 2)
that David shall return and pay to Leticia ₱750,000.00, which is equivalent to half of the
amount of the redemption price of the Sampaloc property; and 3) that David shall renounce
and forfeit all his rights and interest in the conjugal and real properties situated in the
Philippines.5 David was able to collect ₱1,790,000.00 from the sale of the Sampaloc property,
leaving an unpaid balance of ₱410,000.00.
Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with
the Superior Court of California, County of San Mateo, USA. The California court granted the
divorce on 24 June 2005 and judgment was duly entered on 29 June 2005. 6 The California
court granted to Leticia the custody of her two children, as well as all the couple’s properties
in the USA.7
On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before
the RTC of Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and David’s
failure to comply with his obligation under the same. She prayed for: 1) the power to
administer all conjugal properties in the Philippines; 2) David and his partner to cease and
desist from selling the subject conjugal properties; 3) the declaration that all conjugal
properties be forfeited in favor of her children; 4) David to remit half of the purchase price as
share of Leticia from the sale of the Sampaloc property; and 5) the payment of₱50,000.00
and ₱100,000.00 litigation expenses.8
In his Answer, David stated that a judgment for the dissolution of their marriage was entered
on 29 June 2005 by the Superior Court of California, County of San Mateo. He demanded that
the conjugal partnership properties, which also include the USA properties, be liquidated and
that all expenses of liquidation, including attorney’s fees of both parties be charged against
the conjugal partnership.9
The RTC of Baler, Aurora simplified the issues as follow:
1. Whether or not respondent David A. Noveras committed acts of
abandonment and marital infidelity which can result intothe forfeiture of the
parties’ properties in favor of the petitioner and their two (2) children.
2. Whether or not the Court has jurisdiction over the properties in California,
U.S.A. and the same can be included in the judicial separation prayed for.
3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T.
Noveras and respondent David A. Noveras will amount to a waiver or forfeiture
of the latter’s property rights over their conjugal properties.
4. Whether or not Leticia T. Noveras isentitled to reimbursement of onehalf of
the ₱2.2 [M]illion sales proceeds of their property in Sampaloc, Manila and one-
half of the ₱1.5 [M]illion used to redeem the property of Atty. Isaias Noveras,
including interests and charges.
5. How the absolute community properties should be distributed.
6. Whether or not the attorney’s feesand litigation expenses of the parties were
chargeable against their conjugal properties.
Corollary to the aboveis the issue of:
Whether or not the two common children of the parties are entitled to support and
presumptive legitimes.10
On 8 December 2006, the RTC rendered judgment as follows:
1. The absolute community of property of the parties is hereby declared
DISSOLVED;
2. The net assets of the absolute community of property ofthe parties in the
Philippines are hereby ordered to be awarded to respondent David A. Noveras
only, with the properties in the United States of America remaining in the sole
ownership of petitioner Leticia Noveras a.k.a. Leticia Tacbiana pursuant to the
divorce decree issuedby the Superior Court of California, County of San Mateo,
United States of America, dissolving the marriage of the parties as of June 24,
2005. The titles presently covering said properties shall be cancelled and new
titles be issued in the name of the party to whom said properties are awarded;
3. One-half of the properties awarded to respondent David A. Noveras in the
preceding paragraph are hereby given to Jerome and Jena, his two minor
children with petitioner LeticiaNoveras a.k.a. Leticia Tacbiana as their
presumptive legitimes and said legitimes must be annotated on the titles
covering the said properties.Their share in the income from these properties
shall be remitted to them annually by the respondent within the first half of
January of each year, starting January 2008;
4. One-half of the properties in the United States of America awarded to
petitioner Leticia Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given
to Jerome and Jena, her two minor children with respondent David A. Noveras
as their presumptive legitimes and said legitimes must be annotated on the
titles/documents covering the said properties. Their share in the income from
these properties, if any, shall be remitted to them annually by the petitioner
within the first half of January of each year, starting January 2008;
5. For the support of their two (2) minor children, Jerome and Jena, respondent
David A. Noveras shall give them US$100.00 as monthly allowance in addition to
their income from their presumptive legitimes, while petitioner Leticia Tacbiana
shall take care of their food, clothing, education and other needs while they are
in her custody in the USA. The monthly allowance due from the respondent shall
be increased in the future as the needs of the children require and his financial
capacity can afford;
6. Of the unpaid amount of ₱410,000.00 on the purchase price of the Sampaloc
property, the Paringit Spouses are hereby ordered to pay ₱5,000.00 to
respondent David A. Noveras and ₱405,000.00 to the two children. The share of
the respondent may be paid to him directly but the share of the two children
shall be deposited with a local bank in Baler, Aurora, in a joint account tobe
taken out in their names, withdrawal from which shall only be made by them or
by their representative duly authorized with a Special Power of Attorney. Such
payment/deposit shall be made withinthe period of thirty (30) days after receipt
of a copy of this Decision, with the passbook of the joint account to be
submitted to the custody of the Clerk of Court of this Court within the same
period. Said passbook can be withdrawn from the Clerk of Court only by the
children or their attorney-in-fact; and
7. The litigation expenses and attorney’s fees incurred by the parties shall be
shouldered by them individually.11
The trial court recognized that since the parties are US citizens, the laws that cover their legal
and personalstatus are those of the USA. With respect to their marriage, the parties are
divorced by virtue of the decree of dissolution of their marriage issued by the Superior Court
of California, County of San Mateo on 24June 2005. Under their law, the parties’ marriage
had already been dissolved. Thus, the trial court considered the petition filed by Leticia as
one for liquidation of the absolute community of property regime with the determination of
the legitimes, support and custody of the children, instead of an action for judicial separation
of conjugal property.
With respect to their property relations, the trial court first classified their property regime
as absolute community of property because they did not execute any marriage settlement
before the solemnization of their marriage pursuant to Article 75 of the Family Code. Then,
the trial court ruled that in accordance with the doctrine of processual presumption,
Philippine law should apply because the court cannot take judicial notice of the US law since
the parties did not submit any proof of their national law. The trial court held that as the
instant petition does not fall under the provisions of the law for the grant of judicial
separation of properties, the absolute community properties cannot beforfeited in favor of
Leticia and her children. Moreover, the trial court observed that Leticia failed to prove
abandonment and infidelity with preponderant evidence.
The trial court however ruled that Leticia is not entitled to the reimbursements she is praying
for considering that she already acquired all of the properties in the USA. Relying still on the
principle of equity, the Court also adjudicated the Philippine properties to David, subject to
the payment of the children’s presumptive legitimes. The trial court held that under Article
89 of the Family Code, the waiver or renunciation made by David of his property rights in the
Joint Affidavit is void.
On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal
division of the Philippine properties between the spouses. Moreover with respect to the
common children’s presumptive legitime, the appellate court ordered both spouses to each
pay their children the amount of ₱520,000.00, thus:
WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the
assailedDecision dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in Civil
Case No. 828 are hereby MODIFIED to read as follows:
2. The net assets of the absolute community of property of the parties in the
Philippines are hereby divided equally between petitioner Leticia Noveras a.k.a.
Leticia Tacbiana (sic) and respondent David A. Noveras;
xxx
4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in
paragraph 2 shall pertain to her minor children, Jerome and Jena, as their
presumptive legitimes which shall be annotated on the titles/documents
covering the said properties. Their share in the income therefrom, if any, shall
be remitted to them by petitioner annually within the first half of January,
starting 2008;
xxx
6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each
ordered to pay the amount of₱520,000.00 to their two children, Jerome and
Jena, as their presumptive legitimes from the sale of the Sampaloc property
inclusive of the receivables therefrom, which shall be deposited to a local bank
of Baler, Aurora, under a joint account in the latter’s names. The
payment/deposit shall be made within a period of thirty (30) days from receipt
ofa copy of this Decision and the corresponding passbook entrusted to the
custody ofthe Clerk of Court a quowithin the same period, withdrawable only by
the children or their attorney-in-fact.
A number 8 is hereby added, which shall read as follows:
8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia
Tacbiana (sic) the amount of ₱1,040,000.00 representing her share in the
proceeds from the sale of the Sampaloc property.
The last paragraph shall read as follows:
Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry
of Quezon City; the Civil RegistrarGeneral, National Statistics Office, Vibal Building, Times
Street corner EDSA, Quezon City; the Office of the Registry of Deeds for the Province of
Aurora; and to the children, Jerome Noveras and Jena Noveras.
The rest of the Decision is AFFIRMED.12
In the present petition, David insists that the Court of Appeals should have recognized the
California Judgment which awarded the Philippine properties to him because said judgment
was part of the pleading presented and offered in evidence before the trial court. David
argues that allowing Leticia to share in the Philippine properties is tantamount to unjust
enrichment in favor of Leticia considering that the latter was already granted all US
properties by the California court.
In summary and review, the basic facts are: David and Leticia are US citizens who own
properties in the USA and in the Philippines. Leticia obtained a decree of divorce from the
Superior Court of California in June 2005 wherein the court awarded all the properties in the
USA to Leticia. With respect to their properties in the Philippines, Leticiafiled a petition for
judicial separation ofconjugal properties.
At the outset, the trial court erred in recognizing the divorce decree which severed the bond
of marriage between the parties. In Corpuz v. Sto. Tomas,13 we stated that:
The starting point in any recognition of a foreign divorce judgment is the acknowledgment
that our courts do not take judicial notice of foreign judgments and laws. Justice Herrera
explained that, as a rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country." This means that the foreign judgment
and its authenticity must beproven as facts under our rules on evidence, together with the
alien’s applicable national law to show the effect of the judgment on the alien himself or
herself. The recognition may be made in an action instituted specifically for the purpose or in
another action where a party invokes the foreign decree as an integral aspect of his claim or
defense.14
The requirements of presenting the foreign divorce decree and the national law of the
foreigner must comply with our Rules of Evidence. Specifically, for Philippine courts to
recognize a foreign judgment relating to the status of a marriage, a copy of the foreign
judgment may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and
25, in relation to Rule 39, Section 48(b) of the Rules of Court.15
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or
tribunal may be proved by: (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof. Such official publication or copy must
beaccompanied, if the record is not kept in the Philippines, with a certificate that the
attesting officer has the legal custody thereof. The certificate may be issued by any of the
authorized Philippine embassy or consular officials stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part thereof, asthe case
may be, and must be under the official seal of the attesting officer.
Section 25 of the same Rule states that whenever a copy of a document or record is attested
for the purpose of evidence, the attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof, as the case may be. The attestation
must be under the official seal of the attesting officer, if there be any, or if hebe the clerk of a
court having a seal, under the seal of such court.
Based on the records, only the divorce decree was presented in evidence. The required
certificates to prove its authenticity, as well as the pertinent California law on divorce were
not presented.
It may be noted that in Bayot v. Court of Appeals,16 we relaxed the requirement on
certification where we held that "[petitioner therein] was clearly an American citizenwhen
she secured the divorce and that divorce is recognized and allowed in any of the States of the
Union, the presentation of a copy of foreign divorce decree duly authenticatedby the foreign
court issuing said decree is, as here, sufficient." In this case however, it appears that there is
no seal from the office where the divorce decree was obtained.
Even if we apply the doctrine of processual presumption 17 as the lower courts did with
respect to the property regime of the parties, the recognition of divorce is entirely a different
matter because, to begin with, divorce is not recognized between Filipino citizens in the
Philippines. Absent a valid recognition of the divorce decree, it follows that the parties are
still legally married in the Philippines. The trial court thus erred in proceeding directly to
liquidation.
As a general rule, any modification in the marriage settlements must be made before the
celebration of marriage. An exception to this rule is allowed provided that the modification
isjudicially approved and refers only to the instances provided in Articles 66,67, 128, 135 and
136 of the Family Code.18
Leticia anchored the filing of the instant petition for judicial separation of property on
paragraphs 4 and 6 of Article 135 of the Family Code, to wit:
Art. 135. Any of the following shall be considered sufficient cause for judicial separation of
property:
(1) That the spouse of the petitioner has been sentenced to a penalty which
carries with it civil interdiction;
(2) That the spouse of the petitioner has been judicially declared an absentee;
(3) That loss of parental authority ofthe spouse of petitioner has been decreed
by the court;
(4) That the spouse of the petitioner has abandoned the latter or failed to
comply with his or her obligations to the family as provided for in Article 101;
(5) That the spouse granted the power of administration in the marriage
settlements has abused that power; and
(6) That at the time of the petition, the spouses have been separated in fact for
at least one year and reconciliation is highly improbable.
In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment
against the guiltyor absent spouse shall be enough basis for the grant of the decree ofjudicial
separation of property. (Emphasis supplied).
The trial court had categorically ruled that there was no abandonment in this case to
necessitate judicial separation of properties under paragraph 4 of Article 135 of the Family
Code. The trial court ratiocinated:
Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a
valid cause and the spouse is deemed to have abandoned the other when he/she has left the
conjugal dwelling without intention of returning. The intention of not returning is prima facie
presumed if the allegedly [sic] abandoning spouse failed to give any information as to his or
her whereabouts within the period of three months from such abandonment.
In the instant case, the petitioner knows that the respondent has returned to and stayed at
his hometown in Maria Aurora, Philippines, as she even went several times to visit him there
after the alleged abandonment. Also, the respondent has been going back to the USA to visit
her and their children until the relations between them worsened. The last visit of said
respondent was in October 2004 when he and the petitioner discussed the filing by the latter
of a petition for dissolution of marriage with the California court. Such turn for the worse of
their relationship and the filing of the saidpetition can also be considered as valid causes for
the respondent to stay in the Philippines.19
Separation in fact for one year as a ground to grant a judicial separation of property was not
tackled in the trial court’s decision because, the trial court erroneously treated the petition
as liquidation of the absolute community of properties.
The records of this case are replete with evidence that Leticia and David had indeed
separated for more than a year and that reconciliation is highly improbable. First, while
actual abandonment had not been proven, it is undisputed that the spouses had been living
separately since 2003 when David decided to go back to the Philippines to set up his own
business. Second, Leticia heard from her friends that David has been cohabiting with
Estrellita Martinez, who represented herself as Estrellita Noveras. Editha Apolonio, who
worked in the hospital where David was once confined, testified that she saw the name of
Estrellita listed as the wife of David in the Consent for Operation form. 20 Third and more
significantly, they had filed for divorce and it was granted by the California court in June
2005.
Having established that Leticia and David had actually separated for at least one year, the
petition for judicial separation of absolute community of property should be granted.
The grant of the judicial separation of the absolute community property automatically
dissolves the absolute community regime, as stated in the 4th paragraph of Article 99 ofthe
Family Code, thus:
Art. 99. The absolute community terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled or declared void; or
(4) In case of judicial separation of property during the marriage under Articles
134 to 138. (Emphasis supplied).
Under Article 102 of the same Code, liquidation follows the dissolution of the absolute
community regime and the following procedure should apply:
Art. 102. Upon dissolution of the absolute community regime, the following procedure shall
apply:
(1) An inventory shall be prepared, listing separately all the properties of the
absolute community and the exclusive properties of each spouse.
(2) The debts and obligations of the absolute community shall be paid out of its
assets. In case of insufficiency of said assets, the spouses shall be solidarily liable
for the unpaid balance with their separate properties in accordance with the
provisions of the second paragraph of Article 94.
(3) Whatever remains of the exclusive properties of the spouses shall thereafter
be delivered to each of them.
(4) The net remainder of the properties of the absolute community shall
constitute its net assets, which shall be divided equally between husband and
wife, unless a different proportion or division was agreed upon in the marriage
settlements, or unless there has been a voluntary waiver of such share provided
in this Code. For purposes of computing the net profits subject to forfeiture in
accordance with Articles 43, No. (2) and 63, No. (2),the said profits shall be the
increase in value between the market value of the community property at the
time of the celebration of the marriage and the market value at the time of its
dissolution.
(5) The presumptive legitimes of the common children shall be delivered upon
partition, in accordance with Article 51.
(6) Unless otherwise agreed upon by the parties, in the partition of the
properties, the conjugal dwelling and the lot on which it is situated shall be
adjudicated tothe spouse with whom the majority of the common children
choose to remain. Children below the age of seven years are deemed to have
chosen the mother, unless the court has decided otherwise. In case there is no
such majority, the court shall decide, taking into consideration the best interests
of said children. At the risk of being repetitious, we will not remand the case to
the trial court. Instead, we shall adopt the modifications made by the Court of
Appeals on the trial court’s Decision with respect to liquidation.
We agree with the appellate court that the Philippine courts did not acquire jurisdiction over
the California properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly
states that real property as well as personal property is subject to the law of the country
where it is situated. Thus, liquidation shall only be limited to the Philippine properties.
We affirm the modification madeby the Court of Appeals with respect to the share of the
spouses in the absolutecommunity properties in the Philippines, as well as the payment of
their children’s presumptive legitimes, which the appellate court explained in this wise:
Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.1âwphi1 While both claimed to have contributed to the redemption of the Noveras
property, absent a clear showing where their contributions came from, the same is
presumed to have come from the community property. Thus, Leticia is not entitled to
reimbursement of half of the redemption money.
David's allegation that he used part of the proceeds from the sale of the Sampaloc property
for the benefit of the absolute community cannot be given full credence. Only the amount of
₱120,000.00 incurred in going to and from the U.S.A. may be charged thereto. Election
expenses in the amount of ₱300,000.00 when he ran as municipal councilor cannot be
allowed in the absence of receipts or at least the Statement of Contributions and
Expenditures required under Section 14 of Republic Act No. 7166 duly received by the
Commission on Elections. Likewise, expenses incurred to settle the criminal case of his
personal driver is not deductible as the same had not benefited the family. In sum, Leticia
and David shall share equally in the proceeds of the sale net of the amount of ₱120,000.00 or
in the respective amounts of ₱1,040,000.00.
xxxx
Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate
children and descendants consists of one-half or the hereditary estate of the father and of
the mother." The children arc therefore entitled to half of the share of each spouse in the
net assets of the absolute community, which shall be annotated on the titles/documents
covering the same, as well as to their respective shares in the net proceeds from the sale of
the Sampaloc property including the receivables from Sps. Paringit in the amount of
₱410,000.00. Consequently, David and Leticia should each pay them the amount of
₱520,000.00 as their presumptive legitimes therefrom. 21
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA G.R.
CV No. 88686 is AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 186571 August 11, 2010
GERBERT R. CORPUZ, Petitioner,
vs.
DAISYLYN TIROL STO. TOMAS and The SOLICITOR GENERAL, Respondents.
DECISION
BRION, J.:
Before the Court is a direct appeal from the decision1 of the Regional Trial Court (RTC) of
Laoag City, Branch 11, elevated via a petition for review on certiorari2 under Rule 45 of the
Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian citizenship
through naturalization on November 29, 2000. 3 On January 18, 2005, Gerbert married
respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City.4 Due to work and other
professional commitments, Gerbert left for Canada soon after the wedding. He returned to
the Philippines sometime in April 2005 to surprise Daisylyn, but was shocked to discover that
his wife was having an affair with another man. Hurt and disappointed, Gerbert returned to
Canada and filed a petition for divorce. The Superior Court of Justice, Windsor, Ontario,
Canada granted Gerbert’s petition for divorce on December 8, 2005. The divorce decree took
effect a month later, on January 8, 2006.5
Two years after the divorce, Gerbert has moved on and has found another Filipina to love.
Desirous of marrying his new Filipina fiancée in the Philippines, Gerbert went to the Pasig
City Civil Registry Office and registered the Canadian divorce decree on his and Daisylyn’s
marriage certificate. Despite the registration of the divorce decree, an official of the National
Statistics Office (NSO) informed Gerbert that the marriage between him and Daisylyn still
subsists under Philippine law; to be enforceable, the foreign divorce decree must first be
judicially recognized by a competent Philippine court, pursuant to NSO Circular No. 4, series
of 1982.6
Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce and/or
declaration of marriage as dissolved (petition) with the RTC. Although summoned, Daisylyn
did not file any responsive pleading but submitted instead a notarized letter/manifestation
to the trial court. She offered no opposition to Gerbert’s petition and, in fact, alleged her
desire to file a similar case herself but was prevented by financial and personal
circumstances. She, thus, requested that she be considered as a party-in-interest with a
similar prayer to Gerbert’s.
In its October 30, 2008 decision,7 the RTC denied Gerbert’s petition. The RTC concluded that
Gerbert was not the proper party to institute the action for judicial recognition of the foreign
divorce decree as he is a naturalized Canadian citizen. It ruled that only the Filipino spouse
can avail of the remedy, under the second paragraph of Article 26 of the Family Code, 8 in
order for him or her to be able to remarry under Philippine law. 9 Article 26 of the Family
Code reads:
Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in
force in the country where they were solemnized, and valid there as such, shall also be valid
in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to remarry under Philippine law.
This conclusion, the RTC stated, is consistent with the legislative intent behind the
enactment of the second paragraph of Article 26 of the Family Code, as determined by the
Court in Republic v. Orbecido III; 10 the provision was enacted to "avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after obtaining a
divorce, is no longer married to the Filipino spouse."11
THE PETITION
From the RTC’s ruling,12 Gerbert filed the present petition.13
Gerbert asserts that his petition before the RTC is essentially for declaratory relief, similar to
that filed in Orbecido; he, thus, similarly asks for a determination of his rights under the
second paragraph of Article 26 of the Family Code. Taking into account the rationale behind
the second paragraph of Article 26 of the Family Code, he contends that the provision applies
as well to the benefit of the alien spouse. He claims that the RTC ruling unduly stretched the
doctrine in Orbecido by limiting the standing to file the petition only to the Filipino spouse –
an interpretation he claims to be contrary to the essence of the second paragraph of Article
26 of the Family Code. He considers himself as a proper party, vested with sufficient legal
interest, to institute the case, as there is a possibility that he might be prosecuted for bigamy
if he marries his Filipina fiancée in the Philippines since two marriage certificates, involving
him, would be on file with the Civil Registry Office. The Office of the Solicitor General and
Daisylyn, in their respective Comments,14 both support Gerbert’s position.
Essentially, the petition raises the issue of whether the second paragraph of Article 26 of the
Family Code extends to aliens the right to petition a court of this jurisdiction for the
recognition of a foreign divorce decree.
THE COURT’S RULING
The alien spouse can claim no right under the second paragraph of Article 26 of the Family
Code as the substantive right it establishes is in favor of the Filipino spouse
The resolution of the issue requires a review of the legislative history and intent behind the
second paragraph of Article 26 of the Family Code.
The Family Code recognizes only two types of defective marriages – void15 and
voidable16 marriages. In both cases, the basis for the judicial declaration of absolute nullity or
annulment of the marriage exists before or at the time of the marriage. Divorce, on the other
hand, contemplates the dissolution of the lawful union for cause arising after the
marriage.17 Our family laws do not recognize absolute divorce between Filipino citizens. 18
Recognizing the reality that divorce is a possibility in marriages between a Filipino and an
alien, President Corazon C. Aquino, in the exercise of her legislative powers under the
Freedom Constitution,19 enacted Executive Order No. (EO) 227, amending Article 26 of the
Family Code to its present wording, as follows:
Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in
force in the country where they were solemnized, and valid there as such, shall also be valid
in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to remarry under Philippine law.
