Choice, Ascertainment and Application of Foreign Law

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION
page 18 - Facts

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. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO, JOSEPH B.
CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P.
CASTILLO, SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO,
JR., ROMEO A. DE CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS,
HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA,
VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION,
TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR
CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M.

CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR.,

CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ,
AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ,
TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON,
FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO DANTINGUINOO,
JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S. DAVID,
EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN, ROMULO DE
GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON, JOSELITO L. DE LUMBAN, NAPOLEON S.
DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA
CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ,
MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO
DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO,
BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A.
EDUARTE, GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO ENANO,
REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO
ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO
ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN
ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO, ERNESTO
M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA,
WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M.
FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES,
BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO, VALERIANO
FRANCISCO, RODOLFO GABAWAN, ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO
N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES GARCIA,
JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA, PATRICIO L. GARCIA,
JR., PONCIANO G. GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S.
GARCIA, OSIAS G. GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO
GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D.
GUANIO, MARTIN V. GUERRERO, JR., ALEXIS GUNO, RICARDO L. GUNO, FRANCISCO GUPIT,
DENNIS J. GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H.
HABANA, RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO D. HILADO, JUSTO
HILAPO, ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO,
MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL
L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES, GENEROSO
IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER,
ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ, DANILO
E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON, FELINO M. JOCSON, PEDRO N.
JOCSON, VALENTINO S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE,
RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM, SR., LAURO J. LABAY,
EMMANUEL C. LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J. LADINES,
RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN,
VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO LAXAMANA,
DANIEL R. LAZARO, ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE LEMOS, JR.,

PEDRO G. DE LEON, MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING, RENATO

LISING, WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA,
CARLITO M. LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ,
BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA, DANTE LUAGE,
ANTONIO M. LUALHATI, EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI, SEBASTIAN
LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE LUMBAN, THOMAS
VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO MACALINO, RICARDO MACALINO,
ARTURO V. MACARAIG, ERNESTO V. MACARAIG, RODOLFO V. MACARAIG, BENJAMIN
MACATANGAY, HERMOGENES MACATANGAY, RODEL MACATANGAY, ROMULO
MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT,
EFREN C. MAGBANUA, BENJAMIN MAGBUHAT, ALFREDO C. MAGCALENG, ANTONIO
MAGNAYE, ALFONSO MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M. MAGPANTAY,
ARMANDO M. MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V.
MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO, RICARDO MAMADIS, RODOLFO
MANA, BERNARDO A. MANALILI, MANUEL MANALILI, ANGELO MANALO, AGUILES L.
MANALO, LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL
MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON
MAPILE, ROBERTO C. MARANA, NEMESIO MARASIGAN, WENCESLAO MARASIGAN,
LEONARDO MARCELO, HENRY F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO,
NARCISO A. MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE,
RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO
MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO MENDOZA,
JR., CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED,
RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR MINIMO, BENJAMIN
MIRANDA, FELIXBERTO D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO
MONTON, RENATO MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M.
MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU A. MUNOZ,
IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ, ERNESTO NAPALAN, MARCELO A.
NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO D. NAVARRO,
FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO NEPUMUCENO,
HERBERT G. NG, FLORENCIO NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D.
OBA, DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO,
REYNALDO P. OCSON, BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO
OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ, WILFREDO
OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO L. PADILLA, DANILO
PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO
PALABRICA, QUINCIANO PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN,
BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR.,
JOSE V. PASION, ANGELITO M. PENA, DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO
M. PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E.
PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO, FLORENTINO DEL PILAR,
DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO
POBLETE, DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE,

DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO, ALEJANDRO PUNIO, FEDERICO

QUIMAN, ALFREDO L. QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO, RICARDO C. DE
RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO A. RAMIREZ, LITO S.
RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V. RAMIREZ, ALBERTO RAMOS, ANSELMO C.
RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F.
RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO REDAZA, ARTHUR
REJUSO, TORIBIO M. RELLAMA, JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO
RENTOZA, REDENTOR C. REY, ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO R. REYES,
GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES, ROMULO M. REYES, SERGIO REYES,
ERNESTO F. RICO, FERNANDO M. RICO, EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES,
RUBEN ROBLES, RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R.
RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS
RONQUILLO, ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO,
RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO DEL ROSARIO,
GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO, VIRGILIO L. ROSARIO, CARLITO
SALVADOR, JOSE SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO
M. SANCHA, ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO
S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D.
SANTOS, MIGUEL SAPUYOT, ALEX S. SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO,
AMADO M. SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G. SILVA,
EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO,
JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO
SOLIS, ISAGANI M. SOLIS, EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G.
STELLA, FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P.
TALUSIK, FERMIN TARUC, JR., LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO,
ARNEL TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES,
LEONARDO DE TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO UMALI,
SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON VALDERAMA,
NILO VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE VERA,
WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA,
FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P. VIDALLO, SABINO N. VIERNEZ,
JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA,
ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M.
VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO
VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO YABUT,
VICENTE YNGENTE, AND ORO C. ZUNIGA, respondents.

