Crisostomo vs SEC

Crisostomo is a minority stockholder of the United Doctors

Medical Center. He is also the director and legal counsel of UDMC.
The said hospital was unable to pay its P55 million debt incurred
from the Development Bank of the Philippines hence it
faced foreclosure. In order to avoid foreclosure, Crisostomo and
some others were able to convince Japanese doctors to invest in
the hospital. Eventually, these Japanese doctors invested P57
million in said hospital. Pursuant to the Memorandum in lieu of
the investment, the Japanese doctors were promised to be part
of the hospitals board of directors. But then, instead of holding
an election for the new board of directors, Crisostomo opposed
the same citing constitutional grounds. The issue reached
theSecurities and Exchange Commission which ordered UDMC to
hold the election.
Meanwhile, Crisostomo filed an action to annul the Memorandum
agreed with the Japanese doctors before the Regional Trial Court
of Makati. The said RTC denied Crisostomos petition.
Crisostomo then appealed the two decisions (SECs and the RTCs)
before the Court of Appeals. Not only that, while the two cases
were pending appeal, he also filed a petition for certiorari directly
to the Supreme Court.
ISSUE: Whether or not Crisostomo is guilty of forum shopping.
HELD: Yes. All three actions he filed raise the same issues that he
raised in the different tribunals. There is forum-shopping
whenever, as a result of an adverse opinion in one forum, a party
seeks a favorable opinion (other than by appeal or certiorari) in
another. The principle applies not only with respect to suits filed
in the courts but also in connection with litigations commenced in
the courts while an administrative proceeding is pending, as in
this case, in order to defeat administrative processes and in
anticipation of an unfavorable administrative ruling and a
favorable court ruling.
Forum-shopping makes the Crisostomo subject to disciplinary
action and renders his petitions in the Supreme Court and in the
Court of Appeals dismissible. He and his counsel are guilty of
contempt. Crisostomo is ordered by the Supreme Court to pay
double the costs of the suit.
Rule 4: VENUE OF ACTIONS
Q: Define venue.
A: VENUE is the place where the action must be instituted and
tried. (Ballentines Law Dict., 2nd Ed., p. 1132)
EXAMPLE: The venue of the action is in Davao, or the venue of the
action is in Manila. If you file the action in other places, that is
improper or wrong venue. In criminal cases, that is called
territorial jurisdiction the place where the crime was
committed. But in civil cases, venue is not the same with
jurisdiction. We do not call it territorial jurisdiction. We call it
venue.
This is where it is important to determine whether the action is
real or personal for the purpose of venue. The venue of real
action is stated in Section 1 and the venue for personal action is
stated in section 2.
VENUE OF REAL ACTIONS - Section 1. Venue of real
actions. Actions affecting title to or possession of real property, or
interest therein, shall be commenced and tried in the proper
court which has jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried
in the municipal trial court of the municipality or city wherein the
real property involved, or a portion thereof, is situated. (1[a],
2[a]a)
While it is true that the rule on venue is new however, the rule on
venue even before 1997 as earlier as August 1, 1995, Rule 4 of the
1964 Rules has already been amended by the administrative
Circular No. 13 95, but now it incorporated under the Rules of
1997.
Now, when the action is real, we distinguish whether it is forcible
entry and unlawful detainer or action publiciana or action
reinvidicatoria. If it is accion publiciana or reinvidicatoria, the
proper venue is the one which has jurisdiction over the area
wherein the real property involved or a portion thereof is
situated. Of course, the RTC is divided into areas. every branch
has its own designated area of responsibility.
Q: Why does the law say tried in the proper court?
A: It is because proper court will now be the MTC or the RTC,
depending on the assessed value of the property. If the assessed
value is P20,000 or less, MTC yan. If it is over P20,000, it should be
in the RTC.
Now in the case of forcible entry and unlawful detainer,
paragraph 2 will apply that is, MTC it is in the municipality or
city wherein the real property involved or a portion thereof is
situated. So, kung saan iyong real property, doon din ang venue.
Now, it is possible that for a property be in the boundary of two
towns. Example: one half is part of Davao City and the other half
is in the municipality of Panabo. So, if you would like to file a case
for forcible entry against somebody, you have two choices. You
can file it in the MTC of Panabo or in the MTC of Davao City.
Now, lets go to personal actions.
Sec. 2. Venue of personal actions. All other actions may be
commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the plaintiff. (2[b]a)
Iyan ang tinatawag natin na TRANSITORY ACTION . The venue will
now depend on the residence of the parties. In the civil action, the
venue is (1) the place where the plaintiff resides or (2) where the
defendant resides, at the election of the plaintiff. So, puwede
kang pumili sa dalawa.
Now, suppose, there are four (4) plaintiffs and 4 defendants and
the 4 plaintiffs reside in 4 different cities or municipalities. So ang
choice mo ng venue ay walo (8) becuae the law says, where the
plaintiff or any of the principal plaintiffs or where the defendant
or any of the principal defendants reside
So, kung maraming defendants at iba iba ang lugar at maraming
plaintiffs, the residence of each one could be the proper venue.
NOTE: PRINCIPAL PLAINTIFF, PRINCIPAL DEFENDANT. Because
there is such a thing as nominal defendant and nominal plaintiff
iyun bang formal lang.
EXAMPLE of a nominal party: When a party wants to file a case to
annul an execution sale of to annul a levy, normally it pleads the
sheriff as party. But the sheriff is not the principal party but is only
a NOMINAL PARTY. So, the residence of the sheriff is not
considered the sheriff being a nominal party only. So, just imagine
if there are 4 plaintiffs and 4 defendants, iba ibang cities. There 8
choices of venue. That is the original concept of forum shopping. I
will cite the original case which traced the history of
forum shopping na kung saan ako convenient, doon sko mag-file.
That is the original concept which is legal and legitimate. The
trouble is, the concept of forum shopping degenerated into a
malpractice , where a lawyer, mag-file ng case, sabay sabay. Ayan!
That is why there is a SC case which I will later discuss
where Justice Panganiban cited the history of forum shopping.
(Dean is referring to the case of FIRST PHILIPPINE INTERNATIONAL
BANK vs. CA (252 SCRA 259), January 24, 1996)
Forum shopping is legitimate and valid but the trouble is, the
practice acquired another unsavory meaning, where a lawyer will
file simultaneous cases. Kaya nga nasira from a legitimate
practice to an act of malpractice. That is the history of forum
shopping. However, there are instances when it is easy to
distinguish whether the action is real or personal and there are
also instances when it is difficult.
EXAMPLE: An action for annulment of a contract of sale or
rescission of contract of sale of real property. Generally, an action
for annulment or rescission is a personal action. But suppose , I
will file a complaint to annul or rescind a contract of a deed of
sale over a parcel of land. Im from Davao and youre from Davao.
But I would like to annul the sale of a land which I made to you
one year ago which land is situated in Digos and the purpose of
my action is to recover the ownership of that land. Then, that is a
real action because the primary object of the suit is to recover the
ownership of real property, di ba? It seems to be personal but in
reality it is a real action. So the venue is governed by Section 2.