Through the second paragraph of Article 26 of the Family Code, EO 227 effectively
incorporated into the law this Court’s holding in Van Dorn v. Romillo, Jr. 20 and Pilapil v. Ibay-
Somera.21 In both cases, the Court refused to acknowledge the alien spouse’s assertion of
marital rights after a foreign court’s divorce decree between the alien and the Filipino. The
Court, thus, recognized that the foreign divorce had already severed the marital bond
between the spouses. The Court reasoned in Van Dorn v. Romillo that:
To maintain x x x that, under our laws, [the Filipino spouse] has to be considered still married
to [the alien spouse] and still subject to a wife's obligations x x x cannot be just. [The Filipino
spouse] should not be obliged to live together with, observe respect and fidelity, and render
support to [the alien spouse]. The latter should not continue to be one of her heirs with
possible rights to conjugal property. She should not be discriminated against in her own
country if the ends of justice are to be served. 22
As the RTC correctly stated, the provision was included in the law "to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after obtaining
a divorce, is no longer married to the Filipino spouse."23 The legislative intent is for the
benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts
created by the divorce decree. Essentially, the second paragraph of Article 26 of the Family
Code provided the Filipino spouse a substantive right to have his or her marriage to the alien
spouse considered as dissolved, capacitating him or her to remarry. 24 Without the second
paragraph of Article 26 of the Family Code, the judicial recognition of the foreign decree of
divorce, whether in a proceeding instituted precisely for that purpose or as a related issue in
another proceeding, would be of no significance to the Filipino spouse since our laws do not
recognize divorce as a mode of severing the marital bond; 25 Article 17 of the Civil Code
provides that the policy against absolute divorces cannot be subverted by judgments
promulgated in a foreign country. The inclusion of the second paragraph in Article 26 of the
Family Code provides the direct exception to this rule and serves as basis for recognizing the
dissolution of the marriage between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the Family Code is not
limited to the recognition of the foreign divorce decree. If the court finds that the decree
capacitated the alien spouse to remarry, the courts can declare that the Filipino spouse is
likewise capacitated to contract another marriage. No court in this jurisdiction, however, can
make a similar declaration for the alien spouse (other than that already established by the
decree), whose status and legal capacity are generally governed by his national law. 26
Given the rationale and intent behind the enactment, and the purpose of the second
paragraph of Article 26 of the Family Code, the RTC was correct in limiting the applicability of
the provision for the benefit of the Filipino spouse. In other words, only the Filipino spouse
can invoke the second paragraph of Article 26 of the Family Code; the alien spouse can claim
no right under this provision.
The foreign divorce decree is presumptive evidence of a right that clothes the party with
legal interest to petition for its recognition in this jurisdiction
We qualify our above conclusion – i.e., that the second paragraph of Article 26 of the Family
Code bestows no rights in favor of aliens – with the complementary statement that this
conclusion is not sufficient basis to dismiss Gerbert’s petition before the RTC. In other words,
the unavailability of the second paragraph of Article 26 of the Family Code to aliens does not
necessarily strip Gerbert of legal interest to petition the RTC for the recognition of his foreign
divorce decree. The foreign divorce decree itself, after its authenticity and conformity with
the alien’s national law have been duly proven according to our rules of evidence, serves as a
presumptive evidence of right in favor of Gerbert, pursuant to Section 48, Rule 39 of the
Rules of Court which provides for the effect of foreign judgments. This Section states:
SEC. 48. Effect of foreign judgments or final orders.—The effect of a judgment or final order
of a tribunal of a foreign country, having jurisdiction to render the judgment or final order is
as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or
final order is conclusive upon the title of the thing; and
(b) In case of a judgment or final order against a person, the judgment or final
order is presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
To our mind, direct involvement or being the subject of the foreign judgment is sufficient to
clothe a party with the requisite interest to institute an action before our courts for the
recognition of the foreign judgment. In a divorce situation, we have declared, no less, that
the divorce obtained by an alien abroad may be recognized in the Philippines, provided the
divorce is valid according to his or her national law. 27
The starting point in any recognition of a foreign divorce judgment is the acknowledgment
that our courts do not take judicial notice of foreign judgments and laws. Justice Herrera
explained that, as a rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country." 28 This means that the foreign
judgment and its authenticity must be proven as facts under our rules on evidence, together
with the alien’s applicable national law to show the effect of the judgment on the alien
himself or herself.29 The recognition may be made in an action instituted specifically for the
purpose or in another action where a party invokes the foreign decree as an integral aspect
of his claim or defense.
In Gerbert’s case, since both the foreign divorce decree and the national law of the alien,
recognizing his or her capacity to obtain a divorce, purport to be official acts of a sovereign
authority, Section 24, Rule 132 of the Rules of Court comes into play. This Section requires
proof, either by (1) official publications or (2) copies attested by the officer having legal
custody of the documents. If the copies of official records are not kept in the Philippines,
these must be (a) accompanied by a certificate issued by the proper diplomatic or consular
officer in the Philippine foreign service stationed in the foreign country in which the record is
kept and (b) authenticated by the seal of his office.
The records show that Gerbert attached to his petition a copy of the divorce decree, as well
as the required certificates proving its authenticity,30 but failed to include a copy of the
Canadian law on divorce.31 Under this situation, we can, at this point, simply dismiss the
petition for insufficiency of supporting evidence, unless we deem it more appropriate to
remand the case to the RTC to determine whether the divorce decree is consistent with the
Canadian divorce law.
We deem it more appropriate to take this latter course of action, given the Article 26
interests that will be served and the Filipina wife’s (Daisylyn’s) obvious conformity with the
petition. A remand, at the same time, will allow other interested parties to oppose the
foreign judgment and overcome a petitioner’s presumptive evidence of a right by proving
want of jurisdiction, want of notice to a party, collusion, fraud, or clear mistake of law or fact.
Needless to state, every precaution must be taken to ensure conformity with our laws before
a recognition is made, as the foreign judgment, once recognized, shall have the effect of res
judicata32 between the parties, as provided in Section 48, Rule 39 of the Rules of Court.33
In fact, more than the principle of comity that is served by the practice of reciprocal
recognition of foreign judgments between nations, the res judicata effect of the foreign
judgments of divorce serves as the deeper basis for extending judicial recognition and for
considering the alien spouse bound by its terms. This same effect, as discussed above, will
not obtain for the Filipino spouse were it not for the substantive rule that the second
paragraph of Article 26 of the Family Code provides.
Considerations beyond the recognition of the foreign divorce decree
As a matter of "housekeeping" concern, we note that the Pasig City Civil Registry Office has
already recorded the divorce decree on Gerbert and Daisylyn’s marriage certificate based on
the mere presentation of the decree.34 We consider the recording to be legally improper;
hence, the need to draw attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that "[a]cts, events and judicial decrees concerning the
civil status of persons shall be recorded in the civil register." The law requires the entry in the
civil registry of judicial decrees that produce legal consequences touching upon a person’s
legal capacity and status, i.e., those affecting "all his personal qualities and relations, more or
less permanent in nature, not ordinarily terminable at his own will, such as his being
legitimate or illegitimate, or his being married or not."35
A judgment of divorce is a judicial decree, although a foreign one, affecting a person’s legal
capacity and status that must be recorded. In fact, Act No. 3753 or the Law on Registry of
Civil Status specifically requires the registration of divorce decrees in the civil registry:
Sec. 1. Civil Register. – A civil register is established for recording the civil status of persons,
in which shall be entered:
(a) births;
(b) deaths;
(c) marriages;
(d) annulments of marriages;
(e) divorces;
(f) legitimations;
(g) adoptions;
(h) acknowledgment of natural children;
(i) naturalization; and
(j) changes of name.
xxxx
Sec. 4. Civil Register Books. — The local registrars shall keep and preserve in their offices the
following books, in which they shall, respectively make the proper entries concerning the
civil status of persons:
(1) Birth and death register;
(2) Marriage register, in which shall be entered not only the marriages
solemnized but also divorces and dissolved marriages.
(3) Legitimation, acknowledgment, adoption, change of name and naturalization
register.
But while the law requires the entry of the divorce decree in the civil registry, the law and
the submission of the decree by themselves do not ipso facto authorize the decree’s
registration. The law should be read in relation with the requirement of a judicial recognition
of the foreign judgment before it can be given res judicata effect. In the context of the
present case, no judicial order as yet exists recognizing the foreign divorce decree. Thus, the
Pasig City Civil Registry Office acted totally out of turn and without authority of law when it
annotated the Canadian divorce decree on Gerbert and Daisylyn’s marriage certificate, on
the strength alone of the foreign decree presented by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of a court
recognition, as it cited NSO Circular No. 4, series of 1982, 36 and Department of Justice
Opinion No. 181, series of 198237 – both of which required a final order from a competent
Philippine court before a foreign judgment, dissolving a marriage, can be registered in the
civil registry, but it, nonetheless, allowed the registration of the decree. For being contrary to
law, the registration of the foreign divorce decree without the requisite judicial recognition is
patently void and cannot produce any legal effect.1avvphi1
Another point we wish to draw attention to is that the recognition that the RTC may extend
to the Canadian divorce decree does not, by itself, authorize the cancellation of the entry in
the civil registry. A petition for recognition of a foreign judgment is not the proper
proceeding, contemplated under the Rules of Court, for the cancellation of entries in the civil
registry.
Article 412 of the Civil Code declares that "no entry in a civil register shall be changed or
corrected, without judicial order." The Rules of Court supplements Article 412 of the Civil
Code by specifically providing for a special remedial proceeding by which entries in the civil
registry may be judicially cancelled or corrected. Rule 108 of the Rules of Court sets in detail
the jurisdictional and procedural requirements that must be complied with before a
judgment, authorizing the cancellation or correction, may be annotated in the civil registry. It
also requires, among others, that the verified petition must be filed with the RTC of the
province where the corresponding civil registry is located; 38 that the civil registrar and all
persons who have or claim any interest must be made parties to the proceedings;39 and that
the time and place for hearing must be published in a newspaper of general circulation. 40 As
these basic jurisdictional requirements have not been met in the present case, we cannot
consider the petition Gerbert filed with the RTC as one filed under Rule 108 of the Rules of
Court.
We hasten to point out, however, that this ruling should not be construed as requiring two
separate proceedings for the registration of a foreign divorce decree in the civil registry –
one for recognition of the foreign decree and another specifically for cancellation of the
entry under Rule 108 of the Rules of Court. The recognition of the foreign divorce decree
may be made in a Rule 108 proceeding itself, as the object of special proceedings (such as
that in Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or
a particular fact. Moreover, Rule 108 of the Rules of Court can serve as the appropriate
adversarial proceeding41 by which the applicability of the foreign judgment can be measured
and tested in terms of jurisdictional infirmities, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the October 30,
2008 decision of the Regional Trial Court of Laoag City, Branch 11, as well as its February 17,
2009 order. We order the REMAND of the case to the trial court for further proceedings in
accordance with our ruling above. Let a copy of this Decision be furnished the Civil Registrar
General. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-68470 October 8, 1985
ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of
the National Capital Region Pasay City and RICHARD UPTON respondents.
MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set
aside the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P,
issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion
for Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private
respondent is a citizen of the United States; that they were married in Hongkong in 1972;
that, after the marriage, they established their residence in the Philippines; that they begot
two children born on April 4, 1973 and December 18, 1975, respectively; that the parties
were divorced in Nevada, United States, in 1982; and that petitioner has re-married also in
Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P
of the Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in
Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking
that petitioner be ordered to render an accounting of that business, and that private
respondent be declared with right to manage the conjugal property. Petitioner moved to
dismiss the case on the ground that the cause of action is barred by previous judgment in the
divorce proceedings before the Nevada Court wherein respondent had acknowledged that
he and petitioner had "no community property" as of June 11, 1982. The Court below denied
the Motion to Dismiss in the mentioned case on the ground that the property involved is
located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is
now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject
to appeal. certiorari and Prohibition are neither the remedies to question the propriety of an
interlocutory order of the trial Court. However, when a grave abuse of discretion was
patently committed, or the lower Court acted capriciously and whimsically, then it devolves
upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct
the error committed which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition
would then lie since it would be useless and a waste of time to go ahead with the
proceedings. 2 Weconsider the petition filed in this case within the exception, and we have
given it due course.
For resolution is the effect of the foreign divorce on the parties and their alleged conjugal
property in the Philippines.
Petitioner contends that respondent is estopped from laying claim on the alleged conjugal
property because of the representation he made in the divorce proceedings before the
American Court that they had no community of property; that the Galleon Shop was not
established through conjugal funds, and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot
prevail over the prohibitive laws of the Philippines and its declared national policy; that the
acts and declaration of a foreign Court cannot, especially if the same is contrary to public
policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property
relations between petitioner and private respondent, after their marriage, were upon
absolute or relative community property, upon complete separation of property, or upon
any other regime. The pivotal fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over
petitioner who appeared in person before the Court during the trial of the case. It also
obtained jurisdiction over private respondent who, giving his address as No. 381 Bush Street,
San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to
agree to the divorce on the ground of incompatibility in the understanding that there were
neither community property nor community obligations. 3 As explicitly stated in the Power of
Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno,
Nevada, to represent him in the divorce proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to file an
Answer, appear on my behalf and do an things necessary and
proper to represent me, without further contesting, subject to the
following:
1. That my spouse seeks a divorce on the ground of incompatibility.
2. That there is no community of property to be adjudicated by the
Court.
3. 'I'hat there are no community obligations to be adjudicated by
the court.
xxx xxx xxx 4
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, 5 only Philippine nationals are covered by the policy against absolute divorces the
same being considered contrary to our concept of public police and morality. However,
aliens may obtain divorces abroad, which may be recognized in the Philippines, provided
they are valid according to their national law. 6 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. As stated by the Federal Supreme Court of the United
States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
The purpose and effect of a decree of divorce from the bond of
matrimony by a court of competent jurisdiction are to change the
existing status or domestic relation of husband and wife, and to
free them both from the bond. The marriage tie when thus severed
as to one party, ceases to bind either. A husband without a wife, or
a wife without a husband, is unknown to the law. When the law
provides, in the nature of a penalty. that the guilty party shall not
marry again, that party, as well as the other, is still absolutely freed
from the bond of the former marriage.
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.
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations under
Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The
latter should not continue to be one of her heirs with possible rights to conjugal property.
She should not be discriminated against in her own country if the ends of justice are to be
served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168785 February 5, 2010
HERALD BLACK DACASIN, Petitioner,
vs.
SHARON DEL MUNDO DACASIN, Respondent.
DECISION
CARPIO, J.:
The Case
For review1 is a dismissal2 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 Code6 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 law15 (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.1avvphi1
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 spouse26 - 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. Romillo27 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-Somera29 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.
Republic of the Philippines
SUPREME COURT
FIRST DIVISION
G.R. No. 154380 October 5, 2005
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
CIPRIANO ORBECIDO III, Respondent.
DECISION
QUISUMBING, J.:
Given a valid marriage between two Filipino citizens, where one party is later naturalized as a
foreign citizen and obtains a valid divorce decree capacitating him or her to remarry, can the
Filipino spouse likewise remarry under Philippine law?
Before us is a case of first impression that behooves the Court to make a definite ruling on
this apparently novel question, presented as a pure question of law.
In this petition for review, the Solicitor General assails the Decision1 dated May 15, 2002, of
the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and its Resolution2 dated
July 4, 2002 denying the motion for reconsideration. The court a quo had declared that
herein respondent Cipriano Orbecido III is capacitated to remarry. The fallo of the impugned
Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art. 26 of the Family Code
and by reason of the divorce decree obtained against him by his American wife, the
petitioner is given the capacity to remarry under the Philippine Law.
IT IS SO ORDERED.3
The factual antecedents, as narrated by the trial court, are as follows.
On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United
Church of Christ in the Philippines in Lam-an, Ozamis City. Their marriage was blessed with a
son and a daughter, Kristoffer Simbortriz V. Orbecido and Lady Kimberly V. Orbecido.
In 1986, Cipriano’s wife left for the United States bringing along their son Kristoffer. A few
years later, Cipriano discovered that his wife had been naturalized as an American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce decree
and then married a certain Innocent Stanley. She, Stanley and her child by him currently live
at 5566 A. Walnut Grove Avenue, San Gabriel, California.
Cipriano thereafter filed with the trial court a petition for authority to remarry invoking
Paragraph 2 of Article 26 of the Family Code. No opposition was filed. Finding merit in the
petition, the court granted the same. The Republic, herein petitioner, through the Office of
the Solicitor General (OSG), sought reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26 OF THE FAMILY CODE4
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to the
instant case because it only applies to a valid mixed marriage; that is, a marriage celebrated
between a Filipino citizen and an alien. The proper remedy, according to the OSG, is to file a
petition for annulment or for legal separation. 5 Furthermore, the OSG argues there is no law
that governs respondent’s situation. The OSG posits that this is a matter of legislation and
not of judicial determination.6
For his part, respondent admits that Article 26 is not directly applicable to his case but insists
that when his naturalized alien wife obtained a divorce decree which capacitated her to
remarry, he is likewise capacitated by operation of law pursuant to Section 12, Article II of
the Constitution.7
At the outset, we note that the petition for authority to remarry filed before the trial court
actually constituted a petition for declaratory relief. In this connection, Section 1, Rule 63 of
the Rules of Court provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
Section 1. Who may file petition—Any person interested under a deed, will, contract or other
written instrument, or whose rights are affected by a statute, executive order or regulation,
ordinance, or other governmental regulation may, before breach or violation thereof, bring
an action in the appropriate Regional Trial Court to determine any question of construction
or validity arising, and for a declaration of his rights or duties, thereunder.
...
The requisites of a petition for declaratory relief are: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3)
that the party seeking the relief has a legal interest in the controversy; and (4) that the issue
is ripe for judicial determination.8
This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between two
Filipino citizens where one later acquired alien citizenship, obtained a divorce decree, and
remarried while in the U.S.A. The interests of the parties are also adverse, as petitioner
representing the State asserts its duty to protect the institution of marriage while
respondent, a private citizen, insists on a declaration of his capacity to remarry. Respondent,
praying for relief, has legal interest in the controversy. The issue raised is also ripe for judicial
determination inasmuch as when respondent remarries, litigation ensues and puts into
question the validity of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code apply
to the case of respondent? Necessarily, we must dwell on how this provision had come about
in the first place, and what was the intent of the legislators in its enactment?
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209,
otherwise known as the "Family Code," which took effect on August 3, 1988. Article 26
thereof states:
All marriages solemnized outside the Philippines in accordance with the laws in force in the
country where they were solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No.
227 was likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A
second paragraph was added to Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with the laws in
force in the country where they were solemnized, and valid there as such, shall also be valid
in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (Emphasis
supplied)
On its face, the foregoing provision does not appear to govern the situation presented by the
case at hand. It seems to apply only to cases where at the time of the celebration of the
marriage, the parties are a Filipino citizen and a foreigner. The instant case is one where at
the time the marriage was solemnized, the parties were two Filipino citizens, but later on,
the wife was naturalized as an American citizen and subsequently obtained a divorce
granting her capacity to remarry, and indeed she remarried an American citizen while
residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings 9 on the Family Code, the Catholic Bishops’
Conference of the Philippines (CBCP) registered the following objections to Paragraph 2 of
Article 26:
1. The rule is discriminatory. It discriminates against those whose spouses are Filipinos who
divorce them abroad. These spouses who are divorced will not be able to re-marry, while the
spouses of foreigners who validly divorce them abroad can.
2. This is the beginning of the recognition of the validity of divorce even for Filipino citizens.
For those whose foreign spouses validly divorce them abroad will also be considered to be
validly divorced here and can re-marry. We propose that this be deleted and made into law
only after more widespread consultation. (Emphasis supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of
Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code
Revision Committee, is to avoid the absurd situation where the Filipino spouse remains
married to the alien spouse who, after obtaining a divorce, is no longer married to the
Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v.
Romillo, Jr.10 The Van Dorn case involved a marriage between a Filipino citizen and a
foreigner. The Court held therein that a divorce decree validly obtained by the alien spouse is
valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry
under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the marriage,
the parties were Filipino citizens, but later on, one of them obtains a foreign citizenship by
naturalization?
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of
Appeals.11 In Quita, the parties were, as in this case, Filipino citizens when they got married.
The wife became a naturalized American citizen in 1954 and obtained a divorce in the same
year. The Court therein hinted, by way of obiter dictum, that a Filipino divorced by his
naturalized foreign spouse is no longer married under Philippine law and can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason, we hold
that Paragraph 2 of Article 26 should be interpreted to include cases involving parties who, at
the time of the celebration of the marriage were Filipino citizens, but later on, one of them
becomes naturalized as a foreign citizen and obtains a divorce decree. The Filipino spouse
should likewise be allowed to remarry as if the other party were a foreigner at the time of
the solemnization of the marriage. To rule otherwise would be to sanction absurdity and
injustice. Where the interpretation of a statute according to its exact and literal import
would lead to mischievous results or contravene the clear purpose of the legislature, it
should be construed according to its spirit and reason, disregarding as far as necessary the
letter of the law. A statute may therefore be extended to cases not within the literal meaning
of its terms, so long as they come within its spirit or intent. 12
If we are to give meaning to the legislative intent to avoid the absurd situation where the
Filipino spouse remains married to the alien spouse who, after obtaining a divorce is no
longer married to the Filipino spouse, then the instant case must be deemed as coming
within the contemplation of Paragraph 2 of Article 26.
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of
Article 26 as follows:
1. There is a valid marriage that has been celebrated between a Filipino citizen and a
foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien
spouse capacitating the latter to remarry.
In this case, when Cipriano’s wife was naturalized as an American citizen, there was still a
valid marriage that has been celebrated between her and Cipriano. As fate would have it, the
naturalized alien wife subsequently obtained a valid divorce capacitating her to remarry.
Clearly, the twin requisites for the application of Paragraph 2 of Article 26 are both present
in this case. Thus Cipriano, the "divorced" Filipino spouse, should be allowed to remarry.
We are also unable to sustain the OSG’s theory that the proper remedy of the Filipino spouse
is to file either a petition for annulment or a petition for legal separation. Annulment would
be a long and tedious process, and in this particular case, not even feasible, considering that
the marriage of the parties appears to have all the badges of validity. On the other hand,
legal separation would not be a sufficient remedy for it would not sever the marriage tie;
hence, the legally separated Filipino spouse would still remain married to the naturalized
alien spouse.
However, we note that the records are bereft of competent evidence duly submitted by
respondent concerning the divorce decree and the naturalization of respondent’s wife. It is
settled rule that one who alleges a fact has the burden of proving it and mere allegation is
not evidence.13
Accordingly, for his plea to prosper, respondent herein must prove his allegation that his wife
was naturalized as an American citizen. Likewise, before a foreign divorce decree can be
recognized by our own courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it. 14 Such foreign law must also be
proved as our courts cannot take judicial notice of foreign laws. Like any other fact, such laws
must be alleged and proved.15 Furthermore, respondent must also show that the divorce
decree allows his former wife to remarry as specifically required in Article 26. Otherwise,
there would be no evidence sufficient to declare that he is capacitated to enter into another
marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the Family
Code (E.O. No. 209, as amended by E.O. No. 227), should be interpreted to allow a Filipino
citizen, who has been divorced by a spouse who had acquired foreign citizenship and
remarried, also to remarry. However, considering that in the present petition there is no
sufficient evidence submitted and on record, we are unable to declare, based on
respondent’s bare allegations that his wife, who was naturalized as an American citizen, had
obtained a divorce decree and had remarried an American, that respondent is now
capacitated to remarry. Such declaration could only be made properly upon respondent’s
submission of the aforecited evidence in his favor.