Gerardo A. Del Mundo and Associates for petitioners.

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

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

QUIASON, J.:

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

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

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

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

(1)
to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the Labor Code of
the Philippines instead of the ten-year prescriptive period under the Civil Code of the
Philippines; and (ii) denied the

"three-hour daily average" formula in the computation of petitioners' overtime pay; and

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

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

(1)
to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and

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

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

Consolidation of Cases

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

In the Resolution dated September 29, 1993, the Third Division granted the motion filed in G.R.
Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and 105029-32,
which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos.
105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the First

Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R.
Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p. 1562).

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

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

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

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

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

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

On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the 1,767
claimants be awarded their monetary claims for failure of private respondents to file their
answers within the reglamentary period required by law.

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

WHEREFORE, premises considered, the Decision of the POEA in these consolidated cases is
modified to the extent and in accordance with the following dispositions:

1.
The claims of the 94 complainants identified and listed in Annex "A" hereof are
dismissed for having prescribed;

2.
Respondents AIBC and Brown & Root are hereby ordered, jointly and severally, to pay
the 149 complainants, identified and listed in Annex "B" hereof, the peso equivalent, at the time
of payment, of the total amount in US dollars indicated opposite their respective names;

3.
The awards given by the POEA to the 19 complainants classified and listed in Annex
"C" hereof, who appear to have worked elsewhere than in Bahrain are hereby set aside.

4.
All claims other than those indicated in Annex "B", including those for overtime work
and favorably granted by the POEA, are hereby dismissed for lack of substantial evidence in
support thereof or are beyond the competence of this Commission to pass upon.

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

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

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

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

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

January 27, 1992.

Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were filed.
The first, by the claimants represented by Atty. Del Mundo; the second, by the claimants
represented by Atty. De Castro; and the third, by AIBC and BRII.

In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.

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

II

Compromise Agreements

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

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

1)
Joint Manifestation and Motion involving claimant Emigdio Abarquez and 47
co-claimants dated September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263-406; G.R. Nos.
105029-32, Rollo, pp.
470-615);

2)

Joint Manifestation and Motion involving petitioner Bienvenido Cadalin and 82

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

3)

Joint Manifestation and Motion involving claimant Jose

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

4)
Joint Manifestation and Motion involving claimant Antonio T. Anglo and 17
co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713; G.R. Nos. 104911-14,
Rollo, pp. 530-590);

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

6)
Joint Manifestation and Motion involving claimant Valerio A. Evangelista and 4
co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746; G.R. No. 104776,
Rollo, pp. 1815-1829);

7)
Joint Manifestation and Motion involving claimants Palconeri Banaag and 5
co-claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R. Nos.
104911-14, Rollo, pp. 655-675);

8)
Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15 other
co-claimants dated May 4, 1993 (G.R. Nos. 105029-32, Rollo, pp. 906-956; G.R. Nos.
104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp. 1773-1814);

9)
Joint Manifestation and Motion involving Valerio Evangelista and 3 co-claimants dated
May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829);

10)

Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and 36

co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R. Nos.
104911-14, Rollo, pp. 748-864; G.R. No. 104776, Rollo, pp. 1066-1183);

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

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

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

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

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

III

The facts as found by the NLRC are as follows:

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

Malaysia.

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

PART B

(1)

Employment Position Classification :

(Code) :

(2)

Company Employment Status

(3)

Date of Employment to Commence on

(4)

Basic Working Hours Per Week

(5)

Basic Working Hours Per Month

(6)

Basic Hourly Rate

(7)

Overtime Rate Per Hour

(8)

Projected Period of Service

:
:

(Subject to C(1) of this [sic]) :

Months and/or
Job Completion

xxx

xxx

xxx

3.

HOURS OF WORK AND COMPENSATION

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

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

4.

TERMINATION

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

xxx

xxx

xxx

10.