CLAVECILLA Radio System v. Hon. Agustin Antillon
Facts:
1. New Cagayan Grocery (NECAGRO) filed a complaint for
damages against Clavecilla Radio system. They alleged that
Clavecilla omitted the word NOT in the letter addressed to
NECAGRO for transmittal at Clavecilla Cagayande Oro Branch.
2. NECAGRO alleged that the omission of the word not between
the word WASHED and AVAILABLE altered the contents of the
same causing them to suffer from damages
3. Clavecilla filed a motion to dismiss on the ground of failure to
state a cause of action and improper venue
4. City Judge of CDO denied the MTD. Clavecilla filed a petition for
prohibition with preliminary Injunction with the CFIpraying that
the City Judge be enjoined from further proceeding with the case
because of improper venue.
5. CFI dismissed the case and held that Clavecilla may be sued
either in Manila (principal office) or in CDO (branchoffice).
6. Clavecilla appealed to the SC contending that the suit against it
should be filed in Manila where it holds its principaloffice.
Issue: WON the present case against Clavecilla should be filed
in Manila where it holds its principal office.
Held: YES. It is clear that the case from damages is based upon
a written contract.Under par. (b)(3) Sec. 1 Rule 4 of the New Rules
of Court, when an action is not upon a written contract then the
case should be filed in the municipality where the defendant or
any of the defendant resides or maybe served upon with
summons.In corpo. Law, the residence of the corporation is the
place where the principal office is established. Since Clavecillas
principal office is in Manila, then the suit against it may properly
be file in the City of Manila. As stated in Evangelista v. Santos, the
laying of the venue of an action is not left to plaintiffs caprice
because the matter is regulated by the Rules of Court.
NORTHWEST ORIENT AIRLINES, INC. vs. CA and C.F. SHARP &
COMPANY INC.
FACTS: Petitioner Northwest Orient Airlines, Inc. (NORTHWEST), a
corporation organized under the laws of the State of Minnesota,
U.S.A., sought to enforce in the RTC- Manila, a judgment rendered
in its favor by a Japanese court against private respondent C.F.
Sharp & Company, Inc., (SHARP), a corporation incorporated
under Philippine laws.
factual and procedural antecedents of this controversy:
On May 9, 1974, Northwest Airlines and Sharp, 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 defendants office to
serve the summons. Mr. 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 defendants 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
plaintiffs 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.
defendant filed its answer averring that the judgment of the
Japanese Court: (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.
In its decision, the Court of Appeals sustained the trial court. It
agreed with the latter in its reliance upon Boudard vs. Tait
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:
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. vs. Nieto, 125 SCRA 230). To confer jurisdiction on the
court, personal or substituted service of summons on the
defendant not extraterritorial service is necessary.
ISSUE: 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.
HELD: YES
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
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.(See Sec. 50, R 39)
Being the party challenging the judgment rendered by the
Japanese court, SHARP had the duty to demonstrate the invalidity
of such judgment.
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. 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 is a question of fact, not
of law. 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 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.
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.
Nowhere in its pleadings did SHARP profess to having had a
resident agent authorized to receive court processes in Japan.
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 respondent court, two attempts at service were
made at SHARPs Yokohama branch. Both were unsuccessful. 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,
SHARPs contention that such manner of service is not valid under
Philippine laws holds no water.
We find NORTHWESTs claim for attorneys fees, litigation
expenses, and exemplary damages to be without merit. We find
no evidence that would justify an award for attorneys fees and
litigation expenses under Article 2208 of the Civil Code of the
Philippines. Nor is an award for exemplary damages warranted.
FACTS:
Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.),
through its Japan branch, entered into an International Passenger
Sales Agency Agreement, whereby the Northwest authorized the
C.F. to sell its air transportation tickets
March 25, 1980: Unable to remit the proceeds of
the ticketsales, Northwest sued C.F. in Tokyo, Japan, for collection
of the unremitted proceeds of the ticket sales, with claim for
damages
April 11, 1980: writ of summons was issued by the 36th Civil
Department, Tokyo District Court of Japan
The attempt to serve the summons was unsuccessful because Mr.
Dinozo was in Manila and would be back on April 24, 1980
April 24, 1980: Mr. Dinozo returned to C.F. Office to serve the
summons but he refused to receive claiming that he no longer an
employee
After the 2 attempts of service were unsuccessful, Supreme Court
of Japan sent the summons together with the other legal
documents to the Ministry of Foreign Affairs of Japan> Japanese
Embassy in Manila>Ministry (now Department) of Foreign Affairs
of the Philippines>Executive Judge of the Court of First Instance
(now Regional Trial Court) of Manila who ordered Deputy Sheriff
Rolando Balingit>C.F. Main Office
August 28, 1980: C.F. received from Deputy Sheriff Rolando
Balingit the writ of summons but failed to appear at the scheduled
hearing.
January 29, 1981: Tokyo Court rendered judgment ordering
the C.F. to pay 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
March 24, 1981: C.F. received from Deputy Sheriff Balingit copy of
the judgment. C.F. did not appeal so it became final and executory
May 20, 1983: Northwest filed a suit for enforcement of the
judgment a RTC
July 16, 1983: C.F. averred that the Japanese Court sought to be
enforced is null and void and unenforceable in this jurisdiction
having been rendered without due and proper notice and/or with
collusion or fraud and/or upon a clear mistake of law and
fact. 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
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
CA sustained RTC: Court agrees that if the C.F. in a foreign court is
a resident in the court of that foreign court such court could
acquire jurisdiction over the person of C.F. but it must be served
in the territorial jurisdiction of the foreign court
ISSUE: W/N the Japanese Court has jurisdiction over C.F.
HELD: YES. instant petition is partly GRANTED, and the challenged
decision is AFFIRMED insofar as it denied NORTHWEST's claims for
attorneys fees, litigation expenses, and exemplary damages
Consequently, the party attacking (C.F.) a foreign judgment has
the burden of overcoming the presumption of its validity
Accordingly, the presumption of validity and regularity of the
service of summons and the decision thereafter rendered by the
Japanese court must stand.
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
(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 proccess to the corporation at its
home or principal office. The sending of such copy is a necessary
part of the service.
The 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
Our laws and jurisprudence indicate a purpose to assimilate
foreign corporations, duly licensed to do business here, to the
status of domestic corporations
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
In as much 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.
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.