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The assailed
Decision dated May 15, 2002, and Resolution dated July 4, 2002, of the Regional Trial Court
of Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
EN BANC
G.R. No. 221029, April 24, 2018
REPUBLIC OF THE PHILIPPINES, Petitioner, v. MARELYN TANEDO MANALO, Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court (Rules) seeks to
reverse and set aside the September 18, 2014 Decision1 and October 12, 2015 Resolution2 of
the Court of Appeals (CA) in CA-G.R. CV No. 100076. The dispositive portion of the Decision
states:
WHEREFORE, the instant appeal is GRANTED. The Decision dated 15 October 2012 of the
Regional Trial Court of Dagupan City, First Judicial Region, Branch 43, in SPEC. PROC. NO.
2012-0005 is REVERSED and SET ASIDE.
Let a copy of this Decision be served on the Local Civil Registrar of San Juan, Metro Manila.
SO ORDERED.3
The facts are undisputed.
On January 10, 2012, respondent Marelyn Tanedo Manalo (Manalo) filed a petition for
cancellation of entry of marriage in the Civil Registry of San Juan, Metro Manila, by virtue of
a judgment of divorce rendered by a Japanese court.
Finding the petition to be sufficient in form and in substance, Branch 43 of the Regional Trial
Court (RTC) of Dagupan City set the case for initial hearing on April 25, 2012. The petition and
the notice of initial hearing were published once a week for three consecutive weeks in a
newspaper of general circulation. During the initial hearing, counsel for Manalo marked the
documentary evidence (consisting of the trial court's Order dated January 25, 2012, affidavit
of publication, and issues of the Northern Journal dated February 21-27, 2012, February 28 -
March 5, 2012, and March 6-12, 2012) for purposes of compliance with the jurisdictional
requirements.
The Office of the Solicitor General (OSG) entered its appearance for petitioner Republic of
the Philippines authorizing the Office of the City Prosecutor of Dagupan to appear on its
behalf. Likewise, a Manifestation and Motion was filed questioning the title and/or caption
of the petition considering that, based on the allegations therein, the proper action should
be a petition for recognition and enforcement of a foreign judgment.
As a result, Manalo moved to admit an Amended Petition, which the court granted. The
Amended Petition, which captioned that it is also a petition for recognition and enforcement
of foreign judgment, alleged:
2. That petitioner is previously married in the Philippines to a Japanese national named
YOSHINO MINORO as shown by their Marriage Contract x x x;
3. That recently, a case for divorce was filed by herein [petitioner] in Japan and after due
proceedings, a divorce decree dated December 6, 2011 was rendered by the Japanese Court
x x x;
4. That at present, by virtue of the said divorce decree, petitioner and her divorced Japanese
husband are no longer living together and in fact, petitioner and her daughter are living
separately from said Japanese former husband;
5. That there is an imperative need to have the entry of marriage in the Civil Registry of San
Juan, Metro Manila cancelled, where the petitioner and the former Japanese husband's
marriage was previously registered, in order that it would not appear anymore that
petitioner is still married to the said Japanese national who is no longer her husband or is no
longer married to her; furthermore, in the event that petitioner decides to be remarried, she
shall not be bothered and disturbed by said entry of marriage;
6. That this petition is filed principally for the purpose of causing the cancellation of entry of
the marriage between the petitioner and the said Japanese national, pursuant to Rule 108 of
the Revised Rules of Court, which marriage was already dissolved by virtue of the aforesaid
divorce decree; [and]
7. That petitioner prays, among others, that together with the cancellation of the said entry
of her marriage, that she be allowed to return and use. her maiden surname, MANALO.4
Manalo was allowed to testify in advance as she was scheduled to leave for Japan for her
employment. Among the documents that were offered and admitted were:
1. Court Order dated January 25, 2012, finding the petition and its attachments to be
sufficient in form and in substance;
2. Affidavit of Publication;
3. Issues of the Northern Journal dated February 21-27, 2012, February 28 - March 5, 2012,
and March 6-12, 2012;
4. Certificate of Marriage between Manalo and her former Japanese husband;
5. Divorce Decree of the Japanese court;
6. Authentication/Certificate issued by the Philippine Consulate General in Osaka, Japan of
the Notification of Divorce; and
7. Acceptance of Certificate of Divorce.5
The OSG did not present any controverting evidence to rebut the allegations of Manalo.
On October 15, 2012, the trial court denied the petition for lack of merit. In ruling that the
divorce obtained by Manalo in Japan should not be recognized, it opined that, based on
Article 15 of the New Civil Code, the Philippine law "does not afford Filipinos the right to file
for a divorce, whether they are in the country or living abroad, if they are married to Filipinos
or to foreigners, or if they celebrated their marriage in the Philippines or in another country"
and that unless Filipinos "are naturalized as citizens of another country, Philippine laws shall
have control over issues related to Filipinos' family rights and duties, together with the
determination of their condition and legal capacity to enter into contracts and civil relations,
including marriages."6
On appeal, the CA overturned the RTC decision. It held that Article 26 of the Family Code of
the Philippines (Family Code) is applicable even if it was Manalo who filed for divorce against
her Japanese husband because the decree they obtained makes the latter no longer married
to the former, capacitating him to remarry. Conformably with Navarro, et al. v. Exec.
Secretary Ermita, et al.7 ruling that the meaning of the law should be based on the intent of
the lawmakers and in view of the legislative intent behind Article 26, it would be the height
of injustice to consider Manalo as still married to the Japanese national, who, in turn, is no
longer married to her. For the appellate court, the fact that it was Manalo who filed the
divorce case is inconsequential. Cited as similar to this case was Van Dorn v. Judge Romillo,
Jr.8 where the marriage between a foreigner and a Filipino was dissolved through a divorce
filed abroad by the latter.
The OSG filed a motion for reconsideration, but it was denied; hence, this petition.
We deny the petition and partially affirm the CA decision.
Divorce, the legal dissolution of a lawful union for a cause arising after marriage, are of two
types: (1) absolute divorce or a vinculo matrimonii, which terminates the marriage, and (2)
limited divorce or a mensa et thoro, which suspends it and leaves the bond in full force. 9 In
this jurisdiction, the following rules exist:
1. Philippine law does not provide for absolute divorce; hence, our courts cannot grant it.10
2. Consistent with Articles 1511 and 1712 of the New Civil Code, the marital bond between
two Filipinos cannot be dissolved even by an absolute divorce obtained abroad. 13
3. An absolute divorce obtained abroad by a couple, who are both aliens, may be recognized
in the Philippines, provided it is consistent with their respective national laws. 14
4. In mixed marriages involving a Filipino and a foreigner, the former is allowed to contract a
subsequent marriage in case the absolute divorce is validly obtained abroad by the alien
spouse capacitating him or her to remarry. 15
On July 6, 1987, then President Corazon C. Aquino signed into law Executive Order (E.O.) No.
209, otherwise known as The Family Code of the Philippines, which took effect on August 3,
1988.16 Shortly thereafter, E.O. No. 227 was issued on July 17, 1987. 17 Aside from amending
Articles 36 and 39 of the Family Code, a second paragraph was added to Article 26. 18 This
provision was originally deleted by the Civil Code Revision Committee (Committee), but it was
presented and approved at a Cabinet meeting after Pres. Aquino signed E.O. No. 209. 19 As
modified, Article 26 now states:
Art. 26. All marriages solemnized outside the Philippines, in accordance with the laws in
force in the country where they were solemnized, and valid there as such, shall also be valid
in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to remarry under Philippine law.
Paragraph 2 of Article 26 confers jurisdiction on Philippine courts to extend the effect of a
foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity
of the dissolution of the marriage. 20 It authorizes our courts to adopt the effects of a foreign
divorce decree precisely because the Philippines does not allow divorce. 21 Philippine courts
cannot try the case on the merits because it is tantamount to trying a divorce case. 22 Under
the principles of comity, our jurisdiction recognizes a valid divorce obtained by a spouse of
foreign nationality, but the legal effects thereof, e.g., on custody, care and support of the
children or property relations of the spouses, must still be determined by our courts. 23
According to Judge Alicia Sempio-Diy, a member of the Committee, the idea of the
amendment is to avoid the absurd situation of a Filipino as still being married to his or her
alien spouse, although the latter is no longer married to the former because he or she had
obtained a divorce abroad that is recognized by his or her national law.24 The aim was that it
would solve the problem of many Filipino women who, under the New Civil Code, are still
considered married to their alien husbands even after the latter have already validly divorced
them under their (the husbands') national laws and perhaps have already married again. 25
In 2005, this Court concluded that Paragraph 2 of Article 26 applies to a case where, at the
time of the celebration of the marriage, the parties were Filipino citizens, but later on, one of
them acquired foreign citizenship by naturalization, initiated a divorce proceeding, and
obtained a favorable decree. We held in Republic of the Phils. v. Orbecido III:26
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals. In Quita,
the parties were, as in this case, Filipino citizens when they got married. The wife became a
naturalized American citizen in 1954 and obtained a divorce in the same year. The Court
therein hinted, by way of obiter dictum, that a Filipino divorced by his naturalized foreign
spouse is no longer married under Philippine law and can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason, we hold
that Paragraph 2 of Article 26 should be interpreted to include cases involving parties who, at
the time of the celebration of the marriage were Filipino citizens, but later on, one of them
becomes naturalized as a foreign citizen and obtains a divorce decree. The Filipino spouse
should likewise be allowed to remarry as if the other party were a foreigner at the time of
the solemnization of the marriage. To rule otherwise would be to sanction absurdity and
injustice. x x x
If we are to give meaning to the legislative intent to avoid the absurd situation where the
Filipino spouse remains married to the alien spouse who, after obtaining a divorce is no
longer married to the Filipino spouse, then the instant case must be deemed as coming
within the contemplation of Paragraph 2 of Article 26.
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of
Article 26 as follows:
1. There is a valid marriage that has been celebrated between a
Filipino citizen and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating
him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien
spouse capacitating the latter to remarry.27
Now, the Court is tasked to resolve whether, under the same provision, a Filipino citizen has
the capacity to remarry under Philippine law after initiating a divorce proceeding abroad and
obtaining a favorable judgment against his or her alien spouse who is capacitated to remarry.
Specifically, Manalo pleads for the recognition and enforcement of the divorce decree
rendered by the Japanese court and for the cancellation of the entry of marriage in the local
civil registry "in order that it would not appear anymore that [she] is still married to the said
Japanese national who is no longer her husband or is no longer married to her; [and], in the
event that [she] decides to be remarried, she shall not be bothered and disturbed by said
entry of marriage," and to return and to use her maiden surname.
We rule in the affirmative.
Both Dacasin v. Dacasin28 and Van Dorn29 already recognized a foreign divorce decree that
was initiated and obtained by the Filipino spouse and extended its legal effects on the issues
of child custody and property relation, respectively.
In Dacasin, post-divorce, the former spouses executed an Agreement for the joint custody of
their minor daughter. Later on, the husband, who is a US citizen, sued his Filipino wife to
enforce the Agreement, alleging that it was only, the latter who exercised sole custody of
their child. The trial court dismissed the action for lack of jurisdiction, on the ground, among
others, that the divorce decree is binding following the "nationality rule" prevailing in this
jurisdiction. The husband moved to reconsider, arguing that the divorce decree obtained by
his former wife is void, but it was denied. In ruling that the trial court has jurisdiction to
entertain the suit but not to enforce the Agreement, which is void, this Court said:
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 - 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 settled the matter by holding that an alien spouse of a
Filipino is bound by a divorce decree obtained abroad. 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 x x x.30
Van Dorn was decided before the Family Code took into effect. There, a complaint was filed
by the ex-husband, who is a US citizen, against his Filipino wife to render an accounting of a
business that was alleged to be a conjugal property and to be declared with right to manage
the same. Van Dorn moved to dismiss the case on the ground that the cause of action was
barred by previous judgment in the divorce proceedings that she initiated, but the trial court
denied the motion. On his part, her ex-husband averred that the divorce decree issued by
the Nevada court could not prevail over the prohibitive laws of the Philippines and its
declared national policy; that the acts and declaration of a foreign court cannot, especially if
the same is contrary to public policy, divest Philippine courts of jurisdiction to entertain
matters within its jurisdiction. In dismissing the case filed by the alien spouse, the Court
discussed the effect of the foreign divorce on the parties and their conjugal property in the
Philippines. Thus:
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. As stated by the Federal Supreme Court of the United States
in Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony by a court of
competent jurisdiction are to change the existing status or domestic relation of husband and
wife, and to free them both from the bond. The marriage tie, when thus severed as to one
party, ceases to bind either. A husband without a wife, or a wife without a husband, is
unknown to the law. When the law provides, in the nature of a penalty, that the guilty party
shall not marry again, that party, as well as the other, is still absolutely freed from the bond
of the former marriage."
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.
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations under
Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The
latter should not continue to be one of her heirs with possible rights to conjugal property.
She should not be discriminated against in her own country if the ends of justice are to be
served.31
In addition, the fact that a validly obtained foreign divorce initiated by the Filipino spouse
can be recognized and given legal effects in the Philippines is implied from Our rulings
in Fujiki v. Marinay, et al.32 and Medina v. Koike.33
In Fujiki, the Filipino wife, with the help of her first husband, who is a Japanese national, was
able to obtain a judgment from Japan's family court, which declared the marriage between
her and her second husband, who is a Japanese national, void on the ground of bigamy. In
resolving the issue of whether a husband or wife of a prior marriage can file a petition to
recognize a foreign judgment nullifying the subsequent marriage between his or her spouse
and a foreign citizen on the ground of bigamy, We ruled:
Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay
and Maekara in the civil registry on the basis of the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material interest in maintaining
the integrity of the marriage he contracted and the property relations arising from it. There is
also no doubt that he is interested in the cancellation of an entry of a bigamous marriage in
the civil registry, which compromises the public record of his marriage. The interest derives
from the substantive right of the spouse not only to preserve (or dissolve, in limited
instances) his most intimate human relation, but also to protect his property interests that
arise by operation of law the moment he contracts marriage. These property interests in
marriage include the right to be supported "in keeping with the financial capacity of the
family" and preserving the property regime of the marriage.
Property rights are already substantive rights protected by the Constitution, but a spouse's
right in a marriage extends further to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family Code. x x x 34
On the other hand, in Medina, the Filipino wife and her Japanese husband jointly filed for
divorce, which was granted. Subsequently, she filed a petition before the RTC for judicial
recognition of foreign divorce and declaration of capacity to remarry pursuant to Paragraph
2 of Article 26. The RTC denied the petition on the ground that the foreign divorce decree
and the national law of the alien spouse recognizing his capacity to obtain a divorce decree
must be proven in accordance with Sections 24 and 25 of Rule 132 of the Revised Rules on
Evidence. This Court agreed and ruled that, consistent with Corpuz v. Sto. Tomas, et
al.35 and Garcia v. Recio,36 the divorce decree and the national law of the alien spouse must
be proven. Instead of dismissing the case, We referred it to the CA for appropriate action
including the reception of evidence to determine and resolve the pertinent factual issues.
There is no compelling reason to deviate from the above-mentioned rulings. When this Court
recognized a foreign divorce decree that was initiated and obtained by the Filipino spouse
and extended its legal effects on the issues of child custody and property relation, it should
not stop short in likewise acknowledging that one of the usual and necessary consequences
of absolute divorce is the right to remarry. Indeed, there is no longer a mutual obligation to
live together and observe fidelity. When the marriage tie is severed and ceased to exist, the
civil status and the domestic relation of the former spouses change as both of them are freed
from the marital bond.
The dissent is of the view that, under the nationality principle, Manalo's personal status is
subject to Philippine law, which prohibits absolute divorce. Hence, the divorce decree which
she obtained under Japanese law cannot be given effect, as she is, without dispute, a
national not of Japan, but of the Philippines. It is said that a contrary ruling will subvert not
only the intention of the framers of the law, but also that of the Filipino people, as expressed
in the Constitution. The Court is, therefore, bound to respect the prohibition until the
legislature deems it fit to lift the same.
We beg to differ.
Paragraph 2 of Article 26 speaks of "a divorce x x x validly obtained abroad by the alien
spouse capacitating him or her to remarry. " Based on a clear and plain reading of the
provision, it only requires that there be a divorce validly obtained abroad. The letter of the
law does not demand that the alien spouse should be the one who initiated the proceeding
wherein the divorce decree was granted. It does not distinguish whether the Filipino spouse
is the petitioner or the respondent in the foreign divorce proceeding. The Court is bound by
the words of the statute; neither can We put words in the mouths of the lawmakers. 37 "The
legislature is presumed to know the meaning of the words, to have used words advisedly,
and to have expressed its intent by the use of such words as are found in the statute. Verba
legis non est recedendum, or from the words of a statute there should be no departure." 38
Assuming, for the sake of argument, that the word "obtained" should be interpreted to mean
that the divorce proceeding must be actually initiated by the alien spouse, still, the Court will
not follow the letter of the statute when to do so would depart from the true intent of the
legislature or would otherwise yield conclusions inconsistent with the general purpose of the
act.39 Laws have ends to achieve, and statutes should be so construed as not to defeat but to
carry out such ends and purposes. 40 As held in League of Cities of the Phils., et al. v.
COMELEC, et al.:41
The legislative intent is not at all times accurately reflected in the manner in which the
resulting law is couched. Thus, applying a verba legis or strictly literal interpretation of a
statute may render it meaningless and lead to inconvenience, an absurd situation or
injustice. To obviate this aberration, and bearing in mind the principle that the intent or the
spirit of the law is the law itself, resort should be to the rule that the spirit of the law controls
its letter.
To reiterate, the purpose of Paragraph 2 of Article 26 is to avoid the absurd situation where
the Filipino spouse remains married to the alien spouse who, after a foreign divorce decree
that is effective in the country where it was rendered, is no longer married to the Filipino
spouse. The provision is a corrective measure to address an anomaly where the Filipino
spouse is tied to the marriage while the foreign spouse is free to marry under the laws of his
or her country.42 Whether the Filipino spouse initiated the foreign divorce proceeding or not,
a favorable decree dissolving the marriage bond and capacitating his or her alien spouse to
remarry will have the same result: the Filipino spouse will effectively be without a husband
or wife. A Filipino who initiated a foreign divorce proceeding is in the same place and in "like
circumstance as a Filipino who is at the receiving end of an alien initiated proceeding.
Therefore, the subject provision should not make a distinction. In both instance, it is
extended as a means to recognize the residual effect of the foreign divorce decree on
Filipinos whose marital ties to their alien spouses are severed by operation of the latter's
national law.
Conveniently invoking the nationality principle is erroneous. Such principle, found under
Article 15 of the Civil Code, is not an absolute and unbending rule. In fact, the mere existence
of Paragraph 2 of Article 26 is a testament that the State may provide for an exception
thereto. Moreover, blind adherence to the nationality principle must be disallowed if it
would cause unjust discrimination and oppression to certain classes of individuals whose
rights are equally protected by law. The courts have the duty to enforce the laws of divorce
as written by the Legislature only if they are constitutional. 43
While the Congress is allowed a wide leeway in providing for a valid classification and that its
decision is accorded recognition and respect by the courts of justice, such classification may
be subjected to judicial review.44 The deference stops where the classification violates a
fundamental right, or prejudices persons accorded special protection by the
Constitution.45 When these violations arise, this Court must discharge its primary role as the
vanguard of constitutional guaranties, and require a stricter and more exacting adherence to
constitutional limitations.46 If a legislative classification impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a suspect
class strict judicial scrutiny is required since it is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve a compelling
state interest and that it is the least restrictive means to protect such interest. 47
"Fundamental rights" whose infringement leads to strict scrutiny under the equal protection
clause are those basic liberties explicitly or implicitly guaranteed in the Constitution. 48 It
includes the right of procreation, the right to marry, the right to exercise free speech,
political expression, press, assembly, and so forth, the right to travel, and the right to
vote.49 On the other hand, what constitutes compelling state interest is measured by the
scale of rights and powers arrayed in the Constitution and calibrated by history. 50 It is akin to
the paramount interest of the state for which some individual liberties must give way, such
as the promotion of public interest, public safety or the general welfare. 51 It essentially
involves a public right or interest that, because of its primacy, overrides individual rights, and
allows the former to take precedence over the latter. 52
Although the Family Code was not enacted by the Congress, the same principle applies with
respect to the acts of the President, which have the force and effect of law unless declared
otherwise by the court. In this case, We find that Paragraph 2 of Article 26 violates one of the
essential requisites53 of the equal protection clause.54 Particularly, the limitation of the
provision only to a foreign divorce decree initiated by the alien spouse is unreasonable as it is
based on superficial, arbitrary, and whimsical classification.
A Filipino who is married to another Filipino is not similarly situated with a Filipino who is
married to a foreign citizen. There are real, material and substantial differences between
them. Ergo, they should not be treated alike, both as to rights conferred and liabilities
imposed. Without a doubt, there are political, economic, cultural, and religious dissimilarities
as well as varying legal systems and procedures, all too unfamiliar, that a Filipino national
who is married to an alien spouse has to contend with. More importantly, while a divorce
decree obtained abroad by a Filipino against another Filipino is null and void, a divorce
decree obtained by an alien against his or her Filipino spouse is recognized if made in
accordance with the national law of the foreigner. 55
On the contrary, there is no real and substantial difference between a Filipino who initiated a
foreign divorce proceedings and a Filipino who obtained a divorce decree upon the instance
of his or her alien spouse. In the eyes of the Philippine and foreign laws, both are considered
as Filipinos who have the same rights and obligations in a alien land. The circumstances
surrounding them are alike. Were it not for Paragraph 2 of Article 26, both are still married
to their foreigner spouses who are no longer their wives/husbands. Hence, to make a
distinction between them based merely on the superficial difference of whether they
initiated the divorce proceedings or not is utterly unfair. Indeed, the treatment gives undue
favor to one and unjustly discriminate against the other.
Further, the differentiation in Paragraph 2 of Article 26 is arbitrary. There is inequality in
treatment because a foreign divorce decree that was initiated and obtained by a Filipino
citizen against his or her alien spouse would not be recognized even if based on grounds
similar to Articles 35, 36, 37 and 38 of the Family Code. 56 In filing for divorce based on these
grounds, the Filipino spouse cannot be accused of invoking foreign law at whim, tantamount
to insisting that he or she should be governed with whatever law he or she chooses. The
dissent's comment that Manalo should be "reminded that all is not lost, for she may still pray
for the severance of her marital ties before the RTC in accordance with the mechanisms now
existing under the Family Code" is anything but comforting. For the guidance of the bench
and the bar, it would have been better if the dissent discussed in detail what these
"mechanisms" are and how they specifically apply in Manalo's case as well as those who are
similarly situated. If the dissent refers to a petition for declaration of nullity or annulment of
marriage, the reality is that there is no assurance that our courts will automatically grant the
same. Besides, such proceeding is duplicitous, costly, and protracted. All to the prejudice of
our kababayan.
It is argued that the Court's liberal interpretation of Paragraph 2 of Article 26 encourages
Filipinos to marry foreigners, opening the floodgate to the indiscriminate practice of Filipinos
marrying foreign nationals or initiating divorce proceedings against their alien spouses.
The supposition is speculative and unfounded.