VACATION/SICK LEAVE BENEFITS

a)
After one (1) year of continuous service and/or satisfactory completion of contract,
employee shall be entitled to 12-days vacation leave with pay. This shall be computed at the
basic wage rate. Fractions of a year's service will be computed on a pro-rata basis.

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

11.

BONUS

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

12.

OFFDAY PAY

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

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

Art. 79:. . . A worker shall receive payment for each extra hour equivalent to his wage
entitlement increased by a minimum of twenty-five per centum thereof for hours worked
during the day; and by a minimum of fifty per centum thereof for hours worked during the night
which shall be deemed to being from seven o'clock in the evening until seven o'clock in the
morning. . . .

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

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

Art. 81:. . . When conditions of work require the worker to work on any official holiday, he shall
be paid an additional sum equivalent to 150% of his normal wage.

Art. 84:Every worker who has completed one year's continuous service with his employer shall
be entitled to leave on full pay for a period of not less than 21 days for each year increased to

a period not less than 28 days after five continuous years of service.

A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of
his service in that year.

Art. 107:
A contract of employment made for a period of indefinite duration may be
terminated by either party thereto after giving the other party thirty days' prior notice before
such termination, in writing, in respect of monthly paid workers and fifteen days' notice in
respect of other workers. The party terminating a contract without giving the required notice
shall pay to the other party compensation equivalent to the amount of wages payable to the
worker for the period of such notice or the unexpired portion thereof.

Art. 111:
. . . the employer concerned shall pay to such worker, upon termination of
employment, a leaving indemnity for the period of his employment calculated on the basis of
fifteen days' wages for each year of the first three years of service and of one month's wages
for each year of service thereafter. Such worker shall be entitled to payment of leaving
indemnity upon a quantum meruit in proportion to the period of his service completed within a
year.

All the individual complainants-appellants have already been repatriated to the Philippines at
the time of the filing of these cases (R.R. No. 104776, Rollo, pp. 59-65).

IV

The issues raised before and resolved by the NLRC were:

First: Whether or not complainants are entitled to the benefits provided by Amiri Decree No.
23 of Bahrain;

(a)
Whether or not the complainants who have worked in Bahrain are entitled to the
above-mentioned benefits.

(b)
Whether or not Art. 44 of the same Decree (allegedly prescribing a more favorable
treatment of alien employees) bars complainants from enjoying its benefits.

Second: Assuming that Amiri Decree No. 23 of Bahrain is applicable in these cases, whether
or not complainants' claim for the benefits provided therein have prescribed.

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

Fourth: Whether or not the proceedings conducted by the POEA, as well as the decision that
is the subject of these appeals, conformed with the requirements of due process;

(a)

Whether or not the respondent-appellant was denied its right to due process;

(b)
Whether or not the admission of evidence by the POEA after these cases were
submitted for decision was valid;

(c)

Whether or not the POEA acquired jurisdiction over Brown & Root International, Inc.;

(d)

Whether or not the judgment awards are supported by substantial evidence;

(e)
Whether or not the awards based on the averages and formula presented by the
complainants-appellants are supported by substantial evidence;

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

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

(a)

Whether or not the POEA has acquired jurisdiction over Brown & Root;

(b)
Whether or not the undisputed fact that AIBC was a licensed construction contractor
precludes a finding that Brown & Root is liable for complainants claims.

Sixth: Whether or not the POEA Administrator's failure to hold respondents in default
constitutes a reversible error.

Seventh: Whether or not the POEA Administrator erred in dismissing the following claims:

a.

Unexpired portion of contract;

b.

Interest earnings of Travel and Reserve Fund;

c.

Retirement and Savings Plan benefits;

d.

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

e.

Area Differential Pay;

f.

Accrued interests on all the unpaid benefits;

g.

Salary differential pay;

h.

Wage differential pay;

i.

Refund of SSS premiums not remitted to SSS;

j.

Refund of withholding tax not remitted to BIR;

k.
Fringe benefits under B & R's "A Summary of Employee Benefits" (Annex "Q" of
Amended Complaint);

l.

Moral and exemplary damages;

m.

Attorney's fees of at least ten percent of the judgment award;

n.
Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and the
accreditation of B & R issued by POEA;

o.
Penalty for violations of Article 34 (prohibited practices), not excluding reportorial
requirements thereof.

Eighth: Whether or not the POEA Administrator erred in not dismissing POEA Case No. (L)
86-65-460 on the ground of multiplicity of suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Issues

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

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

worked elsewhere.