STATE INVESTMENT HOUSE, INC. ANS STATE FINANCING
CENTER, INC. VS
CITIBANK, BANK OF AMERICA AND HONGKONG AND SHANGHAI
BANK

ISSUE: Whether or Not foreign banks licensed to do business in
the Philippines, may be considered residents of the Philippine
Islands as contemplated in Sec. 20 of Insolvency Law
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 int hr Philippine Islands, and the
amount of which credits or demands are in the aggregate not less
than one thousand pesos.
FACTS: The foreign banks involved in the case are Bank of
America, Citibank, and Hongkong and Shanghai Banking
Corporation, all of whom are creditors of Consolidated Mines, Inc.
(CMI).
On December 11, 1981, the three banks jointly filed with the RTC
of Rizal a petition for Involuntary Insolvency of CMI. Among the
grounds alleged by the foreign banks is CMIs commission of
specific acts of insolvency, i.e. that CMI suffered its property to
remain under attachment for three days for the purpose of
hindering or delaying or defrauding its creditors and that CMI has
defaulted in the payment of its current obligations for a period of
thirty days.
The petition for involuntary insolvency was opposed by herein
petitioners State Investment House, Inc. (SIHI) and State Financing
Center, Inc. (SFCI). SIHI and SFCI claimed, among others, that the
court had no jurisdiction to take cognizance of the petition for
insolvency because the foreign banks are not resident creditors of
CMI as required under the Insolvency Law.
The RTC rendered judgment in favour of SIHI and SFCI for lack of
jurisdiction over the subject matter. The court ruled that the
insolvency court could not acquire jurisdiction to adjudicate the
debtor (CMI) as insolvent because the foreign banks are not
residents of the Philippines.
On petition for review, the CA rendered order reversing the
judgment of the RTC. The CA ruled that the three banks are
residents of the Philippines for the purpose of doing business in
the Philippines, and that the Insolvency Law was designed for the
benefit of both the creditors and debtors. The CA also reiterated
that the authority granted to the three banks by the SEC covers
not only transacting banking business, but also maintaining suits
for the recovery of any debt and claims. Hence, SIHI and SFCI
brought their appeal before the SC
RULING: The SC ruled that since the Insolvency Law did not
mention of the meaning of residents of the Philippine Islands,
the better approach would be to harmonize the provisions of the
Corporation Code, the General Banking Act, the Offshore Banking
Law and the NIRC.
Hence, the Court ruled that it is not really the grant of a license to
a foreign corporation to do business in the Philippines that makes
it a resident. The license merely gives legitimacy to its doing
business in the country. What effectively makes such foreign
corporation a resident corporation in the Philippines is its actually
being in the Philippines and licitly doing business here, or the
locality of existence, which is the necessary element.
SUABILITY OF FOREIGN CORPORATIONS
No foreign corporation transacting business in the Philippines
without a license, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or administrative
agency in the Philippines.
METHODS OF CORPORATE DISSOLUTION:
Voluntary dissolution by filing proper papers with SEC.
Involuntary dissolution upon verified complaint filed with SEC
on grounds authorized by law, i.e serious dissension /non-user of
franchise, etc.
Expiration of the term of the corporation
Shortening of corporate term
Failure to organize and commence business within two years from
date of issuance of certificate of incorporation, or
Legislative dissolution
GROUNDS FOR INVOLUNTARY DISSOLUTION
Fraud or misrepresentation as to the paid-up capital of
the corporation
Misinterpretation
Ultra vires mala prohibita, but too numerous
infractions, which is persistent despite SEC warnings
Continuous inactivity of the corporation for at least 5
years
Refusal to adopt or approve by-laws