First, the dissent falls into a hasty generalization as no data whatsoever was shown to
support what he intends to prove. Second, We adhere to the presumption of good faith in
this jurisdiction. Under the rules on evidence, it is disputably presumed (i.e., satisfactory if
uncontradicted and overcome by other evidence) that a person is innocent of crime or
wrong,57 that a person intends the ordinary consequences of his voluntary acts, 58 that a
person takes ordinary care of his concerns,59 that acquiescence resulted from a belief that
the thing acquiesced in was conformable to the law and fact, 60 that a man and woman
deporting themselves as husband and wife have entered into a lawful contract of
marriage,61 and that the law has been obeyed.62 It is whimsical to easily attribute any illegal,
irregular or immoral conduct on the part of a Filipino just because he or she opted to marry a
foreigner instead of a fellow Filipino. It is presumed that interracial unions are entered into
out of genuine love and affection, rather than prompted by pure lust or profit. Third, We
take judicial notice of the fact that Filipinos are relatively more forbearing and conservative
in nature and that they are more often the victims or at the losing end of mixed marriages.
And Fourth, it is not for Us to prejudge the motive behind a Filipino's decision to marry an
alien national. In one case, it was said:
Motives for entering into a marriage are varied and complex. The State does not and cannot
dictate on the kind of life that a couple chooses to lead. Any attempt to regulate their
lifestyle would go into the realm of their right to privacy and would raise serious
constitutional questions. The right to marital privacy allows married couples to structure
their marriages in almost any way they see fit, to live together or live apart, to have children
or no children, to love one another or not, and so on. Thus, marriages entered into for other
purposes, limited or otherwise, such as convenience, companionship, money, status, and
title, provided that they comply with all the legal requisites, are equally valid. Love, though
the ideal consideration in a marriage contract, is not the only valid cause for marriage. Other
considerations, not precluded by law, may validly support a marriage. 63
The 1987 Constitution expresses that marriage, as an inviolable social institution, is the
foundation of the family and shall be protected by the State. 64 Nevertheless, it was not
meant to be a general prohibition on divorce because Commissioner Jose Luis Martin C.
Gascon, in response to a question by Father Joaquin G. Bernas during the deliberations of the
1986 Constitutional Commission, was categorical about this point. 65 Their exchange reveal as
follows:
MR. RAMA. Mr. Presiding Officer, may I ask that Commissioner Bernas be recognized.
THE PRESIDING OFFICER (Mr. Colayco). Commissioner Bernas is recognized.
FR. BERNAS. Just one question, and I am not sure if it has been categorically answered. I refer
specifically to the proposal of Commissioner Gascon. Is this to be understood as a prohibition
of a general law on divorce? His intention is to make this a prohibition so that the legislature
cannot pass a divorce law.
MR. GASCON. Mr. Presiding Officer, that was not primarily my intention. My intention was
primarily to encourage the social institution of marriage, but not necessarily discourage
divorce. But now that he mentioned the issue of divorce, my personal opinion is to
discourage it, Mr. Presiding Officer.
FR. BERNAS. No. my question is more categorical. Does this carry the meaning of prohibiting
a divorce law?
MR. GASCON. No. Mr. Presiding Officer.
FR. BERNAS. Thank you.66
Notably, a law on absolute divorce is not new in our country. Effective March 11, 1917,
Philippine courts could grant an absolute divorce on the grounds of adultery on the part of
the wife or concubinage on the part of the husband by virtue of Act No. 2710 of the
Philippine Legislature.67 On March 25, 1943, pursuant to the authority conferred upon him by
the Commander-in-Chief of the Imperial Japanese Forces in the Philippines and with the
approval of the latter, the Chairman of the Philippine Executive Commission promulgated an
E.O. No. 141 ("New Divorce Law"), which repealed Act No. 2710 and provided eleven
grounds for absolute divorce, such as intentional or unjustified desertion continuously for at
least one year prior to the filing of the action, slander by deed or gross insult by one spouse
against the other to such an extent as to make further living together impracticable, and a
spouse's incurable insanity.68 When the Philippines was liberated and the Commonwealth
Government was restored, it ceased to have force and effect and Act No. 2710 again
prevailed.69 From August 30, 1950, upon the effectivity of Republic Act No. 386 or the New
Civil Code, an absolute divorce obtained by Filipino citizens, whether here or abroad, is no
longer recognized.70
Through the years, there has been constant clamor from various sectors of the Philippine
society to re-institute absolute divorce. As a matter of fact, in the current 17th Congress,
House Bill (H.B.) Nos. 116,71 1062,72 238073 and 602774 were filed in the House of
Representatives. In substitution of these bills, H.B. No. 7303 entitled "An Act Instituting
Absolute Divorce and Dissolution of Marriage in the Philippines" or the Absolute Divorce Act
of 2018 was submitted by the House Committee on Population and Family Relations on
February 28, 2018. It was approved on March 19, 2018 on Third Reading - with 134 in favor,
57 against, and 2 abstentions. Under the bill, the grounds for a judicial decree of absolute
divorce are as follows:
1. The grounds for legal separation under Article 55 of the Family Code, modified
or amended, as follows:
a. Physical violence or grossly abusive conduct directed against the petitioner, a common
child, or a child of the petitioner;
b. Physical violence or moral pressure to compel the petitioner to change religious or
political affiliation;
c. Attempt of respondent to corrupt or induce the petitioner, a common child, or a child of
the petitioner, to engage in prostitution, or connivance in such corruption or inducement;
d. Final judgment sentencing the respondent to imprisonment of more than six (6) years,
even if pardoned;
e. Drug addiction or habitual alcoholism or chronic gambling of the respondent;
f. Homosexuality of the respondent;
g. Contracting by the respondent of a subsequent bigamous marriage, whether in the
Philippines or abroad;
h. Marital infidelity or perversion or having a child with another person other than one's
spouse during the marriage, except when upon the mutual agreement of the spouses, a child
is born to them by in vitro or a similar procedure or when the wife bears a child after being a
victim of rape;
i. Attempt by the respondent against the life of the petitioner, a common child or a child of
the petitioner; and
j. Abandonment of petitioner by respondent without justifiable cause for more than one (1)
year.
When the spouses are legally separated by judicial decree for more than two (2) years, either
or both spouses can petition the proper court for an absolute divorce based on said judicial
decree of legal separation.
1. Grounds for annulment of marriage under Article 45 of the Family Code, restated as
follows:
a. The party in whose behalf it is sought to have the marriage
annulled was eighteen (18) years of age or over but below twenty-
one (21), and the marriage was solemnized without the consent of
the parents, guardian or person having substitute parental
authority over the party, in that order, unless after attaining the
age of twenty-one (21), such party freely cohabited with the other
and both lived together as husband or wife;
b. either party was of unsound mind, unless such party after coming
to reason, freely cohabited with the other as husband and wife;
c. The consent of either party was obtained by fraud, unless such
party afterwards with full knowledge of the facts constituting the
fraud, freely cohabited with the other as husband and wife;
d. The consent of either party was obtained by force, intimidation or
undue influence, unless the same having disappeared or ceased,
such party thereafter freely cohabited with the other as husband
and wife;
e. Either party was physically incapable of consummating the
marriage with the other and such incapacity continues or appears
to be incurable; and
f. Either party was afflicted with a sexually transmissible infection
found to be serious or appears to be incurable.
Provided, That the grounds mentioned in b, e and f existed either at the time of the marriage
or supervening after the marriage.
1. When the spouses have been separated in fact for at least five (5)
years at the time the petition for absolute divorce is filed, and
reconciliation is highly improbable;
2. Psychological incapacity of either spouse as provided for in Article
36 of the Family Code, whether or not the incapacity was present at
the time of the celebration of the marriage or later;
3. When one of the spouses undergoes a gender reassignment surgery
or transitions from one sex to another, the other spouse is entitled
to petition for absolute divorce with the transgender or transsexual
as respondent, or vice-versa;
4. Irreconcilable marital differences and conflicts which have resulted
in the total breakdown of the marriage beyond repair, despite
earnest and repeated efforts at reconciliation.
To be sure, a good number of the Filipinos led by the Roman Catholic Church react adversely
to any attempt to enact a law on absolute divorce, viewing it as contrary to our customs,
morals, and traditions that has looked upon marriage and family as an institution and their
nature of permanence, inviolability, and solidarity. However, none of our laws should be
based on any religious law, doctrine, or teaching; otherwise, the separation of Church and
State will be violated.75
In the same breath that the establishment clause restricts what the government can do with
religion, it also limits what religious sects can or cannot do. They can neither cause the
government to adopt their particular doctrines as policy for everyone, nor can they cause the
government to restrict other groups. To do so, in simple terms, would cause the State to
adhere to a particular religion and, thus, establish a state religion. 76
The Roman Catholic Church can neither impose its beliefs and convictions on the State and
the rest of the citizenry nor can it demand that the nation follow its beliefs, even if it
sincerely believes that they are good for the country. 77 While marriage is considered a
sacrament, it has civil and legal consequences which are governed by the Family Code.78 It is
in this aspect, bereft of any ecclesiastical overtone, that the State has a legitimate right and
interest to regulate.
The declared State policy that marriage, as an inviolable social institution, is the foundation
of the family and shall be protected by the State, should not be read in total isolation but
must be harmonized with other constitutional provisions. Aside from strengthening the
solidarity of the Filipino family, the State is equally mandated to actively promote its total
development.79 It is also obligated to defend, among others, the right of children to special
protection from all forms of neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development.80 To Our mind, the State cannot effectively enforce these
obligations if We limit the application of Paragraph 2 of Article 26 only to those foreign
divorce initiated by the alien spouse. It is not amiss to point that the women and children are
almost always the helpless victims of all forms of domestic abuse and violence. In fact,
among the notable legislation passed in order to minimize, if not eradicate, the menace are
R.A. No. 6955 (prohibiting mail order bride and similar practices), R.A. No. 9262 ("Anti-
Violence Against Women and Their Children Act of 2004"), R.A. No. 9710 ("The Magna Carta
of Women"), R.A. No. 10354 ("The Responsible Parenthood and Reproductive Health Act of
2012"), and R.A. No. 9208 ("Anti-Trafficking in Persons Act of 2003"), as amended by R.A. No.
10364 ("Expanded Anti-Trafficking in Persons Act of 2012"). Moreover, in protecting and
strengthening the Filipino family as a basic autonomous social institution, the Court must not
lose sight of the constitutional mandate to value the dignity of every human person,
guarantee full respect for human rights, and ensure the fundamental equality before the law
of women and men.81
A prohibitive view of Paragraph 2 of Article 26 would do more harm than good. If We
disallow a Filipino citizen who initiated and obtained a foreign divorce from the coverage of
Paragraph 2 of Article 26 and still require him or her to first avail of the existing
"mechanisms" under the Family Code, any subsequent relationship that he or she would
enter in the meantime shall be considered as illicit in the eyes of the Philippine law. Worse,
any child born out of such "extra-marital" affair has to suffer the stigma of being branded as
illegitimate. Surely, these are just but a few of the adverse consequences, not only to the
parent but also to the child, if We are to hold a restrictive interpretation of the subject
provision. The irony is that the principle of inviolability of marriage under Section 2, Article
XV of the Constitution is meant to be tilted in favor of marriage and against unions not
formalized by marriage, but without denying State protection and assistance to live-in
arrangements or to families formed according to indigenous customs. 82
This Court should not turn a blind eye to the realities of the present time. With the
advancement of communication and information technology, as well as the improvement of
the transportation system that almost instantly connect people from all over the world,
mixed marriages have become not too uncommon. Likewise, it is recognized that not all
marriages are made in heaven and that imperfect humans more often than not create
imperfect unions.83 Living in a flawed world, the unfortunate reality for some is that the
attainment of the individual's full human potential and self-fulfillment is not found and
achieved in the context of a marriage. Thus, it is hypocritical to safeguard the quantity of
existing marriages and, at the same time, brush aside the truth that some of them are of
rotten quality.
Going back, We hold that marriage, being a mutual and shared commitment between two
parties, cannot possibly be productive of any good to the society where one is considered
released from the marital bond while the other remains bound to it. 84 In reiterating that the
Filipino spouse should not be discriminated against in his or her own country if the ends of
justice are to be served, San Luis v. San Luis85 quoted:
x x x In Alonzo v. Intermediate Appellate Court, the Court stated:
But as has also been aptly observed, we test a law by its results; and likewise, we may add,
by its purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern
of the judge should be to discover in its provisions the intent of the lawmaker.
Unquestionably, the law should never be interpreted in such a way as to cause injustice as
this is never within the legislative intent. An indispensable part of that intent, in fact, for we
presume the good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance with justice.
Law and justice are inseparable, and we must keep them so. To be sure, there are some laws
that, while generally valid, may seem arbitrary when applied in a particular case because of
its peculiar circumstances. In such a situation, we are not bound, because only of our nature
and functions, to apply them just the same, in slavish obedience to their language. What we
do instead is find a balance between the word and the will, that justice may be done even as
the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is
worded, yielding like robots to the literal command without regard to its cause and
consequence. "Courts are apt to err by sticking too closely to the words of a law," so we are
warned, by Justice Holmes again, "where these words import a policy that goes beyond
them."
xxxx
More than twenty centuries ago, Justinian defined justice "as the constant and perpetual
wish to render every one his due." That wish continues to motivate this Court when it
assesses the facts and the law in every case brought to it for decision. Justice is always an
essential ingredient of its decisions. Thus when the facts warrant, we interpret the law in a
way that will render justice, presuming that it was the intention of the lawmaker, to begin
with, that the law be dispensed with justice. 86
Indeed, where the interpretation of a statute according to its exact and literal import would
lead to mischievous results or contravene the clear purpose of the legislature, it should be
construed according to its spirit and reason, disregarding as far as necessary the letter of the
law.87 A statute may, therefore, be extended to cases not within the literal meaning of its
terms, so long as they come within its spirit or intent.88
The foregoing notwithstanding, We cannot yet write finis to this controversy by granting
Manalo's petition to recognize and enforce the divorce decree rendered by the Japanese
court and to cancel the entry of marriage in the Civil Registry of San Juan, Metro Manila.
Jurisprudence has set guidelines before Philippine courts recognize a foreign judgment
relating to the status of a marriage where one of the parties is a citizen of a foreign country.
Presentation solely of the divorce decree will not suffice.89 The fact of divorce must still first
be proven.90 Before a foreign divorce decree can be recognized by our courts, the party
pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign
law allowing it.91
x x x Before a foreign judgment is given presumptive evidentiary value, the document must
first be presented and admitted in evidence. A divorce obtained abroad is proven by the
divorce decree itself. Indeed the best evidence of a judgment is the judgment itself. The
decree purports to be a written act or record of an act of an official body or tribunal of a
foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be
proven as a public or official record of a foreign country by either (1) an official publication or
(2) a copy thereof attested by the officer having legal custody of the document. If the record
is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by
the proper diplomatic or consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by the seal of his office. 92
In granting Manalo's petition, the CA noted:
In this case, Petitioner was able to submit before the court a quo the 1) Decision of the
Japanese Court allowing the divorce; 2) the Authentication/Certificate issued by the
Philippine Consulate General in Osaka, Japan of the Decree of Divorce; and 3) Acceptance of
Certificate of Divorce by Petitioner and the Japanese national. Under Rule 132, Sections 24
and 25, in relation to Rule 39, Section 48 (b) of the Rules of Court, these documents
sufficiently prove the subject Divorce Decree as a fact. Thus, We are constrained to recognize
the Japanese Court's judgment decreeing the divorce.93
If the opposing party fails to properly object, as in this case, the divorce decree is rendered
admissible as a written act of the foreign court. 94 As it appears, the existence of the divorce
decree was not denied by the OSG; neither was the jurisdiction of the divorce court
impeached nor the validity of its proceedings challenged on the ground of collusion, fraud, or
clear mistake of fact or law, albeit an opportunity to do so. 95
Nonetheless, the Japanese law on divorce must still be proved.
x x x The burden of proof lies with the "party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an action." In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those are denied by the
answer; and defendants have the burden of proving the material allegations in their answer
when they introduce new matters. x x x
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws.
Like any other facts, they must be alleged and proved. x x x The power of judicial notice must
be exercised with caution, and every reasonable doubt upon the subject should be resolved
in the negative.96
Since the divorce was raised by Manalo, the burden of proving the pertinent Japanese law
validating it, as well as her former husband's capacity to remarry, fall squarely upon her.
Japanese laws on persons and family relations are not among those matters that Filipino
judges are supposed to know by reason of their judicial function.
WHEREFORE, the petition for review on certiorari is DENIED. The September 18, 2014
Decision and October 12, 2015 Resolution of the Court of Appeals in CA-G.R. CV No. 100076,
are AFFIRMED IN PART. The case is REMANDED to the court of origin for further proceedings
and reception of evidence as to the relevant Japanese law on divorce.
SO ORDERED.
SECOND DIVISION
G.R. No. 224015, July 23, 2018
STEPHEN I. JUEGO-SAKAI, Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Amended Decision 1 dated March 3, 2016 of the Court of
Appeals (CA) in CA-G.R. CV No. 104253 that set aside its former Decision dated November 25,
2015, which in turn, affirmed the Decision of the Regional Trial Court (RTC), Branch 40, Daet,
Camarines Norte, granting petitioner's Petition for Judicial Recognition of Foreign Judgment.
The antecedent facts are as follows:
Petitioner Stephen I. Juego-Sakai and Toshiharu Sakai got married on August 11, 2000 in
Japan pursuant to the wedding rites therein. After two (2) years, the parties, by agreement,
obtained a divorce decree in said country dissolving their marriage.2 Thereafter, on April 5,
2013, petitioner filed a Petition for Judicial Recognition of Foreign Judgment before the
Regional Trial Court (RTC), Branch 40, Camarines Norte. In its Decision dated October 9,
2014, the RTC granted the petition and recognized the divorce between the parties as valid
and effective under Philippine Laws. 3 On November 25, 2015, the CA affirmed the decision of
the RTC.
In an Amended Decision4 dated March 3, 2016, however, the CA revisited its findings and
recalled and set aside its previous decision. According to the appellate court, the second of
the following requisites under Article 26 of the Family Code is missing: (a) there is a valid
marriage that has been celebrated between a Filipino citizen and a foreigner; and (b) a
divorce is obtained abroad by the alien spouse capacitating him or her to remarry. 5 This is
because the divorce herein was consensual in nature, obtained by agreement of the parties,
and not by Sakai alone. Thus, since petitioner, a Filipino citizen, also obtained the divorce
herein, said divorce cannot be recognized in the Philippines. In addition, the CA ruled that
petitioner's failure to present authenticated copies of the Civil Code of Japan was fatal to her
cause.6
On May 2, 2016, petitioner filed the instant petition invoking the following arguments:
I.
WHETHER OR NOT THE HONORABLE [COURT OF APPEALS] GRAVELY ERRED UNDER LAW
WHEN IT HELD THAT THE SECOND REQUISITE FOR THE APPLICATION OF THE SECOND
PARAGRAPH OF ARTICLE 26 OF THE FAMILY CODE IS NOT PRESENT BECAUSE THE PETITIONER
GAVE CONSENT TO THE DIVORCE OBTAINED BY HER JAPANESE HUSBAND.
II.
In the instant case, the Office of the Solicitor General does not dispute the existence of the
WHETHER OR NOT THE HONORABLE [COURT OF APPEALS] GRAVELY ERRED UNDER LAW divorce decree, rendering the same admissible. What remains to be proven, therefore, is the
WHEN IT HELD THAT THERE IS NO SUBSTANTIAL COMPLIANCE WITH REQUIREMENT ON THE pertinent Japanese Law on divorce considering that Japanese laws on persons and family
SUBMISSION OF AUTHENTICATED COPIES OF [THE] CIVIL CODE OF JAPAN RELATIVE TO relations are not among those matters that Filipino judges are supposed to know by reason
DIVORCE AS REQUIRED BY THE RULES.7 of their judicial function.18
Petitioner posits that the divorce she obtained with her husband, designated as Divorce by
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Amended
Agreement in Japan, as opposed to Judicial Divorce, is the more practical and common type
Decision dated March 3, 2016 of the Court of Appeals in CA-G.R. CV No. 104253
of divorce in Japan. She insists that it is to her great disadvantage if said divorce is not
is REVERSED and SET ASIDE. The case is REMANDED to the court of origin for further
recognized and instead, Judicial Divorce is required in order for her to avail of the benefit
proceedings and reception of evidence as to the relevant Japanese law on divorce.
under the second paragraph of Article 26 of the Family Code, since their divorce had already
been granted abroad.8 Moreover, petitioner asserts that the mere fact that she consented to
SO ORDERED.
the divorce does not prevent the application of Article 26 for said provision does not state
that where the consent of the Filipino spouse was obtained in the divorce, the same no
longer finds application. In support of her contentions, petitioner cites the ruling in Republic
of the Philippines v. Orbecido III wherein the Court held that a Filipino spouse is allowed to Republic of the Philippines
remarry in the event that he or she is divorced by a Filipino spouse who had acquired foreign SUPREME COURT
citizenship.9 As to the issue of evidence presented, petitioner explains that the reason why Manila
she was unable to present authenticated copies of the provisions of the Civil Code of Japan
relative to divorce is because she was unable to go to Japan due to the fact that she was
pregnant. Also, none of her friends could obtain a copy of the same for her. Instead, she SECOND DIVISION
went to the library of the Japanese Embassy to photocopy the Civil Code. There, she was
issued a document which states that diplomatic missions of Japan overseas do not issue
G.R. No. 196049 June 26, 2013
certified true copies of Japanese Law nor process translation certificates of Japanese Law due
to the potential problem in the legal interpretation thereof. Thus, petitioner maintains that
this constitutes substantial compliance with the Rules on Evidence. 10 MINORU FUJIKI, PETITIONER,
vs.
We grant the petition. MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR OF QUEZON
CITY, AND THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF THE NATIONAL
The issue before Us has already been resolved in the landmark ruling of Republic v. STATISTICS OFFICE, RESPONDENTS.