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

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

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

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

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

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

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

(1)

that the POEA Administrator has no jurisdiction over the claims for refund of the SSS

premiums and refund of withholding taxes and the claimants should file their claims for said
refund with the appropriate government agencies;

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

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

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

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

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

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

G.R. No. 104776

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

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

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

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

(4)

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

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

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

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

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

(3)

that the claimants failed to refute NLRC's finding that

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

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

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

Attorney's Lien

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

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

Contempt of Court

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

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

G.R. Nos. 104911-14

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

The claimants argue that said method was proposed by BRII itself during the negotiation for
an amicable settlement of their money claims in Bahrain as shown in the Memorandum dated
April 16, 1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).

BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the
prescriptive period in the Labor Code of the Philippines, a special law, prevails over that
provided in the Civil Code of the Philippines, a general law.

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

G.R. Nos. 105029-32

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

VI

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

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

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

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

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

The POEA Administrator held the view that:

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

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

Hence, premises considered, the applicable law of prescription to this instant case is Article
1144 of the Civil Code of the Philippines, which provides:

Art. 1144.
The following actions may be brought within ten years from the time the cause
of action accrues:

(1)

Upon a written contract;

(2)

Upon an obligation created by law;

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

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

The Labor Code provides that "all money claims arising from employer-employee relations . . .
shall be filed within three years from the time the cause of action accrued; otherwise they shall
be forever barred" (Art. 291, Labor Code, as amended). This three-year prescriptive period shall
be the one applied here and which should be reckoned from the date of repatriation of each
individual complainant, considering the fact that the case is having (sic) filed in this country.

We do not agree with the POEA Administrator that this three-year prescriptive period applies
only to money claims specifically recoverable under the Philippine Labor Code. Article 291
gives no such indication. Likewise, We can not consider complainants' cause/s of action to
have accrued from a violation of their employment contracts. There was no violation; the
claims arise from the benefits of the law of the country where they worked. (G.R. No. 104776,
Rollo, pp.
90-91).

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

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

The court further noted:

xxx

xxx

xxx

Applying that test here it appears to us that the libelant is entitled to succeed, for the
respondents have failed to satisfy us that the Panamanian period of limitation in question was
specifically aimed against the particular rights which the libelant seeks to enforce. The
Panama Labor Code is a statute having broad objectives, viz: "The present Code regulates the
relations between capital and labor, placing them on a basis of social justice, so that, without
injuring any of the parties, there may be guaranteed for labor the necessary conditions for a

normal life and to capital an equitable return to its investment." In pursuance of these
objectives the Code gives laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain ones which are
enumerated in Article 621. And there is nothing in the record to indicate that the Panamanian
legislature gave special consideration to the impact of Article 623 upon the particular rights
sought to be enforced here, as distinguished from the other rights to which that Article is also
applicable. Were we confronted with the question of whether the limitation period of Article
621 (which carves out particular rights to be governed by a shorter limitation period) is to be
regarded as "substantive" or "procedural" under the rule of "specifity" we might have a different
case; but here on the surface of things we appear to be dealing with a "broad," and not a
"specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).

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

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

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

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

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

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

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

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

However, the characterization of a statute into a procedural or substantive law becomes

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

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

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

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

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

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

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

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

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

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

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

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

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

(1)

Upon a written contract;

(2)

Upon an obligation created by law;

(3)

Upon a judgment.

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

Money claims-all money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years from the time the cause of action
accrued, otherwise they shall be forever barred.

xxx

xxx

xxx

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

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

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

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

The court further explained:

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

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

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

VII

G.R. No. 104776

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

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

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

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

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

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

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

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

It must be here emphasized that the right to a speedy disposition of a case, like the right to
speedy trial, is deemed violated only when the proceeding is attended by vexatious, capricious,

and oppressive delays; or when unjustified postponements of the trial are asked for and
secured, or when without cause or justified motive a long period of time is allowed to elapse
without the party having his case tried.

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

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

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

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

1.

Unexpired portion of contract;

2.

Interest earnings of Travel and Fund;

3.

Retirement and Savings Plan benefit;

4.

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

5.

Area Differential pay;

6.

Accrued Interest of all the unpaid benefits;

7.

Salary differential pay;

8.

Wage Differential pay;

9.

Refund of SSS premiums not remitted to Social Security System;

10.

Refund of Withholding Tax not remitted to Bureau of Internal Revenue (B.I.R.);

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

12.