THE GOVT OF THE PHILIPPINE ISLANDS vs. FRANK

FACTS: In 1903, in the city of Chicago, Illinois, Frank entered into a
contract for a period of 2 years with the Plaintiff, by which Frank
was to receive a salary as a stenographer in the service of the said
Plaintiff, and in addition thereto was to be paid in advance the
expenses incurred in traveling from the said city of Chicago to
Manila, and one-half salary during said period of travel.
Said contract contained a provision that in case of a violation of its
terms on the part of Frank, he should become liable to the
Plaintiff for the amount expended by the Government by way of
expenses incurred in traveling from Chicago to Manila and the
one-half salary paid during such period.
Frank entered upon the performance of his contract and was paid
half-salary from the date until the date of his arrival in the
Philippine Islands.
Thereafter, Frank left the service of the Plaintiff and refused to
make a further compliance with the terms of the contract.
The Plaintiff commenced an action in the CFI-Manila to recover
from Frank the sum of money, which amount the Plaintiff claimed
had been paid to Frank as expenses incurred in traveling from
Chicago to Manila, and as half-salary for the period consumed in
travel.
It was expressly agreed between the parties to said contract that
Laws No. 80 and No. 224 should constitute a part of said contract.
The Defendant filed a general denial and a special defense,
alleging in his special defense that (1) the Government of the
Philippine Islands had amended Laws No. 80 and No. 224 and had
thereby materially altered the said contract, and also that (2) he
was a minor at the time the contract was entered into and was
therefore not responsible under the law.
the lower court rendered a judgment against Frank and in favor of
the Plaintiff for the sum of 265. 90 dollars
ISSUE:
1. Did the amendment of the laws altered the tenor of the
contract entered into between Plaintiff and Defendant?
2. Can the defendant allege minority/infancy?
HELD: the judgment of the lower court is affirmed
1. NO; It may be said that the mere fact that the legislative
department of the Government of the Philippine Islands had
amended said Acts No. 80 and No. 224 by Acts No. 643 and No.
1040 did not have the effect of changing the terms of the contract
made between the Plaintiff and the Defendant. The legislative
department of the Government is expressly prohibited by section
5 of the Act of Congress of 1902 from altering or changing the
terms of a contract. The right which the Defendant had acquired
by virtue of Acts No. 80 and No. 224 had not been changed in any
respect by the fact that said laws had been amended. These acts,
constituting the terms of the contract, still constituted a part of
said contract and were enforceable in favor of the Defendant.
2. NO; The Defendant alleged in his special defense that he was a
minor and therefore the contract could not be enforced against
him. The record discloses that, at the time the contract was
entered into in the State of Illinois, he was an adult under the laws
of that State and had full authority to contract. Frank claims that,
by reason of the fact that, under that laws of the Philippine
Islands at the time the contract was made, made persons in said
Islands did not reach their majority until they had attained the age
of 23 years, he was not liable under said contract, contending that
the laws of the Philippine Islands governed.
It is not disputed upon the contrary the fact is admitted that
at the time and place of the making of the contract in question
the Defendant had full capacity to make the same. No rule is
better settled in law than that matters bearing upon the
execution, interpretation and validity of a contract are
determined b the law of the place where the contract is made.
Matters connected with its performance are regulated by the law
prevailing at the place of performance. Matters respecting a
remedy, such as the bringing of suit, admissibility of evidence, and
statutes of limitations, depend upon the law of the place where
the suit is brought.
Insular Government vs. Frank 13 Phil 236, G.R.No.2935. March
23, 1909.
FACTS: In 1903 in the state of Illinois, Mr. Frank, a US citizen and a
representative of the Insular Government of the Philippines
entered into a contract whereby the former shall serve as
stenographer in the Philippines for a period of 2 years. The
contract contained a provision that in case of violation of its
terms, Mr. Frank shall be liable for the amount incurred by the
Philippine Government for his travel from Chicago to Manila and
one-half salary paid during such period. After serving for
6 months, defendant left the service and refused to make
further compliance with the terms of the contract, therefore the
Government sued him to recover the amount of $269.23 plus
damages. The lower court ruled in favor of the plaintiff, hence the
defendant appealed presenting minority as his special defense. By
reason of the fact that under the laws of the Philippines, contracts
made by person who did not reach majority age of 23 are
unenforceable. Defendant claim that he is an adult when he left
Chicago but was a minor when he arrived in Manila and at the
time the plaintiff attempted to enforce the contract.
ISSUE: Whether or not the contract is valid.
RULING: Mr. Frank being fully qualified to enter into a contract at
the place and time the contract was made, he cannot therefore
plead infancy as a defense at the place where the contract is
being enforced. Although Mr. Frank was still a minor under
Philippine laws, he was nevertheless considered an adult under
the laws of the state of Illinois, the place where the contract was
made. No rule is better settled in law than that matters bearing
upon the execution, interpretation and validity of a contract are
determined by the law of the place where the contract is made.
Matters connected to its performance are regulated by the law
prevailing at the place of its performance. Matters respecting a
remedy, such as bringing of a suit, admissibility of evidence, and
statutes of limitations, depend upon the law of the place where
the suit is brought. Although generally, capacity of the parties to
enter into a contract is governed by national law. This is one case
not involving real property which was decided by our Supreme
Court, where instead of national law, what should determine