Manalo,11 the facts of which fall squarely on point with the facts herein. In Manalo,
respondent Marelyn Manalo, a Filipino, was married to a Japanese national named Yoshino
Minoro. She, however, filed a case for divorce before a Japanese Court, which granted the DECISION
same and consequently issued a divorce decree dissolving their marriage. Thereafter, she
sought to have said decree recognized in the Philippines and to have the entry of her CARPIO, J.:
marriage to Minoro in the Civil Registry in San Juan, Metro Manila, cancelled, so that said
entry shall not become a hindrance if and when she decides to remarry. The trial court,
however, denied Manalo's petition and ruled that Philippine law does not afford Filipinos the The Case
right to file for a divorce, whether they are in the country or abroad, if they are married to
Filipinos or to foreigners, or if they celebrated their marriage in the Philippines or in another
country. This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107,
Quezon City, through a petition for review on certiorari under Rule 45 of the Rules of Court
On appeal, however, the Court therein rejected the trial court's view and affirmed, instead, on a pure question of law. The petition assails the Order1 dated 31 January 2011 of the RTC
the ruling of the CA. There, the Court held that the fact that it was the Filipino spouse who in Civil Case No. Q-11-68582 and its Resolution dated 2 March 2011 denying petitioner’s
initiated the proceeding wherein the divorce decree was granted should not affect the Motion for Reconsideration. The RTC dismissed the petition for "Judicial Recognition of
application nor remove him from the coverage of Paragraph 2 of Article 26 of the Family Foreign Judgment (or Decree of Absolute Nullity of Marriage)" based on improper venue and
Code which states that "where a marriage between a Filipino citizen and a foreigner is validly the lack of personality of petitioner, Minoru Fujiki, to file the petition.
celebrated and a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall likewise have capacity to The Facts
remarry under Philippine law." We observed that to interpret the word "obtained" to mean
that the divorce proceeding must actually be initiated by the alien spouse would depart from
the true intent of the legislature and would otherwise yield conclusions inconsistent with the Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz
general purpose of Paragraph 2 of Article 26, which is, specifically, to avoid the absurd Galela Marinay (Marinay) in the Philippines 2 on 23 January 2004. The marriage did not sit
situation where the Filipino spouse remains married to the alien spouse who, after a foreign well with petitioner’s parents. Thus, Fujiki could not bring his wife to Japan where he resides.
divorce decree that is effective in the country where it was rendered, is no longer married to Eventually, they lost contact with each other.
the Filipino spouse. The subject provision, therefore, should not make a distinction for a
Filipino who initiated a foreign divorce proceeding is in the same place and in like
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first
circumstance as a Filipino who is at the receiving end of an alien initiated proceeding. 12
marriage being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon
City, Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly suffered
Applying the foregoing pronouncement to the case at hand, the Court similarly rules that
physical abuse from Maekara. She left Maekara and started to contact Fujiki. 3
despite the fact that petitioner participated in the divorce proceedings in Japan, and even if
it is assumed that she initiated the same, she must still be allowed to benefit from the
exception provided under Paragraph 2 of Article 26. Consequently, since her marriage to Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In 2010,
Toshiharu Sakai had already been dissolved by virtue of the divorce decree they obtained in Fujiki helped Marinay obtain a judgment from a family court in Japan which declared the
Japan, thereby capacitating Toshiharu to remarry, petitioner shall likewise have capacity to marriage between Marinay and Maekara void on the ground of bigamy. 4 On 14 January
remarry under Philippine law. 2011, Fujiki filed a petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or
Decree of Absolute Nullity of Marriage)." Fujiki prayed that (1) the Japanese Family Court
Nevertheless, as similarly held in Manalo, We cannot yet grant petitioner's Petition for judgment be recognized; (2) that the bigamous marriage between Marinay and Maekara be
Judicial Recognition of Foreign Judgment for she has yet to comply with certain guidelines declared void ab initio under Articles 35(4) and 41 of the Family Code of the Philippines; 5 and
before our courts may recognize the subject divorce decree and the effects thereof. Time (3) for the RTC to direct the Local Civil Registrar of Quezon City to annotate the Japanese
and again, the Court has held that the starting point in any recognition of a foreign divorce Family Court judgment on the Certificate of Marriage between Marinay and Maekara and to
judgment is the acknowledgment that our courts do not take judicial notice of foreign endorse such annotation to the Office of the Administrator and Civil Registrar General in the
judgments and laws.13 This means that the foreign judgment and its authenticity must be National Statistics Office (NSO).6
proven as facts under our rules on evidence, together with the alien's applicable national law
to show the effect of the judgment on the alien himself or herself. 14 Since both the foreign
divorce decree and the national law of the alien, recognizing his or her capacity to obtain a The Ruling of the Regional Trial Court
divorce, purport to be official acts of a sovereign authority, Section 24 15 of Rule 132 of the
Rules of Court applies.16 Thus, what is required is proof, either by (1) official publications or
A few days after the filing of the petition, the RTC immediately issued an Order dismissing
(2) copies attested by the officer having legal custody of the documents. If the copies of
the petition and withdrawing the case from its active civil docket. 7 The RTC cited the
official records are not kept in the Philippines, these must be (a) accompanied by a certificate
following provisions of the Rule on Declaration of Absolute Nullity of Void Marriages and
issued by the proper diplomatic or consular officer in the Philippine foreign service stationed
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC):
in the foreign country in which the record is kept and (b) authenticated by the seal of his
office.17
Sec. 2. Petition for declaration of absolute nullity of void marriages. –
(a) Who may file. – A petition for declaration of absolute nullity of void marriage may be filed
solely by the husband or the wife.
xxxx
Sec. 4. Venue. – The petition shall be filed in the Family Court of the province or city where
the petitioner or the respondent has been residing for at least six months prior to the date of
filing, or in the case of a non-resident respondent, where he may be found in the Philippines,
at the election of the petitioner. x x x
The RTC ruled, without further explanation, that the petition was in "gross violation" of the
above provisions. The trial court based its dismissal on Section 5(4) of A.M. No. 02-11-10-SC
which provides that "[f]ailure to comply with any of the preceding requirements may be a
ground for immediate dismissal of the petition."8 Apparently, the RTC took the view that only
"the husband or the wife," in this case either Maekara or Marinay, can file the petition to
declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC
contemplated ordinary civil actions for declaration of nullity and annulment of marriage.
Thus, A.M. No. 02-11-10-SC does not apply. A petition for recognition of foreign judgment is
a special proceeding, which "seeks to establish a status, a right or a particular fact," 9 and not
a civil action which is "for the enforcement or protection of a right, or the prevention or
redress of a wrong."10 In other words, the petition in the RTC sought to establish (1) the
status and concomitant rights of Fujiki and Marinay as husband and wife and (2) the fact of
the rendition of the Japanese Family Court judgment declaring the marriage between
Marinay and Maekara as void on the ground of bigamy. The petitioner contended that the
Japanese judgment was consistent with Article 35(4) of the Family Code of the
Philippines11 on bigamy and was therefore entitled to recognition by Philippine courts. 12
In any case, it was also Fujiki’s view that A.M. No. 02-11-10-SC applied only to void marriages
under Article 36 of the Family Code on the ground of psychological incapacity. 13 Thus,
Section 2(a) of A.M. No. 02-11-10-SC provides that "a petition for declaration of absolute
nullity of void marriages may be filed solely by the husband or the wife." To apply Section
2(a) in bigamy would be absurd because only the guilty parties would be permitted to sue. In
the words of Fujiki, "[i]t is not, of course, difficult to realize that the party interested in
having a bigamous marriage declared a nullity would be the husband in the prior, pre-
existing marriage."14 Fujiki had material interest and therefore the personality to nullify a
bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of the
Rules of Court is applicable. Rule 108 is the "procedural implementation" of the Civil Register
Law (Act No. 3753)15 in relation to Article 413 of the Civil Code. 16 The Civil Register Law
imposes a duty on the "successful petitioner for divorce or annulment of marriage to send a
copy of the final decree of the court to the local registrar of the municipality where the
dissolved or annulled marriage was solemnized."17 Section 2 of Rule 108 provides that entries
in the civil registry relating to "marriages," "judgments of annulments of marriage" and
"judgments declaring marriages void from the beginning" are subject to cancellation or
correction.18 The petition in the RTC sought (among others) to annotate the judgment of the
Japanese Family Court on the certificate of marriage between Marinay and Maekara.
Fujiki’s motion for reconsideration in the RTC also asserted that the trial court "gravely
erred" when, on its own, it dismissed the petition based on improper venue. Fujiki stated
that the RTC may be confusing the concept of venue with the concept of jurisdiction,
because it is lack of jurisdiction which allows a court to dismiss a case on its own. Fujiki
cited Dacoycoy v. Intermediate Appellate Court19 which held that the "trial court cannot pre-
empt the defendant’s prerogative to object to the improper laying of the venue by motu
proprio dismissing the case."20 Moreover, petitioner alleged that the trial court should not
have "immediately dismissed" the petition under Section 5 of A.M. No. 02-11-10-SC because
he substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioner’s motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC applies because the petitioner, in
effect, prays for a decree of absolute nullity of marriage. 21 The trial court reiterated its two
grounds for dismissal, i.e. lack of personality to sue and improper venue under Sections 2(a)
and 4 of A.M. No. 02-11-10-SC. The RTC considered Fujiki as a "third person" 22 in the
proceeding because he "is not the husband in the decree of divorce issued by the Japanese
Family Court, which he now seeks to be judicially recognized, x x x." 23 On the other hand, the
RTC did not explain its ground of impropriety of venue. It only said that "[a]lthough the Court
cited Sec. 4 (Venue) x x x as a ground for dismissal of this case[,] it should be taken together
with the other ground cited by the Court x x x which is Sec. 2(a) x x x."24
The RTC further justified its motu proprio dismissal of the petition based on Braza v. The City
Civil Registrar of Himamaylan City, Negros Occidental. 25 The Court in Braza ruled that "[i]n a
special proceeding for correction of entry under Rule 108 (Cancellation or Correction of
Entries in the Original Registry), the trial court has no jurisdiction to nullify marriages x x
x."26 Braza emphasized that the "validity of marriages as well as legitimacy and filiation can
be questioned only in a direct action seasonably filed by the proper party, and not through a
collateral attack such as [a] petition [for correction of entry] x x x." 27
The RTC considered the petition as a collateral attack on the validity of marriage between
Marinay and Maekara. The trial court held that this is a "jurisdictional ground" to dismiss the
petition.28 Moreover, the verification and certification against forum shopping of the petition
was not authenticated as required under Section 529 of A.M. No. 02-11-10-SC. Hence, this
also warranted the "immediate dismissal" of the petition under the same provision.
The Manifestation and Motion of the Office of the Solicitor General and the Letters of
Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment on the petition for
review.30 The public respondents, the Local Civil Registrar of Quezon City and the
Administrator and Civil Registrar General of the NSO, participated through the Office of the
Solicitor General. Instead of a comment, the Solicitor General filed a Manifestation and
Motion.31
The Solicitor General agreed with the petition. He prayed that the RTC’s "pronouncement
that the petitioner failed to comply with x x x A.M. No. 02-11-10-SC x x x be set aside" and
that the case be reinstated in the trial court for further proceedings. 32 The Solicitor General
argued that Fujiki, as the spouse of the first marriage, is an injured party who can sue to
declare the bigamous marriage between Marinay and Maekara void. The Solicitor General
cited Juliano-Llave v. Republic33 which held that Section 2(a) of A.M. No. 02-11-10-SC does
not apply in cases of bigamy. In Juliano-Llave, this Court explained:
[t]he subsequent spouse may only be expected to take action if he or she had only
discovered during the connubial period that the marriage was bigamous, and especially if the
conjugal bliss had already vanished. Should parties in a subsequent marriage benefit from
the bigamous marriage, it would not be expected that they would file an action to declare
the marriage void and thus, in such circumstance, the "injured spouse" who should be given
a legal remedy is the one in a subsisting previous marriage. The latter is clearly the aggrieved
party as the bigamous marriage not only threatens the financial and the property ownership
aspect of the prior marriage but most of all, it causes an emotional burden to the prior
spouse. The subsequent marriage will always be a reminder of the infidelity of the spouse
and the disregard of the prior marriage which sanctity is protected by the Constitution. 34
The Solicitor General contended that the petition to recognize the Japanese Family Court
judgment may be made in a Rule 108 proceeding. 35 In Corpuz v. Santo Tomas,36 this Court
held that "[t]he recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules
of Court) is precisely to establish the status or right of a party or a particular
fact."37 While Corpuz concerned a foreign divorce decree, in the present case the Japanese
Family Court judgment also affected the civil status of the parties, especially Marinay, who is
a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to record
"[a]cts, events and judicial decrees concerning the civil status of persons" in the civil registry
as required by Article 407 of the Civil Code. In other words, "[t]he law requires the entry in
the civil registry of judicial decrees that produce legal consequences upon a person’s legal
capacity and status x x x."38 The Japanese Family Court judgment directly bears on the civil
status of a Filipino citizen and should therefore be proven as a fact in a Rule 108 proceeding.
Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing a
void marriage under Rule 108, citing De Castro v. De Castro39 and Niñal v. Bayadog40 which
declared that "[t]he validity of a void marriage may be collaterally attacked." 41
Marinay and Maekara individually sent letters to the Court to comply with the directive for
them to comment on the petition.42 Maekara wrote that Marinay concealed from him the
fact that she was previously married to Fujiki. 43 Maekara also denied that he inflicted any
form of violence on Marinay.44 On the other hand, Marinay wrote that she had no reason to
oppose the petition.45 She would like to maintain her silence for fear that anything she say
might cause misunderstanding between her and Fujiki. 46
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.
(2) Whether a husband or wife of a prior marriage can file a petition to
recognize a foreign judgment nullifying the subsequent marriage between his or
her spouse and a foreign citizen on the ground of bigamy.
 (3) Whether the Regional Trial Court can recognize the foreign judgment in a
proceeding for cancellation or correction of entries in the Civil Registry under
Rule 108 of the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign
judgment relating to the status of a marriage where one of the parties is a citizen of a foreign
country. Moreover, in Juliano-Llave v. Republic,47 this Court held that the rule in A.M. No. 02-
11-10-SC that only the husband or wife can file a declaration of nullity or annulment of
marriage "does not apply if the reason behind the petition is bigamy." 48
I.
For Philippine courts to recognize a foreign judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign country, the petitioner only needs to prove
the foreign judgment as a fact under the Rules of Court. To be more specific, a copy of the
foreign judgment may be admitted in evidence and proven as a fact under Rule 132, Sections
24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court. 49 Petitioner may prove
the Japanese Family Court judgment through (1) an official publication or (2) a certification
or copy attested by the officer who has custody of the judgment. If the office which has
custody is in a foreign country such as Japan, the certification may be made by the proper
diplomatic or consular officer of the Philippine foreign service in Japan and authenticated by
the seal of office.50
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign judgment
would mean that the trial court and the parties should follow its provisions, including the
form and contents of the petition,51 the service of summons,52 the investigation of the public
prosecutor,53 the setting of pre-trial,54 the trial55 and the judgment of the trial court. 56 This is
absurd because it will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues." 57 The interpretation
of the RTC is tantamount to relitigating the case on the merits. In Mijares v. Rañada,58 this
Court explained that "[i]f every judgment of a foreign court were reviewable on the merits,
the plaintiff would be forced back on his/her original cause of action, rendering immaterial
the previously concluded litigation."59
A foreign judgment relating to the status of a marriage affects the civil status, condition and
legal capacity of its parties. However, the effect of a foreign judgment is not automatic. To
extend the effect of a foreign judgment in the Philippines, Philippine courts must determine
if the foreign judgment is consistent with domestic public policy and other mandatory
laws.60 Article 15 of the Civil Code provides that "[l]aws relating to family rights and duties, or
to the status, condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad." This is the rule of lex nationalii in private
international law. Thus, the Philippine State may require, for effectivity in the Philippines,
recognition by Philippine courts of a foreign judgment affecting its citizen, over whom it
exercises personal jurisdiction relating to the status, condition and legal capacity of such
citizen.
A petition to recognize a foreign judgment declaring a marriage void does not require
relitigation under a Philippine court of the case as if it were a new petition for declaration of
nullity of marriage. Philippine courts cannot presume to know the foreign laws under which
the foreign judgment was rendered. They cannot substitute their judgment on the status,
condition and legal capacity of the foreign citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only recognize the foreign judgment as a fact according to
the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order
against a person creates a "presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title." Moreover, Section 48 of the Rules of Court
states that "the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact."
Thus, Philippine courts exercise limited review on foreign judgments. Courts are not allowed
to delve into the merits of a foreign judgment. Once a foreign judgment is admitted and
proven in a Philippine court, it can only be repelled on grounds external to its merits, i.e. ,
"want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact." The rule on limited review embodies the policy of efficiency and the protection of
party expectations,61 as well as respecting the jurisdiction of other states. 62
Since 1922 in Adong v. Cheong Seng Gee,63 Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the
rules of evidence.64 Divorce involves the dissolution of a marriage, but the recognition of a
foreign divorce decree does not involve the extended procedure under A.M. No. 02-11-10-SC
or the rules of ordinary trial. While the Philippines does not have a divorce law, Philippine
courts may, however, recognize a foreign divorce decree under the second paragraph of
Article 26 of the Family Code, to capacitate a Filipino citizen to remarry when his or her
foreign spouse obtained a divorce decree abroad. 65
There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family
Court judgment nullifying the marriage between Marinay and Maekara on the ground of
bigamy. While the Philippines has no divorce law, the Japanese Family Court judgment is fully
consistent with Philippine public policy, as bigamous marriages are declared void from the
beginning under Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of the
Revised Penal Code. Thus, Fujiki can prove the existence of the Japanese Family Court
judgment in accordance with Rule 132, Sections 24 and 25, in relation to Rule 39, Section
48(b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact of the judgment, it
may be made in a special proceeding for cancellation or correction of entries in the civil
registry under Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides
that "[a] special proceeding is a remedy by which a party seeks to establish a status, a right,
or a particular fact." Rule 108 creates a remedy to rectify facts of a person’s life which are
recorded by the State pursuant to the Civil Register Law or Act No. 3753. These are facts of
public consequence such as birth, death or marriage, 66 which the State has an interest in
recording. As noted by the Solicitor General, in Corpuz v. Sto. Tomas this Court declared that
"[t]he recognition of the foreign divorce decree may be made in a Rule 108 proceeding itself,
as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a particular fact." 67
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. — Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry relating
thereto, with the Regional Trial Court of the province where the corresponding civil registry
is located. (Emphasis supplied)
Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay
and Maekara in the civil registry on the basis of the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material interest in maintaining
the integrity of the marriage he contracted and the property relations arising from it. There is
also no doubt that he is interested in the cancellation of an entry of a bigamous marriage in
the civil registry, which compromises the public record of his marriage. The interest derives
from the substantive right of the spouse not only to preserve (or dissolve, in limited
instances68) his most intimate human relation, but also to protect his property interests that
arise by operation of law the moment he contracts marriage. 69 These property interests in
marriage include the right to be supported "in keeping with the financial capacity of the
family"70 and preserving the property regime of the marriage. 71
Property rights are already substantive rights protected by the Constitution, 72 but a spouse’s
right in a marriage extends further to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family Code. 73 A.M. No. 02-11-10-SC cannot
"diminish, increase, or modify" the substantive right of the spouse to maintain the integrity
of his marriage.74 In any case, Section 2(a) of A.M. No. 02-11-10-SC preserves this substantive
right by limiting the personality to sue to the husband or the wife of the union recognized by
law.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to
question the validity of a subsequent marriage on the ground of bigamy. On the contrary,
when Section 2(a) states that "[a] petition for declaration of absolute nullity of void marriage
may be filed solely by the husband or the wife"75—it refers to the husband or the wife of the
subsisting marriage. Under Article 35(4) of the Family Code, bigamous marriages are void
from the beginning. Thus, the parties in a bigamous marriage are neither the husband nor
the wife under the law. The husband or the wife of the prior subsisting marriage is the one
who has the personality to file a petition for declaration of absolute nullity of void marriage
under Section 2(a) of A.M. No. 02-11-10-SC.
Article 35(4) of the Family Code, which declares bigamous marriages void from the
beginning, is the civil aspect of Article 349 of the Revised Penal Code, 76 which penalizes
bigamy. Bigamy is a public crime. Thus, anyone can initiate prosecution for bigamy because
any citizen has an interest in the prosecution and prevention of crimes. 77 If anyone can file a
criminal action which leads to the declaration of nullity of a bigamous marriage, 78 there is
more reason to confer personality to sue on the husband or the wife of a subsisting
marriage. The prior spouse does not only share in the public interest of prosecuting and
preventing crimes, he is also personally interested in the purely civil aspect of protecting his
marriage.
When the right of the spouse to protect his marriage is violated, the spouse is clearly an
injured party and is therefore interested in the judgment of the suit. 79 Juliano-Llave ruled
that the prior spouse "is clearly the aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership aspect of the prior marriage but most of
all, it causes an emotional burden to the prior spouse."80 Being a real party in interest, the
prior spouse is entitled to sue in order to declare a bigamous marriage void. For this purpose,
he can petition a court to recognize a foreign judgment nullifying the bigamous marriage and
judicially declare as a fact that such judgment is effective in the Philippines. Once
established, there should be no more impediment to cancel the entry of the bigamous
marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court held
that a "trial court has no jurisdiction to nullify marriages" in a special proceeding for
cancellation or correction of entry under Rule 108 of the Rules of Court. 81 Thus, the "validity
of marriage[] x x x can be questioned only in a direct action" to nullify the marriage.82 The
RTC relied on Braza in dismissing the petition for recognition of foreign judgment as a
collateral attack on the marriage between Marinay and Maekara.
Braza is not applicable because Braza does not involve a recognition of a foreign judgment
nullifying a bigamous marriage where one of the parties is a citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in the civil registry cannot
substitute for an action to invalidate a marriage. A direct action is necessary to prevent
circumvention of the substantive and procedural safeguards of marriage under the Family
Code, A.M. No. 02-11-10-SC and other related laws. Among these safeguards are the
requirement of proving the limited grounds for the dissolution of
marriage,83 support pendente lite of the spouses and children,84 the liquidation, partition and
distribution of the properties of the spouses,85 and the investigation of the public prosecutor
to determine collusion.86 A direct action for declaration of nullity or annulment of marriage is
also necessary to prevent circumvention of the jurisdiction of the Family Courts under the
Family Courts Act of 1997 (Republic Act No. 8369), as a petition for cancellation or correction
of entries in the civil registry may be filed in the Regional Trial Court "where the
corresponding civil registry is located."87 In other words, a Filipino citizen cannot dissolve his
marriage by the mere expedient of changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation of a civil registry
entry based on the recognition of a foreign judgment annulling a marriage where one of the
parties is a citizen of the foreign country. There is neither circumvention of the substantive
and procedural safeguards of marriage under Philippine law, nor of the jurisdiction of Family
Courts under R.A. No. 8369. A recognition of a foreign judgment is not an action to nullify a
marriage. It is an action for Philippine courts to recognize the effectivity of a foreign
judgment, which presupposes a case which was already tried and decided under foreign
law. The procedure in A.M. No. 02-11-10-SC does not apply in a petition to recognize a
foreign judgment annulling a bigamous marriage where one of the parties is a citizen of the
foreign country. Neither can R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of
a foreign divorce decree to a Filipino spouse without undergoing trial to determine the
validity of the dissolution of the marriage. The second paragraph of Article 26 of the Family
Code provides that "[w]here a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under
Philippine law." In Republic v. Orbecido,88 this Court recognized the legislative intent of the
second paragraph of Article 26 which is "to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after obtaining a divorce, is no longer
married to the Filipino spouse"89 under the laws of his or her country. The second paragraph
of Article 26 of the Family Code only authorizes Philippine courts to adopt the effects of a
foreign divorce decree precisely because the Philippines does not allow divorce. Philippine
courts cannot try the case on the merits because it is tantamount to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to address the anomaly that
results from a marriage between a Filipino, whose laws do not allow divorce, and a foreign
citizen, whose laws allow divorce. The anomaly consists in the Filipino spouse being tied to
the marriage while the foreign spouse is free to marry under the laws of his or her country.
The correction is made by extending in the Philippines the effect of the foreign divorce
decree, which is already effective in the country where it was rendered. The second
paragraph of Article 26 of the Family Code is based on this Court’s decision in Van Dorn v.