Moral and Exemplary Damages;

13.

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

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

15.
Penalty for violation of Article 34 (Prohibited practices) not excluding reportorial
requirements thereof (NLRC Resolution, September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo,
pp. 73-74).

Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some
facts, the claimants were ordered to comply with the motion of AIBC for a bill of particulars.

When claimants filed their "Compliance and Manifestation," AIBC moved to strike out the
complaint from the records for failure of claimants to submit a proper bill of particulars. While
the POEA Administrator denied the motion to strike out the complaint, he ordered the
claimants "to correct the deficiencies" pointed out by AIBC.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the

practice of some parties of filing multiple petitions and complaints involving the same issues,
with the result that the courts or agencies have to resolve the same issues. Said Rule,
however, applies only to petitions filed with the Supreme Court and the Court of Appeals. It is
entitled "Additional Requirements For Petitions Filed with the Supreme Court and the Court of
Appeals To Prevent Forum Shopping or Multiple Filing of Petitioners and Complainants." The
first sentence of the circular expressly states that said circular applies to an governs the filing
of petitions in the Supreme Court and the Court of Appeals.

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

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

Attorney's Lien

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

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

Contempt of Court

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

G.R. No. 104911-14

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

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

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

xxx

xxx

xxx

The Company in its computation reached the following averages:

A. 1. The average duration of the actual service of the employee is 35 months for the
Philippino (sic) employees . . . .

2.

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

3.

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

4.
Payment of US$8.72 per months (sic) of service as compensation for the difference of
the wages of the overtime done for each Philippino (sic) employee . . . (Rollo, p.22).

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

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

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

Said Rule provides:

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

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

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

G.R. Nos. 105029-32

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

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

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

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

The overseas-employment contracts could have been drafted more felicitously. While a part
thereof provides that the compensation to the employee may be "adjusted downward so that
the total computation (thereunder) plus the non-waivable benefits shall be equivalent to the
compensation" therein agreed, another part of the same provision categorically states "that

total remuneration and benefits do not fall below that of the host country regulation and
custom."

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

Article 1377 of the Civil Code of the Philippines provides:

The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity.

Said rule of interpretation is applicable to contracts of adhesion where there is already a

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

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

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

Instead of adopting the entire mass of the foreign law, the parties may just agree that specific
provisions of a foreign statute shall be deemed incorporated into their contract "as a set of
terms." By such reference to the provisions of the foreign law, the contract does not become a
foreign contract to be governed by the foreign law. The said law does not operate as a statute
but as a set of contractual terms deemed written in the contract (Anton, Private International

Law, 197 [1967]; Dicey and Morris, The Conflict of Laws, 702-703, [8th ed.]).

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

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

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

B.
AIBC and BRII claim that they were denied by NLRC of their right to due process when
said administrative agency granted Friday-pay differential, holiday-pay differential,
annual-leave differential and leave indemnity pay to the claimants listed in Annex B of the
Resolution. At first, NLRC reversed the resolution of the POEA Administrator granting these
benefits on a finding that the POEA Administrator failed to consider the evidence presented by
AIBC and BRII, that some findings of fact of the POEA Administrator were not supported by the
evidence, and that some of the evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36;

106-107). But instead of remanding the case to the POEA Administrator for a new hearing,
which means further delay in the termination of the case, NLRC decided to pass upon the
validity of the claims itself. It is this procedure that AIBC and BRII complain of as being
irregular and a "reversible error."

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

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

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

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

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

C.
AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution dated

September 2, 1991 whose claims had been denied by the POEA Administrator "for lack of
proof" and for 69 claimants listed in Annex E of the same Resolution, whose claims had been
found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).

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

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

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

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

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

VIII

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

WHEREFORE, all the three petitions are DISMISSED.

SO ORDERED.

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

ANNEX A

LIST OF CLAIMANTS WHO SIGNED QUITCLAIMS

Bienvenido Cadalin

Ardon Ello

Antonio Acupan

Josefino R. Enano

Benjamin Alejandre

Rolando E. Espiritu

Wilfredo Aligada

Patricio L. Garcia Jr.