capacity to enter into a contract is the lex loci celebrationis.
According to Conflict of Laws writer Edgardo Paras, Franks
capacity should be judged by his national law and not by the law
of the place where the contract was entered into. In the instant
case whether it is the place where the contract was made or
Franks nationality, the result would be the same. However, as
suggested by the mentioned author, for the conflicts rule in
capacity in general, national law of the parties is controlling.
Tolentino vs. Secretary of Finance
FACTS: RA 7716, otherwise known as the Expanded Value-Added
Tax Law, is an act that seeks to widen the tax base of the existing
VAT system and enhance its administration by amending the
National Internal Revenue Code. There are various suits
questioning and challenging the constitutionality of RA 7716 on
various grounds.
Tolentino contends that RA 7716 did not originate exclusively
from the House of Representatives but is a mere consolidation of
HB. No. 11197 and SB. No. 1630 and it did not pass three readings
on separate days on the Senate thus violating Article VI, Sections
24 and 26(2) of the Constitution, respectively.
Art. VI, Section 24: All appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, bills of local application,
and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with
amendments.
Art. VI, Section 26(2): No bill passed by either House shall
become a law unless it has passed three readings on separate
days, and printed copies thereof in its final form have been
distributed to its Members three days before its passage, except
when the President certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last
reading of a bill, no amendment thereto shall be allowed, and the
vote thereon shall be taken immediately thereafter, and the yeas
and nays entered in the Journal.
ISSUE: Whether or not RA 7716 violated Art. VI, Section 24 and
Art. VI, Section 26(2) of the Constitution.
HELD: No. The phrase originate exclusively refers to the revenue
bill and not to the revenue law. It is sufficient that the House of
Representatives initiated the passage of the bill which may
undergo extensive changes in the Senate.
SB. No. 1630, having been certified as urgent by the President
need not meet the requirement not only of printing but also of
reading the bill on separate days.
Tolentino vs. Secretary of Finance
Arturo Tolentino et al are questioning the constitutionality of RA
7716 otherwise known as the Expanded Value Added Tax (EVAT)
Law. Tolentino averred that this revenue bill did not exclusively
originate from the House of Representatives as required by
Section 24, Article 6 of the Constitution. Even though RA 7716
originated as HB 11197 and that it passed the 3 readings in the
HoR, the same did not complete the 3 readings in Senate for after
the 1st reading it was referred to the Senate Ways & Means
Committee thereafter Senate passed its own version known as
Senate Bill 1630. Tolentino averred that what Senate could have
done is amend HB 11197 by striking out its text and substituting it
with the text of SB 1630 in that way the bill remains a House Bill
and the Senate version just becomes the text (only the text) of the
HB. (Its ironic however to note that Tolentino and co-petitioner
Raul Roco even signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the
challenge, holding that such consolidation was consistent with the
power of the Senate to propose or concur with amendments to
the version originated in the HoR. What the Constitution simply
means, according to the 9 justices, is that the initiative must come
from the HoR. Note also that there were several instances before
where Senate passed its own version rather than having the HoR
version as far as revenue and other such bills are concerned. This
practice of amendment by substitution has always been accepted.
The proposition of Tolentino concerns a mere matter of form.
There is no showing that it would make a significant difference if
Senate were to adopt his over what has been done.
Held: The argument that RA 7716 did not originate exclusively in
the House of Representatives as required by Art. VI, Sec. 24 of the
Constitution will not bear analysis. To begin with, it is not the law
but the revenue bill which is required by the Constitution to
originate exclusively in the House of Representatives. To insist
that a revenue statute and not only the bill which initiated the
legislative process culminating in the enactment of the law must
substantially be the same as the House bill would be to deny the
Senates power not only to concur with amendments but also to
propose amendments. Indeed, what the Constitution simply
means is that the initiative for filing revenue, tariff or tax bills, bills
authorizing an increase of the public debt, private bills and bills of
local application must come from the House of Representatives
on the theory that, elected as they are from the districts, the
members of the House can be expected to be more sensitive to
the local needs and problems. Nor does the Constitutionprohibit
the filing in the Senate of a substitute bill in anticipation of its
receipt of the bill from the House, so long as action by the Senate
as a body is withheld pending receipt of the House bill.
The next argument of the petitioners was that S. No. 1630 did not
pass 3 readings on separate days as required by the Constitution
because the second and third readings were done on the same
day. But this was because the President had certified S. No. 1630
as urgent. The presidential certification dispensed with the
requirement not only of printing but also that of reading the bill
on separate days. That upon the certification of a billby the
President the requirement of 3 readings on separate days and of
printing and distribution can be dispensed with is supported by
the weightof legislative practice.
BAGONG FILIPINAS OVERSEAS CORPORATION and GOLDEN STAR
SHIPPING, LTD.,Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, DIRECTOR PATRICIA SANTO TOMAS and
PROSERFINA PANCHO, Respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SHIPBOARD
EMPLOYMENT CONTRACT, LAW BETWEEN THE PARTIES. We
hold that the shipboard employment contract is controlling in this
case. The contract provides that the beneficiaries of the seaman
are entitled to P20,000 "over and above the benefits" for which
the Philippine Government is liable under Philippine law.