Romillo90 which declared that the Filipino spouse "should not be discriminated against in her
own country if the ends of justice are to be served."91
The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a
foreign citizen who obtains a foreign judgment nullifying the marriage on the ground of
bigamy. The Filipino spouse may file a petition abroad to declare the marriage void on the
ground of bigamy. The principle in the second paragraph of Article 26 of the Family Code
applies because the foreign spouse, after the foreign judgment nullifying the marriage, is
capacitated to remarry under the laws of his or her country. If the foreign judgment is not
recognized in the Philippines, the Filipino spouse will be discriminated—the foreign spouse
can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are
empowered to correct a situation where the Filipino spouse is still tied to the marriage while
the foreign spouse is free to marry. Moreover, notwithstanding Article 26 of the Family Code,
Philippine courts already have jurisdiction to extend the effect of a foreign judgment in the
Philippines to the extent that the foreign judgment does not contravene domestic public
policy. A critical difference between the case of a foreign divorce decree and a foreign
judgment nullifying a bigamous marriage is that bigamy, as a ground for the nullity of
marriage, is fully consistent with Philippine public policy as expressed in Article 35(4) of the
Family Code and Article 349 of the Revised Penal Code. The Filipino spouse has the option to
undergo full trial by filing a petition for declaration of nullity of marriage under A.M. No. 02-
11-10-SC, but this is not the only remedy available to him or her. Philippine courts have
jurisdiction to recognize a foreign judgment nullifying a bigamous marriage, without
prejudice to a criminal prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are incompetent to substitute their
judgment on how a case was decided under foreign law. They cannot decide on the "family
rights and duties, or on the status, condition and legal capacity" of the foreign citizen who is
a party to the foreign judgment. Thus, Philippine courts are limited to the question of
whether to extend the effect of a foreign judgment in the Philippines. In a foreign judgment
relating to the status of a marriage involving a citizen of a foreign country, Philippine courts
only decide whether to extend its effect to the Filipino party, under the rule of lex
nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether the foreign judgment is
inconsistent with an overriding public policy in the Philippines; and (2) whether any alleging
party is able to prove an extrinsic ground to repel the foreign judgment, i.e. want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. If
there is neither inconsistency with public policy nor adequate proof to repel the judgment,
Philippine courts should, by default, recognize the foreign judgment as part of the comity of
nations. Section 48(b), Rule 39 of the Rules of Court states that the foreign judgment is
already "presumptive evidence of a right between the parties." Upon recognition of the
foreign judgment, this right becomes conclusive and the judgment serves as the basis for the
correction or cancellation of entry in the civil registry. The recognition of the foreign
judgment nullifying a bigamous marriage is a subsequent event that establishes a new status,
right and fact92 that needs to be reflected in the civil registry. Otherwise, there will be an
inconsistency between the recognition of the effectivity of the foreign judgment and the
public records in the Philippines.1âwphi1
However, the recognition of a foreign judgment nullifying a bigamous marriage is without
prejudice to prosecution for bigamy under Article 349 of the Revised Penal Code. 93 The
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for
extinction of criminal liability under Articles 89 and 94 of the Revised Penal Code. Moreover,
under Article 91 of the Revised Penal Code, "[t]he term of prescription [of the crime of
bigamy] shall not run when the offender is absent from the Philippine archipelago."
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to address the
questions on venue and the contents and form of the petition under Sections 4 and 5,
respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the Resolution
dated 2 March 2011 of the Regional Trial Court, Branch 107, Quezon City, in Civil Case No. Q-
11-68582 are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in accordance with this
Decision.
SO ORDERED.
Brion, Del Castillo, Perez, and Perlas-Bernabe, JJ., concur.
FIRST DIVISION
G.R. No. 215723, July 27, 2016
DOREEN GRACE PARILLA MEDINA, A.K.A. "DOREEN GRACE MEDINA
KOIKE," Petitioner, v. MICHIYUKI KOIKE, THE LOCAL CIVIL REGISTRAR OF QUEZON CITY,
METRO MANILA, AND THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF THE
NATIONAL STATISTICS OFFICE, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 31, 2014 and
the Resolution3 dated November 28, 2014, of the Regional Trial Court of Quezon City, Branch
106 (RTC), in Sp. Proc. No. Q-13-72692, denying petitioner's petition for judicial recognition
of foreign divorce and declaration of capacity to remarry pursuant to Article 26 of the Family
Code.
The Facts
Petitioner Doreen Grace Parilla (Doreen), a Filipino citizen, and respondent Michiyuki Koike
(Michiyuki), a Japanese national, were married on June 14, 2005 in Quezon City,
Philippines.4 Their union bore two children, Masato Koike, who was born on January 23,
2006, and Fuka Koike who was born on April 4, 2007. 5chanrobleslaw
On June 14, 2012, Doreen and Michiyuki, pursuant to the laws of Japan, filed for
divorce6 before the Mayor of Ichinomiya City, Aichi Prefecture, Japan. They were divorced on
even date as appearing in the Divorce Certificate7 and the same was duly recorded in the
Official Family Register of Michiyuki Koike. 8chanrobleslaw
Seeking to have the said Divorce Certificate annotated on her Certificate of Marriage 9 on file
with the Local Civil Registrar of Quezon City, Doreen filed on February 7, 2013 a petition10 for
judicial recognition of foreign divorce and declaration of capacity to remarry pursuant to the
second paragraph of Article 26 of the Family Code 11 before the RTC, docketed as Sp. Proc.No.
Q-13-72692.
At the hearing, no one appeared to oppose the petition. 12 On the other hand, Doreen
presented several foreign documents, namely, "Certificate of Receiving/Certificate of
Acceptance of Divorce"13 and "Family Register of Michiyuki Koike"14 both issued by the
Mayor of Ichinomiya City and duly authenticated by the Consul of the Republic of the
Philippines for Osaka, Japan. She also presented a certified machine copy of a document
entitled "Divorce Certificate" issued by the Consul for the Ambassador of Japan in Manila
that was authenticated by the Department of the Foreign Affairs, as well as a
Certification15 issued by the City Civil Registry Office in Manila that the original of said
divorce certificate was filed and recorded in the said Office. In addition, photocopies of the
Civil Code of Japan and their corresponding English translation, as well as two (2) books
entitled "The Civil Code of Japan 2000"16 and "The Civil Code of Japan 2009"17 were likewise
submitted as proof of the existence of Japan's law on divorce.18chanrobleslaw
The RTC Ruling
In a Decision19 dated July 31, 2014, the RTC denied Doreen's petition, ruling that in an action
for recognition of foreign divorce decree pursuant to Article 26 of the Family Code, the
foreign divorce decree and" the national law of the alien recognizing his or her capacity to
obtain a divorce must be proven in accordance with Sections 24 20 and 2521 of Rule 132 of the
Revised Rules on Evidence. The RTC ruled that while the divorce documents presented by
Doreen were successfully proven to be public or official records of Japan, she nonetheless
fell short of proving the national law of her husband, particularly the existence of the law on
divorce. The RTC observed that the "The Civil Code of Japan 2000" and "The Civil Code of
Japan 2009," presented were not duly authenticated by the Philippine Consul in Japan as
required by Sections 24 and 25 of the said Rules, adding too that the testimony of Doreen
relative to the applicable provisions found therein and its effect on the matrimonial relations
was insufficient since she was not presented as a qualified expert witness nor was shown to
have, at the very least, a working knowledge of the laws of Japan, particularly those on
family relations and divorce. It likewise did not consider the said books as learned treatises
pursuant to Section 46,22 Rule 130 of the Revised Rules on Evidence, since no expert witness
on the subject matter was presented and considering further that Philippine courts cannot
take judicial notice of foreign judgments and law.23chanrobleslaw
Doreen's motion for reconsideration24 was denied in a Resolution25cralawred dated
November 28, 2014; hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the RTC erred in denying the
petition for judicial recognition of foreign divorce.
The Court's Ruling
At the outset, it bears stressing that Philippine law does not provide for absolute divorce;
hence, our courts cannot grant it. However, Article 26 of the Family Code - which addresses
foreign marriages or mixed marriages involving a Filipino and a foreigner - allows a Filipino
spouse to contract a subsequent marriage in case the divorce is validly obtained abroad by
an alien spouse capacitating him or her to remarry. The provision
reads:ChanRoblesVirtualawlibrary
Art. 26. All marriages solemnized outside the Philippines in accordance with the laws in force
in the country where they were solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to remarry under Philippine
law. (Emphasis supplied)
Under the above-highlighted paragraph, the law confers jurisdiction on Philippine courts to
extend the effect of a foreign divorce decree to a Filipino spouse without undergoing trial to
determine the validity of the dissolution of the marriage. 26chanrobleslaw
In Corpuz v. Sto. Tomas,27 the Court had the occasion to rule that:ChanRoblesVirtualawlibrary
The starting point in any recognition of a foreign divorce judgment is the acknowledgment
that our courts do not take judicial notice of foreign judgments and laws. Justice Herrera
explained that, as a rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country." This means that the foreign judgment
and its authenticity must be proven as facts under our rules on evidence, together with the
alien's applicable national law to show the effect of the judgment on the alien himself or
herself. The recognition may be made in an action instituted specifically for the purpose or in
another action where a party invokes the foreign decree as an integral aspect of his claim or
defense.28 (Emphasis and underscoring supplied; citation omitted)
Thus, in Garcia v. Recio,29 it was pointed out that in order for a divorce obtained abroad by
the alien spouse to be recognized in our jurisdiction, it must be shown that the divorce
decree is valid according to the national law of the foreigner. Both the divorce decree and
the governing personal law of the alien spouse who obtained the divorce must be
proven.30 Since our courts do not take judicial notice of foreign laws and judgment, our law
on evidence requires that both the divorce decree and the national law of the alien must be
alleged and proven like any other fact.31chanrobleslaw
Considering that the validity of the divorce decree between Doreen and Michiyuki, as well as
the existence of pertinent laws of Japan on the matter are essentially factual that calls for a
re-evaluation of the evidence presented before the RTC, the issue raised in the instant
appeal is obviously a question of fact that is beyond the ambit of a Rule 45 petition for
review.
Well entrenched is the rule that this Court is not a trier of facts. The resolution of factual
issues is the function of the lower courts, whose findings on these matters are received with
respect and are in fact binding subject to certain exceptions. 32 In this regard, it is settled that
appeals taken from judgments or final orders rendered by RTC in the exercise of its original
jurisdiction raising questions of fact or mixed questions of fact and law should be brought to
the Court of Appeals (CA) in accordance with Rule 41 of the Rules of Court. 33chanrobleslaw
Nonetheless, despite the procedural restrictions on Rule 45 appeals as above-adverted, the
Court may refer the case to the CA under paragraph 2, Section 6 of Rule 56 of the Rules of
Court, which provides:ChanRoblesVirtualawlibrary
SEC. 6. Disposition of improper appeal. - x x x
An appeal by certiorari taken to the Supreme Court from the Regional Trial Court submitting
issues of fact may be referred to the Court of Appeals for decision or appropriate action. The
determination of the Supreme Court on whether or not issues of fact are involved shall be
final.
This, notwithstanding the express provision under Section 5 (f) thereof that an appeal
likewise "may" be dismissed when there is error in the choice or mode of
appeal.34chanrobleslaw
Since the said Rules denote discretion on the part of the Court to either dismiss the appeal or
refer the case to the CA, the question of fact involved in the instant appeal and substantial
ends of justice warrant that the case be referred to the CA for further appropriate
proceedings. It bears to stress that procedural rules were intended to ensure proper
administration of law and justice. The rules of procedure ought not to be applied in a very
rigid, technical sense, for they are adopted to help secure, not override, substantial justice. A
deviation from its rigid enforcement may thus be allowed to attain its prime objective, for
after all, the dispensation of justice is the core reason for the existence of the
courts.35chanrobleslaw
WHEREFORE, in the interest of orderly procedure and substantial justice, the case is
hereby REFERRED to the Court of Appeals for appropriate action including the reception of
evidence to DETERMINE and RESOLVE the pertinent factual issues in accordance with this
Decision.
SO ORDERED.chanRoblesvirtualLawlibrary
EN BANC
[G.R. No. L-24006. November 25, 1967.]
JOSEFINA JUAN DE DIOS RAMIREZ MARCAIDA, Petitioner-Appellant, v. LEONCIO V.
AGLUBAT, in his capacity as Deputy Local Civil Registrar of Manila, Respondent-Appellee.
Jose W. Diokno for Petitioner-Appellant.
Solicitor General for Respondent-Appellee.
SYLLABUS
1. CIVIL LAW; CIVIL REGISTRARS; ADOPTION, REGISTRATION OF, COMPULSORY. — Act 3753
of the Philippine Legislature established local civil registers for recording civil status of
persons, amongst others, (g) adoptions. This is complemented by Arts. 407 and 408 of our
Civil Code making such registration compulsory.
2. ID.; ID.; FOREIGN ADOPTIONS REGISTERABLE; REMEDIAL LAW; MANDAMUS. — Where
under the laws of Spain the procedure in adoption is for the court to approve a petition for
adoption and to grant authority, once the judgment becomes final to a Notary Public to
execute a notarial document embodying the order of adoption; and where such deed of
adoption had been authenticated by the Philippine Vice-Consul in Madrid, Spain, the local
civil registrar of Manila cannot refuse to register such deed upon the ground that under
Philippine law adoption can only be had through judicial proceeding not by notarial
document of adoption; such officer can be compelled by mandamus.
3. ID.; ID.; REGISTRATION OF CIVIL STATUS NOT LIMITED BY LAW TO LOCAL ADOPTIONS. —
Art. 409 of the Civil Code and section 11 of Act 3753 which impose a duty to a Clerk of Court
to ascertain and/or furnish a copy of the decision of the court to the local civil registrar for
purposes of registration of civil status, apparently refer to adoptions effected in the
Philippines, for indeed, Art. 409 of the Civil Code and Section 10 of the Registry law speak of
adoption which shall be registered in the municipality or city where the court issuing the
adoption decree is functioning. The Court is not persuaded to adopt the Government’s
theory that what is registerable is only adoption obtained through a judgment rendered by a
Philippine court. This is a misconception which should be corrected by a broader view, for, if
registration is to be narrowed down to local adoptions, it is the function of Congress, not of
the Court, to spell out such limitation, and we cannot carve out a prohibition where the law
does not so state. By Arts. 407 and 408 of our Civil Code the disputed adoption is
registerable.
4. ID.; ID.; RECORDING OF FOREIGN ADOPTION SAFEGUARDED BY CIVIL CODE. — Where
there is no suggestion in the record that prejudice to the state and adoptee, or any person,
would ensue from the registration of foreign adoption, the validity of which is not under
attack, the rights of the State and adoptee and other persons interested are fully
safeguarded by Art. 15 of the Civil Code which, in terms explicit, provides that "laws relating
to family rights and duties, or to the status, condition and legal capacity of persons are
binding upon citizens of the Philippines, even though having abroad."cralaw virtua1aw
library
5. ID.; ID.; RECORDING OF FOREIGN ADOPTIONS NOT INIMICAL TO PRIVATE INTERNATIONAL
LAW. — Private International Law offers no obstacle to recognition of foreign adoption, the
principle being that the status of adoption, created by the law of a State having jurisdiction
to create it, will be given the same effect in another state as is given by the latter state to the
status of adoption when created by its own law. It is quite obvious then that the status of
adoption, once created under the proper foreign law, will be recognized in this country
except where public policy or the interests of its inhabitants forbid its enforcement and
demand the substitution of the lex fori Indeed, implicit in Art. 15 of the Civil Code is that the
exercise of incidents to foreign adoption remains subject to the local law.
DECISION
SANCHEZ, J.:
Refusal of the Local Civil Registrar of Manila to record an Escritura de Adopcion executed in
Madrid, Spain, is now challenged before this Court on appeal by registrant-adoptee from a
judgment of the Court of First Instance of Manila confirmatory of such refusal.
The disputed deed of adoption had its inception, thus: Prior to October 21, 1958,
proceedings for adoption were started before the Court of First Instance of Madrid, Spain, by
Maria Garnier Garreau, then 84 years of age, adopting Josefina Juana de Dios Ramirez
Marcaida, 55 years, a citizen of the Philippines. Both were residents of Madrid, Spain. On
that date, October 21, 1953, the court granted the application for adoption and gave the
necessary judicial authority, once the judgment becomes final, to execute the corresponding
adoption document "con arreglo al articulo 177 del Codigo Civil." The adoption document
became necessary for the reason that under Article 177 of the Civil Code of Spain,"
[a]probada definitivamente la adopcion por el Juez, se otorgara escritura, expresando en ella
las condiciones con que se haya hecho, y se inscribira en el Registro Civil correspondiente." In
compliance, on November 29, 1958, the notarial document of adoption — which embodies
the court order of adoption — whereunder Maria Garnier Garreau formally adopted
petitioner, was executed before Notary Public Braulio Velasco Carrasquedo of Madrid. In
that document, Maria Garnier Garreau instituted petitioner, amongst other conditions, as
here unica y universal heredera de todos sus bienes, derechos y acciones, presentes y
futuros.
In conformity with our law, this escritura de adopcion was, on December 10, 1958,
authenticated by Emilio S. Martinez, Philippine Vice Consul, Philippine Embassy, Madrid, who
issued the corresponding certificate of authentication. 1 mandamus petition, appealed from, is hereby reversed; and the Local Civil Registrar of
The document of adoption was filed in the Office of the Local Civil Registrar of Manila on
January 15, 1959. The Registrar, however, refused to register that document upon the
ground that under Philippine law, adoption can only be had through judicial proceeding. And
since the notarial document of adoption is not judicial proceeding, it is not entitled to
registration.
Failing in her move to reconsider, petitioner went to the Court of First Instance of Manila on
mandamus. 2 As adverted to earlier, the mandamus petition did not prosper. The lower
court in its decision of February 28, 1964 dismissed said petition.
Petitioner’s lone assignment of error reads: "The lower court erred in declaring the ‘escritura
de adopcion’ as authenticated by the Philippine Vice Consul in Madrid, Spain, as not
registrable in the Philippines."cralaw virtua1aw library
1. Act 3753 of the Philippine Legislature, entitled "An Act to establish a civil register", in
Section 1 thereof, recites that a "civil register is established for recording the civil status of
persons, in which shall be entered", amongst others," (g) adoptions." It provides for local civil
registrars. Complementary thereto are Article 407 of our Civil Code which commands that"
[a]cts, events and judicial decrees concerning the civil status of persons shall be recorded in
civil register" ; and Article 408 of the same Code which, in language similar, directs that"
[t]he following shall be entered in the civil register: . . . (8) adoptions; . . ." The law is clear.
The compulsory tenor of the word "shall" leaves no alternative. It is a command.
2. But the Solicitor General, hewing to the line drawn by the court below, argues that
petitioner’s case does not come within the purview of Article 409 of the Civil Code, which
states that:jgc:chanrobles.com.ph
"ART. 409. In cases of legal separation, adoption, naturalization and other judicial orders
mentioned in the preceding article, it shall be the duty of the clerk of the court which issued
the decree to ascertain whether the same has been registered, and if this has not been done,
to send a copy of said decree to the civil registry of the city or municipality where the court is
functioning."cralaw virtua1aw library
and Section 11 of Act 3753, which reads:jgc:chanrobles.com.ph
"SEC. 11. Duties of clerks of court to register certain decisions. — In cases of legitimation,
acknowledgment, adoption, naturalization, and change of given or family name, or both,
upon the decree of the court becoming final, it shall be the duty of the clerk of the court
which issued the decree to ascertain whether the same has been registered, and if this has
not been done, to have said decree recorded in the office of the civil registrar of the
municipality where the court is functioning."cralaw virtua1aw library
It is at once apparent that the cited legal provisions refer to adoptions effected in the
Philippines. For, indeed, Article 409 of the Civil Code and Section 10 of the Registry Law
speak of adoption which shall be registered in the municipality or city where the court
issuing the adoption decree is functioning. But, the trial court concluded that what is
registered is only adoption obtained through a judgment rendered by a Philippine court.
We are not persuaded to adopt the Government’s theory. We are at a loss to understand
how it could be concluded that the structure of the law did not authorize registration of
foreign adoptions. We perceive that Article 409 and Section 10 aforesaid were incorporated
into the statute books merely to give effect to our law 3 which required judicial proceedings
for adoption. Limitation of registration of adoptions to those granted by Philippine courts is a
misconception which a broader view allows us not to correct. For, if registration is to be
narrowed down to local adoptions, it is the function of Congress, not of this Court, to spell
out such limitation. We cannot carve out a prohibition where the law does not so state.
Excessive rigidity serves no purpose. And, by Articles 407 and 408 of our Civil Code, the
disputed document of adoption is registrable.
3. No suggestion there is in the record that prejudice to State and adoptee, or any other
person for that matter, would ensue from the adoption here involved. The validity thereof is
not under attack. At any rate, whatever may be the effect of adoption, the rights of the State
and adoptee and other persons interested are fully safeguarded by Article 15 of our Civil
Code which, in terms explicit, provides that: "Laws relating to family rights and duties, or to
the status, condition and legal capacity of persons are binding upon citizens of the Philippine
even though living abroad."cralaw virtua1aw library
4. Private international law offers no obstacle to recognition of foreign adoption. This rests
on the principle that the status of adoption, created by the law of a State having jurisdiction
to create it, will be given the same effect in another state as is given by the latter state to the
status of adoption when created by its own law. 4 It is quite obvious then that the status of
adoption, once created under the proper foreign law, will be recognized in this country,
except where public policy or the interests of its inhabitants forbid its enforcement and
demand the substitution of the lex fori. Indeed, implicit in Article 15 of our Civil Code just
quoted, is that the exercise of incidents to foreign adoption "remains subject to local law." 5
It is high time for this Court to formulate a rule on the registration of foreign adoptions. We
hold that an adoption created under the law of a foreign country is entitled to registration in
the corresponding civil register of the Philippines. It is to be understood, however, that the
effects of such adoption shall be governed by the laws of this country. 6
Conformably to the foregoing, the lower court’s decision of February 28, 1964 dismissing the
Manila is hereby directed to register the deed of adoption (Escritura de Adopcion) by Maria
Garnier Garreau in favor of petitioner Josefina de Dios Ramirez Marcaida.
No costs. So ordered.
Dizon, Actg., C.J., Bengzon, J.P., Makalintal, Zaldivar, Castro, Angeles and Fernando, JJ.,
concur.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 193707 December 10, 2014
NORMA A. DEL SOCORRO, for and in behalf of her minor child RODERIGO NORJO VAN
WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Orders1 dated February 19, 2010 and September 1,
2010, respectively, of the Regional Trial Court of Cebu City (RTC-Cebu), which dismissed the
criminal case entitled People of the Philippines v. Ernst Johan Brinkman Van Wilsem,
docketed as Criminal Case No. CBU-85503, for violation of Republic Act (R.A.) No. 9262,
otherwise known as the Anti-Violence Against Women and Their Children Act of 2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem
contracted marriage in Holland on September 25, 1990. 2 On January 19, 1994, they were
blessed with a son named Roderigo Norjo Van Wilsem, who at the time of the filing of the
instant petition was sixteen (16) years of age. 3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree
issued by the appropriate Court of Holland.4 At that time, their son was only eighteen (18)
months old.5 Thereafter, petitioner and her son came home to the Philippines. 6
According to petitioner, respondent made a promise to provide monthly support to their son
in the amount of Two Hundred Fifty (250) Guildene (which is equivalent to Php17,500.00
more or less).7 However, since the arrival of petitioner and her son in the Philippines,
respondent never gave support to the son, Roderigo. 8
Not long thereafter, respondent cameto the Philippines and remarried in Pinamungahan,
Cebu, and since then, have been residing thereat. 9 Respondent and his new wife established
a business known as Paree Catering, located at Barangay Tajao, Municipality of
Pinamungahan, Cebu City.10 To date, all the parties, including their son, Roderigo, are
presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter demanding for support
from respondent. However, respondent refused to receive the letter.12
Because of the foregoing circumstances, petitioner filed a complaint affidavit with the
Provincial Prosecutor of Cebu City against respondent for violation of Section 5, paragraph
E(2) of R.A. No. 9262 for the latter’s unjust refusal to support his minor child with
petitioner.13 Respondent submitted his counter-affidavit thereto, to which petitioner also
submitted her reply-affidavit.14 Thereafter, the Provincial Prosecutor of Cebu City issued a
Resolution recommending the filing of an information for the crime charged against herein
respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof, states
that:
That sometime in the year 1995 and up to the present, more or less, in the Municipality of
Minglanilla, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did then and there wilfully, unlawfully and deliberately deprive,
refuse and still continue to deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14)
year old minor, of financial support legally due him, resulting in economic abuse to the
victim. CONTRARY TO LAW.15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order
against respondent.16 Consequently, respondent was arrested and, subsequently, posted
bail.17 Petitioner also filed a Motion/Application of Permanent Protection Order to which
respondent filed his Opposition. 18 Pending the resolution thereof, respondent was
arraigned.19 Subsequently, without the RTC-Cebu having resolved the application of the
protection order, respondent filed a Motion to Dismiss on the ground of: (1) lack of
jurisdiction over the offense charged; and (2) prescription of the crime charged. 20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order,21 dismissing the
instant criminal case against respondent on the ground that the facts charged in the
information do not constitute an offense with respect to the respondent who is an alien, the
dispositive part of which states:
WHEREFORE, the Court finds that the facts charged in the information do not constitute an
offense with respect to the accused, he being an alien, and accordingly, orders this case
DISMISSED.