2. ID.; ID.; ID.; NORSE CASE DISTINGUISHED FROM CASE AT BAR.
Hongkong law on workmens compensation is not the
applicable law. The case of Norse Management Co. v. National
Seamen Board, G. R. No. 54204, September 30, 1982, 117 SCRA
486 cannot be a precedent because it was expressly stipulated in
the employment contract in that case that the workmens
compensation payable to the employee should be in accordance
with Philippine Law or the Workmens Insurance Law of the
country where the vessel is registered "whichever is greater."
D E C I S I O N
The issue in this case is whether the shipboard employment
contract or Hongkong law should govern the amount of death
compensation due to the wife of (Guillermo Pancho who was
employed by Golden Star Shipping, Ltd., a Hongkong based
firm.chanrobles.com : virtual law library

The shipboard employment contract dated June 1, 1978 was
executed in this country between Pancho and Bagong Filipinas
Overseas Corporation, the local agent of Golden Star Shipping. It
was approved by the defunct National Seamen Board. Pancho was
hired as an oiler in the M/V Olivine for 12 months with a gross
monthly wage of US $195.

In October, 1978, he had a cerebral stroke. He was rushed to the
hospital while the vessel was docked at Gothenberg, Sweden. He
was repatriated to the Philippines and confined at the San Juan de
Dios Hospital. He died on December 13, 1979.

The National Seamen Board awarded his widow, Proserfina,
P20,000 as disability compensation benefits pursuant to the
above-mentioned employment contract plus P2,000 as attorneys
fees. Proserfina appealed to the National Labor Relations
Commission which awarded her $621 times 36 months or its
equivalent in Philippine currency plus 10% of the benefits as
attorneys fees. Golden Star Shipping assailed that decision
by certiorari.

We hold that the shipboard employment contract is controlling in
this case. The contract provides that the beneficiaries of the
seaman are entitled to P20,000 "over and above the benefits" for
which the Philippine Government is liable under Philippine law.

Hongkong law on workmens compensation is not the applicable
law. The case of Norse Management Co. v. National Seamen
Board, G. R. No. 54204, September 30, 1982, 117 SCRA 486
cannot be a precedent because it was expressly stipulated in the
employment contract in that case that the workmens
compensation payable to the employee should be in accordance
with Philippine Law or the Workmens Insurance Law of the
country where the vessel is registered "whichever is
greater." chanrobles law library : red

The Solicitor General opines that the employment contract should
be applied. For that reason, he refused to uphold the decision of
the NLRC.

WHEREFORE, the judgment of the National Labor Relations
Commission is reversed and set aside. The decision of the
National Seamen Board dated February 26, 1981 is affirmed. No
costs.
PAKISTAN INTERNATIONAL AIRLINES (PIA) CORPORATION 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
G.R. No. 61594 September 28, 1990
FACTS: On 2 December 1978, petitioner Pakistan International
Airlines Corporation (PIA), a foreign corporation licensed to do
business in the Philippines, executed in Manila 2 separate
contracts of employment, one with private respondent Farrales
and the other with private respondent 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 3 years, but can be extended by
the mutual consent of the parties.
6. TERMINATION: 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 months salary.
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.
Farrales & Mamasig (employees) were hired as flight attendants
after undergoing training. Base station was in Manila and flying
assignments to different parts of the Middle East and Europe.
roughly 1 year and 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,
informing them that they will be terminated effective September
1, 1980. Farrales and Mamasig jointly instituted a complaint, for
illegal dismissal and non-payment of company benefits and
bonuses, against PIA with the then Ministry of Labor and
Employment (MOLE).
PIAs Contention: The PIA submitted its position paper, 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.
Favorable decision for the respondents. 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 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.
Decision sustained on appeal. Hence, this petition for certiorari
ISSUE: (Relative to the subject) Which law should govern over the
case? Which court has jurisdiction?
HELD: Philippine Law and Philippine courts
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. 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.
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. [DOCTRINE OF PROCESSUAL
PRESUMPTION, eh?] Petition denied.