The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional liberty
is hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating respondent’s
obligation to support their child under Article 19523 of the Family Code, thus, failure to do so
makes him liable under R.A. No. 9262 which "equally applies to all persons in the Philippines
who are obliged to support their minor children regardless of the obligor’s nationality." 24
On September 1, 2010, the lower court issued an Order 25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling. Thus:
x x x The arguments therein presented are basically a rehash of those advanced earlier in the
memorandum of the prosecution. Thus, the court hereby reiterates its ruling that since the
accused is a foreign national he is not subject to our national law (The Family Code) in regard
to a parent’s duty and obligation to givesupport to his child. Consequently, he cannot be
charged of violating R.A. 9262 for his alleged failure to support his child. Unless it is
conclusively established that R.A. 9262 applies to a foreigner who fails to give support tohis
child, notwithstanding that he is not bound by our domestic law which mandates a parent to
give such support, it is the considered opinion of the court that no prima faciecase exists
against the accused herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following issues:
1. Whether or not a foreign national has an obligation to support his minor child
under Philippine law; and
2. Whether or not a foreign national can be held criminally liable under R.A. No.
9262 for his unjustified failure to support his minor child. 27
At the outset, let it be emphasized that We are taking cognizance of the instant petition
despite the fact that the same was directly lodged with the Supreme Court, consistent with
the ruling in Republic v. Sunvar Realty Development Corporation, 28 which lays down the
instances when a ruling of the trial court may be brought on appeal directly to the Supreme
Court without violating the doctrine of hierarchy of courts, to wit:
x x x Nevertheless, the Rules do not prohibit any of the parties from filing a Rule 45 Petition
with this Court, in case only questions of law are raised or involved. This latter situation was
one that petitioners found themselves in when they filed the instant Petition to raise only
questions of law. In Republic v. Malabanan, the Court clarified the three modes of appeal
from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule
41, whereby judgment was rendered in a civil or criminal action by the RTC in the exercise of
its original jurisdiction; (2) by a petition for review under Rule 42, whereby judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for
review on certiorari before the Supreme Court under Rule 45. "The first mode of appeal is
taken to the [Court of Appeals] on questions of fact or mixed questions of fact and law. The
second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions
of fact and law. The third mode of appealis elevated to the Supreme Court only on questions
of law." (Emphasis supplied)
There is a question of law when the issue does not call for an examination of the probative
value of the evidence presented or of the truth or falsehood of the facts being admitted, and
the doubt concerns the correct application of law and jurisprudence on the matter. The
resolution of the issue must rest solely on what the law provides on the given set of
circumstances.29
Indeed, the issues submitted to us for resolution involve questions of law – the response
thereto concerns the correct application of law and jurisprudence on a given set of facts,
i.e.,whether or not a foreign national has an obligation to support his minor child under
Philippine law; and whether or not he can be held criminally liable under R.A. No. 9262 for
his unjustified failure to do so.
It cannot be negated, moreover, that the instant petition highlights a novel question of law
concerning the liability of a foreign national who allegedly commits acts and omissions
punishable under special criminal laws, specifically in relation to family rights and duties. The
inimitability of the factual milieu of the present case, therefore, deserves a definitive ruling
by this Court, which will eventually serve as a guidepost for future cases. Furthermore,
dismissing the instant petition and remanding the same to the CA would only waste the time,
effort and resources of the courts. Thus, in the present case, considerations of efficiency and
economy in the administration of justice should prevail over the observance of the hierarchy
of courts.
Now, on the matter of the substantive issues, We find the petition meritorious. Nonetheless,
we do not fully agree with petitioner’s contentions.
To determine whether or not a person is criminally liable under R.A. No. 9262, it is
imperative that the legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code, which provides the parent’s obligation to
support his child. Petitioner contends that notwithstanding the existence of a divorce decree
issued in relation to Article 26 of the Family Code,31 respondent is not excused from
complying with his obligation to support his minor child with petitioner.
On the other hand, respondent contends that there is no sufficient and clear basis presented
by petitioner that she, as well as her minor son, are entitled to financial
support.32 Respondent also added that by reason of the Divorce Decree, he is not obligated
topetitioner for any financial support. 33
On this point, we agree with respondent that petitioner cannot rely on Article 195 34 of the
New Civil Code in demanding support from respondent, who is a foreign citizen, since Article
1535 of the New Civil Code stresses the principle of nationality. In other words, insofar as
Philippine laws are concerned, specifically the provisions of the Family Code on support, the
same only applies to Filipino citizens. By analogy, the same principle applies to foreigners
such that they are governed by their national law with respect to family rights and duties. 36
The obligation to give support to a child is a matter that falls under family rights and duties.
Since the respondent is a citizen of Holland or the Netherlands, we agree with the RTC-Cebu
that he is subject to the laws of his country, not to Philippinelaw, as to whether he is obliged
to give support to his child, as well as the consequences of his failure to do so. 37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position to invoke the provisions of the Civil
Code of the Philippines, for that Code cleaves to the principle that family rights and duties
are governed by their personal law, i.e.,the laws of the nation to which they belong even
when staying in a foreign country (cf. Civil Code, Article 15). 39
It cannot be gainsaid, therefore, that the respondent is not obliged to support petitioner’s
son under Article195 of the Family Code as a consequence of the Divorce Covenant obtained
in Holland. This does not, however, mean that respondent is not obliged to support
petitioner’s son altogether.
In international law, the party who wants to have a foreign law applied to a dispute or case
has the burden of proving the foreign law. 40 In the present case, respondent hastily
concludes that being a national of the Netherlands, he is governed by such laws on the
matter of provision of and capacity to support.41 While respondent pleaded the laws of the
Netherlands in advancing his position that he is not obliged to support his son, he never
proved the same.
It is incumbent upon respondent to plead and prove that the national law of the Netherlands
does not impose upon the parents the obligation to support their child (either before, during
or after the issuance of a divorce decree), because Llorente v. Court of Appeals,42 has already
enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our courts are not
authorized to takejudicial notice of them. Like any other fact, they must be alleged and
proved.43
In view of respondent’s failure to prove the national law of the Netherlands in his favor, the
doctrine of processual presumption shall govern. Under this doctrine, if the foreign law
involved is not properly pleaded and proved, our courts will presume that the foreign law is
the same as our local or domestic or internal law. 44 Thus, since the law of the Netherlands as
regards the obligation to support has not been properly pleaded and proved in the instant
case, it is presumed to be the same with Philippine law, which enforces the obligation of
parents to support their children and penalizing the non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera,45 the Court held that a divorce obtained in a
foreign land as well as its legal effects may be recognized in the Philippines in view of the
nationality principle on the matter of status of persons, the Divorce Covenant presented by
respondent does not completely show that he is notliable to give support to his son after the
divorce decree was issued. Emphasis is placed on petitioner’s allegation that under the
second page of the aforesaid covenant, respondent’s obligation to support his child is
specifically stated,46 which was not disputed by respondent.
We likewise agree with petitioner that notwithstanding that the national law of respondent
states that parents have no obligation to support their children or that such obligation is not
punishable by law, said law would still not find applicability,in light of the ruling in Bank of
America, NT and SA v. American Realty Corporation,47 to wit:
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in accordance with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales, said foreign law would still not find
applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established
public policy of the forum, the said foreign law, judgment or order shall not be applied.
Additionally, prohibitive laws concerning persons, their acts or property, and those which
have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country.
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
—
If two or more suits are instituted on the basis of the same cause of action, the filing of one
or a judgment upon the merits in any one is available as a ground for the dismissal of the
others. Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust
negates the fundamental principles of Conflict of Laws.48
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s
obligation to support his child nor penalize the noncompliance therewith, such obligation is
still duly enforceable in the Philippines because it would be of great injustice to the child to
be denied of financial support when the latter is entitled thereto.
We emphasize, however, that as to petitioner herself, respondent is no longer liable to
support his former wife, in consonance with the ruling in San Luis v. San Luis, 49 to wit:
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no
longerbe considered marriedto the alien spouse. Further, she should not be required to
perform her marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner has to be
considered still married to private respondent and still subject to a wife's obligations under
Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live
together with, observe respect and fidelity, and render support to private respondent. The
latter should not continue to be one of her heirs with possible rights to conjugal property.
She should not be discriminated against in her own country if the ends of justice are to be
served. (Emphasis added)50
Based on the foregoing legal precepts, we find that respondent may be made liable under
Section 5(e) and (i) of R.A. No. 9262 for unjustly refusing or failing to give support
topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence
against women and their children is committed through any of the following acts:
xxxx
(e) Attempting to compel or compelling the woman or her child to engage in conduct which
the woman or her child has the right to desist from or desist from conduct which the woman
or her child has the right to engage in, or attempting to restrict or restricting the woman's or
her child's freedom of movement or conduct by force or threat of force, physical or other
harm or threat of physical or other harm, or intimidation directed against the woman or
child. This shall include, butnot limited to, the following acts committed with the purpose or
effect of controlling or restricting the woman's or her child's movement or conduct:
xxxx
(2) Depriving or threatening to deprive the woman or her children of financial support legally
due her or her family, or deliberately providing the woman's children insufficient financial
support; x x x x
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her
child, including, but not limited to, repeated verbal and emotional abuse, and denial of
financial support or custody of minor childrenof access to the woman's child/children. 51
Under the aforesaid special law, the deprivation or denial of financial support to the child is
considered anact of violence against women and children.
In addition, considering that respondent is currently living in the Philippines, we find strength
in petitioner’s claim that the Territoriality Principle in criminal law, in relation to Article 14 of
the New Civil Code, applies to the instant case, which provides that: "[p]enal laws and those
of public security and safety shall be obligatory upon all who live and sojourn in Philippine
territory, subject to the principle of public international law and to treaty stipulations." On
this score, it is indisputable that the alleged continuing acts of respondent in refusing to
support his child with petitioner is committed here in the Philippines as all of the parties
herein are residents of the Province of Cebu City. As such, our courts have territorial
jurisdiction over the offense charged against respondent. It is likewise irrefutable that
jurisdiction over the respondent was acquired upon his arrest.
Finally, we do not agree with respondent’s argument that granting, but not admitting, that
there is a legal basis for charging violation of R.A. No. 9262 in the instant case, the criminal
liability has been extinguished on the ground of prescription of crime 52 under Section 24 of
R.A. No. 9262, which provides that:
SECTION 24. Prescriptive Period. – Acts falling under Sections 5(a) to 5(f) shall prescribe in
twenty (20) years. Acts falling under Sections 5(g) to 5(I) shall prescribe in ten (10) years.
The act of denying support to a child under Section 5(e)(2) and (i) of R.A. No. 9262 is a
continuing offense,53 which started in 1995 but is still ongoing at present. Accordingly, the
crime charged in the instant case has clearly not prescribed.
Given, however, that the issue on whether respondent has provided support to petitioner’s
child calls for an examination of the probative value of the evidence presented, and the truth
and falsehood of facts being admitted, we hereby remand the determination of this issue to
the RTC-Cebu which has jurisdiction over the case.
WHEREFORE, the petition is GRANTED. The Orders dated February 19, 2010 and September
1, 2010, respectively, of the Regional Trial Court of the City of Cebu are hereby REVERSED
and SET ASIDE. The case is REMANDED to the same court to conduct further proceedings
based on the merits of the case.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 143581 January 7, 2008
KOREA TECHNOLOGIES CO., LTD., petitioner,
vs.
HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial
Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING
CORPORATION, respondents.
DECISION
VELASCO, JR., J.:
In our jurisdiction, the policy is to favor alternative methods of resolving disputes,
particularly in civil and commercial disputes. Arbitration along with mediation, conciliation,
and negotiation, being inexpensive, speedy and less hostile methods have long been favored
by this Court. The petition before us puts at issue an arbitration clause in a contract mutually
agreed upon by the parties stipulating that they would submit themselves to arbitration in a
foreign country. Regrettably, instead of hastening the resolution of their dispute, the parties
wittingly or unwittingly prolonged the controversy.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in
the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants,
while private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic
corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract1 whereby KOGIES would set up
an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the
Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for Contract No.
KLP-970301 dated March 5, 19972 amending the terms of payment. The contract and its
amendment stipulated that KOGIES will ship the machinery and facilities necessary for
manufacturing LPG cylinders for which PGSMC would pay USD 1,224,000. KOGIES would
install and initiate the operation of the plant for which PGSMC bound itself to pay USD
306,000 upon the plant’s production of the 11-kg. LPG cylinder samples. Thus, the total
contract price amounted to USD 1,530,000.
On October 14, 1997, PGSMC entered into a Contract of Lease 3 with Worth Properties, Inc.
(Worth) for use of Worth’s 5,079-square meter property with a 4,032-square meter
warehouse building to house the LPG manufacturing plant. The monthly rental was PhP
322,560 commencing on January 1, 1998 with a 10% annual increment clause. Subsequently,
the machineries, equipment, and facilities for the manufacture of LPG cylinders were
shipped, delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate4 executed by the parties on January 22, 1998, after
the installation of the plant, the initial operation could not be conducted as PGSMC
encountered financial difficulties affecting the supply of materials, thus forcing the parties to
agree that KOGIES would be deemed to have completely complied with the terms and
conditions of the March 5, 1997 contract.
For the remaining balance of USD306,000 for the installation and initial operation of the
plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated January 30,
1998 for PhP 4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP
4,500,000.5
When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT
STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter 6 to PGSMC threatening
criminal action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same
date, the wife of PGSMC’s President faxed a letter dated May 7, 1998 to KOGIES’ President
who was then staying at a Makati City hotel. She complained that not only did KOGIES deliver
a different brand of hydraulic press from that agreed upon but it had not delivered several
equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but
the payments were stopped for reasons previously made known to KOGIES. 7
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated
March 5, 1997 on the ground that KOGIES had altered the quantity and lowered the quality
of the machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle
and transfer the machineries, equipment, and facilities installed in the Carmona plant. Five
days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint
for Estafa docketed as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not
unilaterally rescind their contract nor dismantle and transfer the machineries and equipment
on mere imagined violations by KOGIES. It also insisted that their disputes should be settled
by arbitration as agreed upon in Article 15, the arbitration clause of their contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998
letter threatening that the machineries, equipment, and facilities installed in the plant would
be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an
Application for Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul,
Korea pursuant to Art. 15 of the Contract as amended.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case
No. 98-1178 against PGSMC before the Muntinlupa City Regional Trial Court (RTC). The RTC
granted a temporary restraining order (TRO) on July 4, 1998, which was subsequently
extended until July 22, 1998. In its complaint, KOGIES alleged that PGSMC had initially
admitted that the checks that were stopped were not funded but later on claimed that it
stopped payment of the checks for the reason that "their value was not received" as the
former allegedly breached their contract by "altering the quantity and lowering the quality of
the machinery and equipment" installed in the plant and failed to make the plant operational
although it earlier certified to the contrary as shown in a January 22, 1998 Certificate.
Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as amended, by
unilaterally rescinding the contract without resorting to arbitration. KOGIES also asked that
PGSMC be restrained from dismantling and transferring the machinery and equipment
installed in the plant which the latter threatened to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled
to the TRO since Art. 15, the arbitration clause, was null and void for being against public
policy as it ousts the local courts of jurisdiction over the instant controversy.
On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim 9 asserting that it
had the full right to dismantle and transfer the machineries and equipment because it had
paid for them in full as stipulated in the contract; that KOGIES was not entitled to the PhP
9,000,000 covered by the checks for failing to completely install and make the plant
operational; and that KOGIES was liable for damages amounting to PhP 4,500,000 for altering
the quantity and lowering the quality of the machineries and equipment. Moreover, PGSMC
averred that it has already paid PhP 2,257,920 in rent (covering January to July 1998) to
Worth and it was not willing to further shoulder the cost of renting the premises of the plant
considering that the LPG cylinder manufacturing plant never became operational.
After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order
denying the application for a writ of preliminary injunction, reasoning that PGSMC had paid
KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the contract
such that KOGIES no longer had proprietary rights over them. And finally, the RTC held that
Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or any
other court jurisdiction over any dispute that may arise between the parties. KOGIES’ prayer
for an injunctive writ was denied.10 The dispositive portion of the Order stated:
WHEREFORE, in view of the foregoing consideration, this Court believes and so
holds that no cogent reason exists for this Court to grant the writ of preliminary
injunction to restrain and refrain defendant from dismantling the machineries
and facilities at the lot and building of Worth Properties, Incorporated at
Carmona, Cavite and transfer the same to another site: and therefore denies
plaintiff’s application for a writ of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim.11 KOGIES
denied it had altered the quantity and lowered the quality of the machinery, equipment, and
facilities it delivered to the plant. It claimed that it had performed all the undertakings under
the contract and had already produced certified samples of LPG cylinders. It averred that
whatever was unfinished was PGSMC’s fault since it failed to procure raw materials due to
lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v. Court of
Appeals,12 insisted that the arbitration clause was without question valid.
After KOGIES filed a Supplemental Memorandum with Motion to Dismiss 13 answering
PGSMC’s memorandum of July 22, 1998 and seeking dismissal of PGSMC’s counterclaims,
KOGIES, on August 4, 1998, filed its Motion for Reconsideration14 of the July 23, 1998 Order
denying its application for an injunctive writ claiming that the contract was not merely for
machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG manufacturing
plant" consisting of "supply of all the machinery and facilities" and "transfer of technology"
for a total contract price of USD 1,530,000 such that the dismantling and transfer of the
machinery and facilities would result in the dismantling and transfer of the very plant itself to
the great prejudice of KOGIES as the still unpaid owner/seller of the plant. Moreover, KOGIES
points out that the arbitration clause under Art. 15 of the Contract as amended was a valid
arbitration stipulation under Art. 2044 of the Civil Code and as held by this Court in Chung Fu
Industries (Phils.), Inc.15
In the meantime, PGSMC filed a Motion for Inspection of Things 16 to determine whether
there was indeed alteration of the quantity and lowering of quality of the machineries and
equipment, and whether these were properly installed. KOGIES opposed the motion positing
that the queries and issues raised in the motion for inspection fell under the coverage of the
arbitration clause in their contract.
On September 21, 1998, the trial court issued an Order (1) granting PGSMC’s motion for
inspection; (2) denying KOGIES’ motion for reconsideration of the July 23, 1998 RTC Order;
and (3) denying KOGIES’ motion to dismiss PGSMC’s compulsory counterclaims as these
counterclaims fell within the requisites of compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration 17 of the September
21, 1998 RTC Order granting inspection of the plant and denying dismissal of PGSMC’s
compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998
urgent motion for reconsideration, KOGIES filed before the Court of Appeals (CA) a petition
for certiorari18 docketed as CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998
and September 21, 1998 RTC Orders and praying for the issuance of writs of prohibition,
mandamus, and preliminary injunction to enjoin the RTC and PGSMC from inspecting,
dismantling, and transferring the machineries and equipment in the Carmona plant, and to
direct the RTC to enforce the specific agreement on arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES’ urgent motion for
reconsideration and directed the Branch Sheriff to proceed with the inspection of the
machineries and equipment in the plant on October 28, 1998.19
Thereafter, KOGIES filed a Supplement to the Petition20 in CA-G.R. SP No. 49249 informing
the CA about the October 19, 1998 RTC Order. It also reiterated its prayer for the issuance of
the writs of prohibition, mandamus and preliminary injunction which was not acted upon by
the CA. KOGIES asserted that the Branch Sheriff did not have the technical expertise to
ascertain whether or not the machineries and equipment conformed to the specifications in
the contract and were properly installed.
On November 11, 1998, the Branch Sheriff filed his Sheriff’s Report 21 finding that the
enumerated machineries and equipment were not fully and properly installed.
The Court of Appeals affirmed the trial court and declared
the arbitration clause against public policy
On May 30, 2000, the CA rendered the assailed Decision22 affirming the RTC Orders and
dismissing the petition for certiorari filed by KOGIES. The CA found that the RTC did not
gravely abuse its discretion in issuing the assailed July 23, 1998 and September 21, 1998
Orders. Moreover, the CA reasoned that KOGIES’ contention that the total contract price for
USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the
finding of the RTC that PGSMC fully paid the price of USD 1,224,000, which was for all the
machineries and equipment. According to the CA, this determination by the RTC was a
factual finding beyond the ambit of a petition for certiorari.
On the issue of the validity of the arbitration clause, the CA agreed with the lower court that
an arbitration clause which provided for a final determination of the legal rights of the
parties to the contract by arbitration was against public policy.
On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum
shopping by PGSMC, the CA held that the counterclaims of PGSMC were compulsory ones
and payment of docket fees was not required since the Answer with counterclaim was not an
initiatory pleading. For the same reason, the CA said a certificate of non-forum shopping was
also not required.
Furthermore, the CA held that the petition for certiorari had been filed prematurely since
KOGIES did not wait for the resolution of its urgent motion for reconsideration of the
September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy available.
According to the CA, the RTC must be given the opportunity to correct any alleged error it
has committed, and that since the assailed orders were interlocutory, these cannot be the
subject of a petition for certiorari.
Hence, we have this Petition for Review on Certiorari under Rule 45.
The Issues
Petitioner posits that the appellate court committed the following errors:
a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND
FACILITIES AS "A QUESTION OF FACT" "BEYOND THE AMBIT OF A PETITION FOR
CERTIORARI" INTENDED ONLY FOR CORRECTION OF ERRORS OF JURISDICTION
OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF
JURISDICTION, AND CONCLUDING THAT THE TRIAL COURT’S FINDING ON THE
SAME QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW;
b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF
THE CONTRACT BETWEEN THE PARTIES FOR BEING "CONTRARY TO PUBLIC
POLICY" AND FOR OUSTING THE COURTS OF JURISDICTION;
 c. DECREEING PRIVATE RESPONDENT’S COUNTERCLAIMS TO BE ALL
COMPULSORY NOT NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;
d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING
FOR THE RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE ORDER
DATED SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN
OPPORTUNITY TO CORRECT ITSELF;
e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998
NOT TO BE PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING
"INTERLOCUTORY IN NATURE;"
f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION
AND, INSTEAD, DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT MERIT."23
The Court’s Ruling
The petition is partly meritorious.