NOTES:
Another Issue: 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.
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. It is thus necessary to
appraise the contractual provisions invoked by petitioner PIA in
terms of their consistency with applicable Philippine law and
regulations.
Triple Eight Integrated Services, Inc. vs. NLRC
LABOR LAW: Disease as Ground for Dismissal, requisites: (1) the
disease must be such that employees continued employment is
prohibited by law or prejudicial to his health as well as to the
health of his co-employees; and (2) there must be a
certification by competent public authority that the disease is of
such nature or at such a stage that it cannot be cured within a
period of 6 months with proper medical treatment.
LABOR LAW: same; The requirement for a medical
certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent
of the employees illness and thus defeat the public policy on the
protection of labor.
PRIVATE INTERNATIONAL LAW: Lex Loci Contractus: Established is
the rule that lex loci contractus (the law of the place where the
contract is made) governs in this jurisdiction. There is
no question that the contract of employment in this case was
perfected here in the Philippines.
PRIVATE INTERNATIONAL LAW: Law of the Forum vis-a-vis Public
Policy: Settled is the rule that the courts of the forum will not
enforce any foreign claim obnoxious to the forums public policy.
Here in the Philippines, employment agreements are more than
contractual in nature. The Constitution itself, in Article XIII
Section 3, guarantees the special protection of workers.

FACTS: Osdana, a Filipino citizen, was recruited by Triple Eight for
employment with the latters principal, Gulf Catering Company
(GCC), a firm based in the Kingdom of Saudi Arabia. The
employment contract (originally as food server but later
changed to waitress) was executed in the Philippines but was to
be performed in Riyadh. Once in Riyadh, however, Osdana was
made to perform strenuous tasks (washing dishes, janitorial
work), which were not included in her designation as a waitress.
Because of the long hours and strenuous nature of her work, she
suffered from Carpal Tunnel Syndrome, for which she had to
undergo surgery. But during her weeks of confinement at the
hospital for her recovery, she was not given any salary. And after
she was discharged from the hospital, GCC suddenly dismissed her
from work, allegedly on the ground of illness. She was not given
any separation pay nor was she paid her salaries for the periods
when she was not allowed to work. Thus, upon her return to the
Philippines, she filed a complaint against Triple Eight, praying for
unpaid and underpaid salaries, among others. The LA ruled in her
favour, which ruling NLRC affirmed. Hence, this petition for
certiorari.
ISSUE: Whether or not Osdana was illegally dismissed. If so,
whether or not she is entitled to award for salaries for the
unexpired portion of the contract
HELD: The petition must fail. Disease as a Ground for Dismissal
Under Article 284 of the Labor Code and the Omnibus Rules
Implementing the Labor Code, for disease to be a valid ground for
termination, the following requisites must be present: The
disease must be such that employees continued employment is
prohibited by law or prejudicial to his health as well as to the
health of his co-employees
There must be a certification by competent public authority
that the disease is of such nature or at such a stage that it cannot
be cured within a period of 6 months with proper medical
treatment.

In the first place, Osdanas continued employment despite
her illness was not prohibited by law nor was it prejudicial to
her health, as well as that of her co-employees. In fact, the
medical report issued after her second operation stated that she
had very good improvement of the symptoms. Besides, Carpal
Tunnel Syndrome is not a contagious disease.

On the medical certificate requirement, petitioner erroneously
argues that private respondent was employed in Saudi Arabia
and not here in the Philippines. Hence, there was a physical
impossibility to secure from a Philippine public health authority
the alluded medical certificate that public respondents illness will
not be cured within a period of six months.

Petitioner entirely misses the point, as counsel for private
respondent states in the Comment. The rule simply prescribes a
certification by a competent public health authority and not a
Philippine public health authority.

If, indeed, Osdana was physically unfit to continue her
employment, her employer could have easily obtained a
certification to that effect from a competent public health
authority in Saudi Arabia, thereby heading off any complaint for
illegal dismissal.

The requirement for a medical certificate under Article 284 of the
Labor Code cannot be dispensed with; otherwise, it
would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employeesillness and
thus defeat the public policy on the protection of labor. As the
Court observed in Prieto v. NLRC, The Court is not unaware of
the many abuses suffered by our overseas workers in the foreign
land where they have ventured, usually with heavy hearts, in
pursuit of a more fulfilling future. Breach of contract,
maltreatment, rape, insufficient nourishment, sub-human
lodgings, insults and other forms of debasement, are only a few of
the inhumane acts to which they are subjected by their foreign
employers, who probably feel they can do as they please in their
country. While these workers may indeed have relatively little
defense against exploitation while they are abroad, that
disadvantage must not continue to burden them when they
return to their own territory to voice their muted
complaint. There is no reason why, in their own land, the
protection of our own laws cannot be extended to them in full
measure for the redress of their grievances.

Which law should apply: Lex Loci Contractus. Petitioner likewise
attempts to sidestep the medical certificate requirement by
contending that since Osdana was working in Saudi Arabia, her
employment was subject to the laws of the host
country. Apparently, petitioner hopes to make it appear that the
labor laws of Saudi Arabia do not require any certification by a
competent public health authority in the dismissal of employees
due to illness.

Again, petitioners argument is without merit. First, established is
the rule that lex loci contractus (the law of the place where the
contract is made) governs in this jurisdiction. There is
no question that the contract of employment in this case was
perfected here in the Philippines. Therefore, the Labor Code, its
implementing rules and regulations, and other laws affecting
labor apply in this case. Furthermore, settled is the rule that the
courts of the forum will not enforce any foreign claim obnoxious
to the forums public policy. Here in the Philippines, employment
agreements are more than contractual in nature. The
Constitution itself, in Article XIII Section 3, guarantees the special
protection of workers.