Before we delve into the substantive issues, we shall first tackle the procedural issues.
The rules on the payment of docket fees for counterclaims
and cross claims were amended effective August 16, 2004
KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket
fees and filed a certificate of non-forum shopping, and that its failure to do so was a fatal
defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with
Compulsory Counterclaim dated July 17, 1998 in accordance with Section 8 of Rule 11, 1997
Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with
Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states, "A compulsory
counterclaim or a cross-claim that a defending party has at the time he files his answer shall
be contained therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against
KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature.
We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by
A.M. No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or
cross-claims.
As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an
initiatory pleading which requires a certification against forum shopping under Sec. 5 24 of
Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a
quo did not commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s
compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz,25 the CA also pronounced that "certiorari and Prohibition are neither
the remedies to question the propriety of an interlocutory order of the trial court." 26 The CA
erred on its reliance on Gamboa. Gamboa involved the denial of a motion to acquit in a
criminal case which was not assailable in an action for certiorari since the denial of a motion
to quash required the accused to plead and to continue with the trial, and whatever
objections the accused had in his motion to quash can then be used as part of his defense
and subsequently can be raised as errors on his appeal if the judgment of the trial court is
adverse to him. The general rule is that interlocutory orders cannot be challenged by an
appeal.27 Thus, in Yamaoka v. Pescarich Manufacturing Corporation, we held:
The proper remedy in such cases is an ordinary appeal from an adverse
judgment on the merits, incorporating in said appeal the grounds for assailing
the interlocutory orders. Allowing appeals from interlocutory orders would
result in the ‘sorry spectacle’ of a case being subject of a
counterproductive ping-pong to and from the appellate court as often as a trial
court is perceived to have made an error in any of its interlocutory rulings.
However, where the assailed interlocutory order was issued with grave abuse of
discretion or patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief, the Court allows certiorari as a mode of
redress.28
Also, appeals from interlocutory orders would open the floodgates to endless occasions for
dilatory motions. Thus, where the interlocutory order was issued without or in excess of
jurisdiction or with grave abuse of discretion, the remedy is certiorari. 29
The alleged grave abuse of discretion of the respondent court equivalent to lack of
jurisdiction in the issuance of the two assailed orders coupled with the fact that there is no
plain, speedy, and adequate remedy in the ordinary course of law amply provides the basis
for allowing the resort to a petition for certiorari under Rule 65.
Prematurity of the petition before the CA
Neither do we think that KOGIES was guilty of forum shopping in filing the petition for
certiorari. Note that KOGIES’ motion for reconsideration of the July 23, 1998 RTC Order
which denied the issuance of the injunctive writ had already been denied. Thus, KOGIES’ only
remedy was to assail the RTC’s interlocutory order via a petition for certiorari under Rule 65.
While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998
RTC Order relating to the inspection of things, and the allowance of the compulsory
counterclaims has not yet been resolved, the circumstances in this case would allow an
exception to the rule that before certiorari may be availed of, the petitioner must have filed
a motion for reconsideration and said motion should have been first resolved by the court a
quo. The reason behind the rule is "to enable the lower court, in the first instance, to pass
upon and correct its mistakes without the intervention of the higher court." 30
The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant,
equipment, and facilities when he is not competent and knowledgeable on said matters is
evidently flawed and devoid of any legal support. Moreover, there is an urgent necessity to
resolve the issue on the dismantling of the facilities and any further delay would prejudice
the interests of KOGIES. Indeed, there is real and imminent threat of irreparable destruction
or substantial damage to KOGIES’ equipment and machineries. We find the resort to
certiorari based on the gravely abusive orders of the trial court sans the ruling on the
October 2, 1998 motion for reconsideration to be proper.
The Core Issue: Article 15 of the Contract
We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause.
It provides:
Article 15. Arbitration.—All disputes, controversies, or differences which may
arise between the parties, out of or in relation to or in connection with this
Contract or for the breach thereof, shall finally be settled by arbitration in Seoul,
Korea in accordance with the Commercial Arbitration Rules of the Korean
Commercial Arbitration Board. The award rendered by the arbitration(s) shall
be final and binding upon both parties concerned. (Emphasis supplied.)
Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and
void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of the place where the contract is made
governs. Lex loci contractus. The contract in this case was perfected here in the Philippines.
Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions the
validity of mutually agreed arbitral clause or the finality and binding effect of an arbitral
award. Art. 2044 provides, "Any stipulation that the arbitrators’ award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)
Arts. 2038,31 2039,32 and 204033 abovecited refer to instances where a compromise or an
arbitral award, as applied to Art. 2044 pursuant to Art. 2043, 34 may be voided, rescinded, or
annulled, but these would not denigrate the finality of the arbitral award.
The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not
been shown to be contrary to any law, or against morals, good customs, public order, or
public policy. There has been no showing that the parties have not dealt with each other on
equal footing. We find no reason why the arbitration clause should not be respected and
complied with by both parties. In Gonzales v. Climax Mining Ltd.,35 we held that submission
to arbitration is a contract and that a clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a contract. 36 Again in Del Monte
Corporation-USA v. Court of Appeals, we likewise ruled that "[t]he provision to submit to
arbitration any dispute arising therefrom and the relationship of the parties is part of that
contract and is itself a contract."37
Arbitration clause not contrary to public policy
The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy. This Court has sanctioned the validity of
arbitration clauses in a catena of cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan
Ysmael and Co., Inc.,38 this Court had occasion to rule that an arbitration clause to resolve
differences and breaches of mutually agreed contractual terms is valid. In BF Corporation v.
Court of Appeals, we held that "[i]n this jurisdiction, arbitration has been held valid and
constitutional. Even before the approval on June 19, 1953 of Republic Act No. 876, this Court
has countenanced the settlement of disputes through arbitration. Republic Act No. 876 was
adopted to supplement the New Civil Code’s provisions on arbitration." 39 And in LM Power
Engineering Corporation v. Capitol Industrial Construction Groups, Inc., we declared that:
Being an inexpensive, speedy and amicable method of settling
disputes, arbitration––along with mediation, conciliation and negotiation––is
encouraged by the Supreme Court. Aside from unclogging judicial dockets,
arbitration also hastens the resolution of disputes, especially of the commercial
kind. It is thus regarded as the "wave of the future" in international civil and
commercial disputes. Brushing aside a contractual agreement calling for
arbitration between the parties would be a step backward.
Consistent with the above-mentioned policy of encouraging alternative dispute
resolution methods, courts should liberally construe arbitration clauses.
Provided such clause is susceptible of an interpretation that covers the asserted
dispute, an order to arbitrate should be granted. Any doubt should be resolved
in favor of arbitration.40
Having said that the instant arbitration clause is not against public policy, we come to the
question on what governs an arbitration clause specifying that in case of any dispute arising
from the contract, an arbitral panel will be constituted in a foreign country and the
arbitration rules of the foreign country would govern and its award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model law
to which we are a signatory
For domestic arbitration proceedings, we have particular agencies to arbitrate disputes
arising from contractual relations. In case a foreign arbitral body is chosen by the parties, the
arbitration rules of our domestic arbitration bodies would not be applied. As signatory to the
Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration 41 of
the United Nations Commission on International Trade Law (UNCITRAL) in the New York
Convention on June 21, 1985, the Philippines committed itself to be bound by the Model
Law. We have even incorporated the Model Law in Republic Act No. (RA) 9285, otherwise
known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize
the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the
Office for Alternative Dispute Resolution, and for Other Purposes, promulgated on April 2,
2004. Secs. 19 and 20 of Chapter 4 of the Model Law are the pertinent provisions:
CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION
SEC. 19. Adoption of the Model Law on International Commercial Arbitration.––
International commercial arbitration shall be governed by the Model Law on
International Commercial Arbitration (the "Model Law") adopted by the United
Nations Commission on International Trade Law on June 21, 1985 (United
Nations Document A/40/17) and recommended for enactment by the General
Assembly in Resolution No. 40/72 approved on December 11, 1985, copy of
which is hereto attached as Appendix "A".
SEC. 20. Interpretation of Model Law.––In interpreting the Model Law, regard
shall be had to its international origin and to the need for uniformity in its
interpretation and resort may be made to the travaux preparatories and the
report of the Secretary General of the United Nations Commission on
International Trade Law dated March 25, 1985 entitled, "International
Commercial Arbitration: Analytical Commentary on Draft Trade identified by
reference number A/CN. 9/264."
While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a
procedural law which has a retroactive effect. Likewise, KOGIES filed its application for
arbitration before the KCAB on July 1, 1998 and it is still pending because no arbitral award
has yet been rendered. Thus, RA 9285 is applicable to the instant case. Well-settled is the
rule that procedural laws are construed to be applicable to actions pending and
undetermined at the time of their passage, and are deemed retroactive in that sense and to
that extent. As a general rule, the retroactive application of procedural laws does not violate
any personal rights because no vested right has yet attached nor arisen from them. 42
Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model
Law are the following:
(1) The RTC must refer to arbitration in proper cases
Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject
of arbitration pursuant to an arbitration clause, and mandates the referral to arbitration in
such cases, thus:
SEC. 24. Referral to Arbitration.––A court before which an action is brought in a
matter which is the subject matter of an arbitration agreement shall, if at least
one party so requests not later than the pre-trial conference, or upon the
request of both parties thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void, inoperative or incapable of being
performed.
(2) Foreign arbitral awards must be confirmed by the RTC
Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to
be final and binding are not immediately enforceable or cannot be implemented
immediately. Sec. 3543 of the UNCITRAL Model Law stipulates the requirement for the
arbitral award to be recognized by a competent court for enforcement, which court under
Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds
provided for. RA 9285 incorporated these provisos to Secs. 42, 43, and 44 relative to Secs. 47
and 48, thus:
SEC. 42. Application of the New York Convention.––The New York Convention
shall govern the recognition and enforcement of arbitral awards covered by said
Convention.
The recognition and enforcement of such arbitral awards shall be filed with
the Regional Trial Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement shall file with the
court the original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation thereof into any of
such languages.
The applicant shall establish that the country in which foreign arbitration award
was made in party to the New York Convention.
xxxx
SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by
the New York Convention.––The recognition and enforcement of foreign arbitral
awards not covered by the New York Convention shall be done in accordance
with procedural rules to be promulgated by the Supreme Court. The Court may,
on grounds of comity and reciprocity, recognize and enforce a non-convention
award as a convention award.
SEC. 44. Foreign Arbitral Award Not Foreign Judgment.––A foreign arbitral
award when confirmed by a court of a foreign country, shall be recognized and
enforced as a foreign arbitral award and not as a judgment of a foreign court.
A foreign arbitral award, when confirmed by the Regional Trial Court, shall be
enforced in the same manner as final and executory decisions of courts of law of
the Philippines
xxxx
SEC. 47. Venue and Jurisdiction.––Proceedings for recognition and enforcement
of an arbitration agreement or for vacations, setting aside, correction or
modification of an arbitral award, and any application with a court for
arbitration assistance and supervision shall be deemed as special proceedings
and shall be filed with the Regional Trial Court (i) where arbitration proceedings
are conducted; (ii) where the asset to be attached or levied upon, or the act to
be enjoined is located; (iii) where any of the parties to the dispute resides or has
his place of business; or (iv) in the National Judicial Capital Region, at the option
of the applicant.
SEC. 48. Notice of Proceeding to Parties.––In a special proceeding for recognition
and enforcement of an arbitral award, the Court shall send notice to the parties
at their address of record in the arbitration, or if any part cannot be served
notice at such address, at such party’s last known address. The notice shall be
sent al least fifteen (15) days before the date set for the initial hearing of the
application.
It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a
judgment of a foreign court but as a foreign arbitral award, and when confirmed, are
enforced as final and executory decisions of our courts of law.
Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to
judgments or awards given by some of our quasi-judicial bodies, like the National Labor
Relations Commission and Mines Adjudication Board, whose final judgments are stipulated
to be final and binding, but not immediately executory in the sense that they may still be
judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral
awards are similarly situated in that they need first to be confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign arbitral awards
Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with specific
authority and jurisdiction to set aside, reject, or vacate a foreign arbitral award on grounds
provided under Art. 34(2) of the UNCITRAL Model Law. Secs. 42 and 45 provide:
SEC. 42. Application of the New York Convention.––The New York Convention
shall govern the recognition and enforcement of arbitral awards covered by said
Convention.
The recognition and enforcement of such arbitral awards shall be filed with
the Regional Trial Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural rules shall provide that the
party relying on the award or applying for its enforcement shall file with the
court the original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation thereof into any of
such languages.
The applicant shall establish that the country in which foreign arbitration award
was made is party to the New York Convention.
If the application for rejection or suspension of enforcement of an award has
been made, the Regional Trial Court may, if it considers it proper, vacate its
decision and may also, on the application of the party claiming recognition or
enforcement of the award, order the party to provide appropriate security.
xxxx
SEC. 45. Rejection of a Foreign Arbitral Award.––A party to a foreign arbitration
proceeding may oppose an application for recognition and enforcement of the
arbitral award in accordance with the procedures and rules to be promulgated
by the Supreme Court only on those grounds enumerated under Article V of the
New York Convention. Any other ground raised shall be disregarded by the
Regional Trial Court.
Thus, while the RTC does not have jurisdiction over disputes governed by arbitration
mutually agreed upon by the parties, still the foreign arbitral award is subject to judicial
review by the RTC which can set aside, reject, or vacate it. In this sense, what this Court held
in Chung Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable insofar as the foreign
arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral
awards are not absolute and without exceptions as they are still judicially reviewable.
Chapter 7 of RA 9285 has made it clear that all arbitral awards, whether domestic or foreign,
are subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign arbitral awards
The differences between a final arbitral award from an international or foreign arbitral
tribunal and an award given by a local arbitral tribunal are the specific grounds or conditions
that vest jurisdiction over our courts to review the awards.
For foreign or international arbitral awards which must first be confirmed by the RTC, the
grounds for setting aside, rejecting or vacating the award by the RTC are provided under Art.
34(2) of the UNCITRAL Model Law.
For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec.
23 of RA 87644 and shall be recognized as final and executory decisions of the RTC, 45 they
may only be assailed before the RTC and vacated on the grounds provided under Sec. 25 of
RA 876.46
(5) RTC decision of assailed foreign arbitral award appealable
Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party
in cases where the RTC sets aside, rejects, vacates, modifies, or corrects an arbitral award,
thus:
SEC. 46. Appeal from Court Decision or Arbitral Awards.—A decision of the
Regional Trial Court confirming, vacating, setting aside, modifying or correcting
an arbitral award may be appealed to the Court of Appeals in accordance with
the rules and procedure to be promulgated by the Supreme Court.
The losing party who appeals from the judgment of the court confirming an
arbitral award shall be required by the appellate court to post a counterbond
executed in favor of the prevailing party equal to the amount of the award in
accordance with the rules to be promulgated by the Supreme Court.
Thereafter, the CA decision may further be appealed or reviewed before this Court through a
petition for review under Rule 45 of the Rules of Court.
PGSMC has remedies to protect its interests
Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign
arbitration as it bound itself through the subject contract. While it may have misgivings on
the foreign arbitration done in Korea by the KCAB, it has available remedies under RA 9285.
Its interests are duly protected by the law which requires that the arbitral award that may be
rendered by KCAB must be confirmed here by the RTC before it can be enforced.
With our disquisition above, petitioner is correct in its contention that an arbitration clause,
stipulating that the arbitral award is final and binding, does not oust our courts of jurisdiction
as the international arbitral award, the award of which is not absolute and without
exceptions, is still judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.
Finally, it must be noted that there is nothing in the subject Contract which provides that the
parties may dispense with the arbitration clause.
Unilateral rescission improper and illegal
Having ruled that the arbitration clause of the subject contract is valid and binding on the
parties, and not contrary to public policy; consequently, being bound to the contract of
arbitration, a party may not unilaterally rescind or terminate the contract for whatever cause
without first resorting to arbitration.
What this Court held in University of the Philippines v. De Los Angeles 47 and reiterated in
succeeding cases,48 that the act of treating a contract as rescinded on account of infractions
by the other contracting party is valid albeit provisional as it can be judicially assailed, is not
applicable to the instant case on account of a valid stipulation on arbitration. Where an
arbitration clause in a contract is availing, neither of the parties can unilaterally treat the
contract as rescinded since whatever infractions or breaches by a party or differences arising
from the contract must be brought first and resolved by arbitration, and not through an
extrajudicial rescission or judicial action.
The issues arising from the contract between PGSMC and KOGIES on whether the equipment
and machineries delivered and installed were properly installed and operational in the plant
in Carmona, Cavite; the ownership of equipment and payment of the contract price; and
whether there was substantial compliance by KOGIES in the production of the samples, given
the alleged fact that PGSMC could not supply the raw materials required to produce the
sample LPG cylinders, are matters proper for arbitration. Indeed, we note that on July 1,
1998, KOGIES instituted an Application for Arbitration before the KCAB in Seoul, Korea
pursuant to Art. 15 of the Contract as amended. Thus, it is incumbent upon PGSMC to abide
by its commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion in granting PGSMC’s Motion for
Inspection of Things on September 21, 1998, as the subject matter of the motion is under the
primary jurisdiction of the mutually agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the
inspection made on October 28, 1998, as ordered by the trial court on October 19, 1998, is of
no worth as said Sheriff is not technically competent to ascertain the actual status of the
equipment and machineries as installed in the plant.
For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to
the grant of the inspection of the equipment and machineries have to be recalled and
nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract
price of USD 1,530,000 was for the whole plant and its installation is beyond the ambit of a
Petition for Certiorari.
Petitioner’s position is untenable.
It is settled that questions of fact cannot be raised in an original action for
certiorari.49 Whether or not there was full payment for the machineries and equipment and
installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the order of the RTC in
resolving the issue on the ownership of the plant when it is the arbitral body (KCAB) and not
the RTC which has jurisdiction and authority over the said issue. The RTC’s determination of
such factual issue constitutes grave abuse of discretion and must be reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for
PGSMC to dismantle and transfer the equipment and machineries, we find it to be in order
considering the factual milieu of the instant case.
Firstly, while the issue of the proper installation of the equipment and machineries might
well be under the primary jurisdiction of the arbitral body to decide, yet the RTC under Sec.
28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested rights of
the parties. Sec. 28 pertinently provides:
SEC. 28. Grant of interim Measure of Protection.—(a) It is not incompatible with
an arbitration agreement for a party to request, before constitution of the
tribunal, from a Court to grant such measure. After constitution of the arbitral
tribunal and during arbitral proceedings, a request for an interim measure of
protection, or modification thereof, may be made with the arbitral or to the
extent that the arbitral tribunal has no power to act or is unable to act
effectivity, the request may be made with the Court. The arbitral tribunal is
deemed constituted when the sole arbitrator or the third arbitrator, who has
been nominated, has accepted the nomination and written communication of
said nomination and acceptance has been received by the party making the
request.
(b) The following rules on interim or provisional relief shall be observed:
Any party may request that provisional relief be granted against the adverse
party.
Such relief may be granted:
(i) to prevent irreparable loss or injury;
(ii) to provide security for the performance of any obligation;
(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(c) The order granting provisional relief may be conditioned upon the provision
of security or any act or omission specified in the order.
(d) Interim or provisional relief is requested by written application transmitted
by reasonable means to the Court or arbitral tribunal as the case may be and the
party against whom the relief is sought, describing in appropriate detail the
precise relief, the party against whom the relief is requested, the grounds for
the relief, and the evidence supporting the request.
(e) The order shall be binding upon the parties.
(f) Either party may apply with the Court for assistance in implementing or
enforcing an interim measure ordered by an arbitral tribunal.
(g) A party who does not comply with the order shall be liable for all damages
resulting from noncompliance, including all expenses, and reasonable attorney's
fees, paid in obtaining the order’s judicial enforcement. (Emphasis ours.)
Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx
(2) An interim measure is any temporary measure, whether in the form of an
award or in another form, by which, at any time prior to the issuance of the
award by which the dispute is finally decided, the arbitral tribunal orders a party
to:
(a) Maintain or restore the status quo pending determination of the dispute;
(b) Take action that would prevent, or refrain from taking action that is likely to
cause, current or imminent harm or prejudice to the arbitral process itself;
(c) Provide a means of preserving assets out of which a subsequent award may
be satisfied; or
(d) Preserve evidence that may be relevant and material to the resolution of the
dispute.
Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue
interim measures:
Article 17 J. Court-ordered interim measures
A court shall have the same power of issuing an interim measure in relation to
arbitration proceedings, irrespective of whether their place is in the territory of
this State, as it has in relation to proceedings in courts. The court shall exercise
such power in accordance with its own procedures in consideration of the
specific features of international arbitration.
In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation, we were
explicit that even "the pendency of an arbitral proceeding does not foreclose resort to the
courts for provisional reliefs." We explicated this way:
As a fundamental point, the pendency of arbitral proceedings does not foreclose
resort to the courts for provisional reliefs. The Rules of the ICC, which governs
the parties’ arbitral dispute, allows the application of a party to a judicial
authority for interim or conservatory measures. Likewise, Section 14 of Republic
Act (R.A.) No. 876 (The Arbitration Law) recognizes the rights of any party to
petition the court to take measures to safeguard and/or conserve any matter
which is the subject of the dispute in arbitration. In addition, R.A. 9285,
otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the
filing of provisional or interim measures with the regular courts whenever the
arbitral tribunal has no power to act or to act effectively.50
It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures
of protection.
Secondly, considering that the equipment and machineries are in the possession of PGSMC,
it has the right to protect and preserve the equipment and machineries in the best way it
can. Considering that the LPG plant was non-operational, PGSMC has the right to dismantle
and transfer the equipment and machineries either for their protection and preservation or
for the better way to make good use of them which is ineluctably within the management
discretion of PGSMC.
Thirdly, and of greater import is the reason that maintaining the equipment and machineries
in Worth’s property is not to the best interest of PGSMC due to the prohibitive rent while the
LPG plant as set-up is not operational. PGSMC was losing PhP322,560 as monthly rentals or
PhP3.87M for 1998 alone without considering the 10% annual rent increment in maintaining
the plant.
Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the
preservation or transfer of the equipment and machineries as an interim measure, yet on
hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the equipment and
machineries given the non-recognition by the lower courts of the arbitral clause, has
accorded an interim measure of protection to PGSMC which would otherwise been
irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount
based on the contract. Moreover, KOGIES is amply protected by the arbitral action it has
instituted before the KCAB, the award of which can be enforced in our jurisdiction through
the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration pursuant to
the valid arbitration clause of its contract with KOGIES.

PGSMC to preserve the subject equipment and machineries

Finally, while PGSMC may have been granted the right to dismantle and transfer the subject
equipment and machineries, it does not have the right to convey or dispose of the same
considering the pending arbitral proceedings to settle the differences of the parties. PGSMC
therefore must preserve and maintain the subject equipment and machineries with the
diligence of a good father of a family51 until final resolution of the arbitral proceedings and
enforcement of the award, if any.

WHEREFORE, this petition is PARTLY GRANTED, in that:

(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE;

(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117
are REVERSED and SET ASIDE;

(3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute
and differences arising from the subject Contract before the KCAB; and

(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if
it had not done so, and ORDERED to preserve and maintain them until the finality of
whatever arbitral award is given in the arbitration proceedings.

No pronouncement as to costs.

SO ORDERED.

Quisumbing,Chairperson Carpio, Carpio-Morales, Tinga, JJ., concur.