This public policy should be borne in mind in this case because to
allow foreign employers to determine for and by themselves
whether an overseas contract worker may be dismissed on the
ground of illness would encourage illegal or arbitrary pre-
termination of employment contracts.

Award of Salaries granted but reduced. In the case at bar, while it
would appear that the employment contract approved by the
POEA was only for a period of twelve months, Osdanas actual
stint with the foreign principal lasted for one year and seven-and-
a-half months. It may be inferred, therefore, that the employer
renewed her employment contract for another year. Thus, the
award for the unexpired portion of the contract should have been
US$1,260 (US$280 x 4 months) or its equivalent in Philippine
pesos, not US$2,499 as adjudged by the labor arbiter and
affirmed by the NLRC.

As for the award for unpaid salaries and differential amounting to
US$1,076 representing seven months unpaid salaries and one
month underpaid salary, the same is proper because, as correctly
pointed out by Osdana, the no work, no pay rule relied upon by
petitioner does not apply in this case. In the first place, the fact
that she had not worked from June 18 to August 22, 1993 and
then from January 24 to April 29, 1994, was due to
her illness which was clearly work-related. Second, from August
23 to October 5, 1993, Osdana actually worked as food server and
cook for seven days a week at the Hota Bani Tameem Hospital,
but was not paid any salary for the said period. Finally, from
October 6 to October 23, 1993, she was confined to quarters and
was not given any work for no reason at all.
Moral Damages granted but reduced. Now, with respect to the
award of moral and exemplary damages, the same is likewise
proper but should be reduced. Worth reiterating is the rule that
moral damages are recoverable where the dismissal of the
employee was attended by bad faith or fraud or constituted an
act oppressive to labor, or was done in a manner contrary to
morals, good customs, or public policy. Likewise, exemplary
damages may be awarded if the dismissal was effected in a
wanton, oppressive or malevolent manner.

According to the facts of the case as stated by public respondent,
Osdana was made to perform such menial chores, as dishwashing
and janitorial work, among others, contrary to her job designation
as waitress. She was also made to work long hours without
overtime pay. Because of such arduous working conditions, she
developed Carpal Tunnel Syndrome. Her illness was such that she
had to undergo surgery twice. Since her employer determined for
itself that she was no longer fit to continue working, they sent her
home posthaste without as much as separation pay or
compensation for the months when she was unable to work
because of her illness. Since the employer is deemed to have
acted in bad faith, the award for attorneys fees is likewise
upheld.
In August 1992, the Gulf Catering Company, a foreign company
operating in Saudi Arabia, recruited, through its Philippine agent,
Triple Eight Integrated Services, Inc., the services of Erlinda
Osdana. Osdana was contracted to work as a waitress in Saudi
Arabia. Her employment contract was duly approved by the
POEA. She was also medically examined and was declared fit for
employment.
But when she was in Saudi, Osdana was instead forced to work as
a dishwasher with a brutal shift which starts from 6am until 6pm
and this was without overtime pay. Due to the heavy work she
was made to suffer, there were months when she was unable to
work. Eventually, she was diagnosed to be suffering from carpal
tunnel syndrome. She then underwent two separate operations
to fix her hands. She showed good signs and wasrecovering well.
But four days after she was discharged from the hospital, her
employment was terminated an d was sent home to the
Philippines. The reason for the termination was illness. She was
not given any separation pay and apparently, her salaries were
not fully paid.
In the Philippines, she sought the help of Triple Eight but the
agency refused to help her hence she sued them.
In its defense, Triple Eight averred that Osdanas employment was
validly terminated due to her illness. Osdana however claimed
that her carpal tunnel syndrome is not a ground for termination
because it is not even a communicable disease and that under the
implementing rules of the Labor Code, there should be a
certification from a competent public authority that her illness is
such that she can be validly dismissed from employment.
On that point, Triple Eight averred that the Labor Code of the
Philippines does not apply because she works in Saudi Arabia; and
that considering that she works in Saudi, it was not possible for
her Arabian employer to get a certification from a Philippine
public health authority.
The labor arbiter, as well as the NLRC, ruled in favor of Osdana.
ISSUE: Whether or not the arguments of Triple Eight are correct.
HELD: No. The Labor Code, as well as its implementing rules apply.
The contract of employment was executed in the Philippines.
Thus, following the principle of lex loci contractus, Philippine law
shall apply. Further, it is the States policy to afford maximum
protection to labor, domestic or overseas.
Anent the issue of securing a certification from a competent
public authority, the pertinent rules are as follows:
As a general rule, an employer may dismiss an employee found to
be suffering from any disease and whose continued employment
is prohibited by law or prejudicial to his health as well as the
health of his co-employees (Art. 284, Labor Code). There must be
a certification by competent public authority that the disease is of
such nature or at such a stage that it cannot be cured within a
period of six 6 months with proper medical treatment (Section 8,
Rule 1, Book VI, Omnibus Rules Implementing the Labor Code);
Except: If the disease or ailment can be cured within 6 months,
the employer shall not terminate the employee but shall ask the
employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the
restoration of his normal health (Section 8, Rule 1, Book
VI, Omnibus Rules Implementing the Labor Code).
Nowhere in the rule does it state that the term competent public
authority must be a Philippine authority. Hence, it can be a
foreign competent authority, as in this case, it could be a
competent public authority in Saudi Arabia which Triple Eights
principal (Gulf Catering) did not avail of.