Robert Batica Felino M. Jocson

Enrico Belen Eduardo S. Kolimlim
Guillermo Cabeza

Emmanuel C. Labella

Rodolfo Cagatan

Ernesto S. Lising

Francisco De Guzman

Edilberto G. Magat

Ignacio De Vera

Victoriano L. Matilla

Ernesto De la Cruz

Renato V. Morada

Reynaldo Dizon

Ildefonso C. Muoz

Ricardo Ebrada

Herbert G. Ng

Antonio Ejercito

Reynado Oczon

Eduardo Espiritu

Romeo Orial

Ernesto Espiritu

Ricardo Paguio

Rodolfo Espiritu

Emilio Pakingan

Oligario Francisco

Ernesto S. Pangan

Antonio Jocson

Albert L. Quinto

Alejandro Olorino
Efren Lirio

Romulo M. Reyes

Leonilo Tiposo

Noel Martinez Manual P. Villanueva

Francis Mediodia

Arnaldo J. Alonzo

Luciano Melendez

Pastor M. Aquino

Reymundo Milay

Ramon Castro

Jose Pancho Graciano Isla

Modesto Pin Pin

Renato Matilla

Gaudencio Retana

Ricardo B. Morada

Rodelio Rieta, Jr.

Pacifico D. Navarro

Jose Robleza Eugenio A. Remonquillo

Nemeriano San Mateo

Felix Barcena

Juanito Santos

Eliseo Fajardo

Paquito Solanto

Sergio S. Santiago

Conrado Solis, Jr.

Antonio R. Rodriquez

Menandro Temprosa Luis Val B. Ronquillo

Maximiano Torres

Teodorico C. Del Rosario

Francisco Trias

Joselito C. Solante

Delfin Victoria Ricardo C. Dayrit

Gilbert Victoria

Antonio P. Hilario

Domingo Villahermosa
Rogelio Villanueva

Edgardo O. Salonga

Dante C. Aceres

Jose M. Aban Reynaldo S. Acojido

Amorsolo S. Anading Esidro M. Aquino
Alfredo S. Balogo

Rosendo M. Aquino

Ramon T. Barboza

Rodolfo D. Arevalo

Felix M. Bobier

Rexy De Leon Ascuncion

Jose H. Castillo

Basilio Buenaventura

Emmanuel H. Castillo Alexander Bustamante

Remar R. Castrojerez Virgilio V. Butiong, Jr.
Romeo O. Cecilio

Delfin Caballero

Bayani M. Dayrit

Danilo M. Castro

Felizardo S. Delos Santos

Franscisco O. Corvera

Nestor N. Estava

Edgardo N. Dayacap

Rolando M. Garcia

Napoleon S. De Luna

Angel D. Guda Benjamin E. Doza

Henry L. Jacob

Renato A. Eduarte

Dante A. Matreo

Clyde C. Estuye

Renato S. Melo

Buenaventura M. Francisco

Resurrecion D. Nazareno

Rogelio D. Guanio

Jaime C. Pollos

Arnel L. Jacob

Domingo Pondales

Renato S. Lising

Eugenio Ramirez

Wilfredo S. Lising

Lucien M. Respall

Rogelio S. Lopena

Alvin C. Reyes Bernardito G. Loreja

Rizalina R. Reyes

Ignacio E. Muoz

Quirino Ronquillo

Romeo C. Quintos

Avelino M. Roque

Willafredo Dayrit Raymundo

Pedro L. Salgatar

Virgilio L. Rosario

Rodolfo T. Sultan

Joselito Santiago

Benedicto E. Torres

Ernesto G. Sta. Maria

Sergio A. Ursolino

Gavino U. Tuazon

Rogelio R. Valdez

Elito S. Villanueva

Dionisio Bobongo

Lamberto Q. Alcantara

Crisenciano Miranda Arturo P. Apilado

Ildefonso C. Molina

Turiano V. Concepcion

Gorgonio C. Parala

Domingo V. Dela Cruz

Virgilio RicazaEduardo R. Enguancho

Palconeri D. Banaag Melanio R. Esteron
Bayani S. Bracamante

Santiago N. Galoso

Onofre De Rama

Joveniano Hilado

Jose C. Melanes

Eduardo Hipolito

Romeo I. Patag

Romero M. Javier

Valerio A. EvangelistaValentino S. Jocson

Gilbert E. Ebrada

Jose B. Lacson

Juanito P. Villarino

Armando M. Magsino

Aristeo M. Bicol

Avelino O. Nuqui

Quiterio R. Agudo

Delmar F. Pineda

Marianito J. Alcantara

Federico T. Quiman

Jose Arevalo Alberto M. Redaza

Ramon A. Arevalo
Jesus Baya

Renosa Ronquillo

Rodolfo Ronquillo

Guillermo Buenconsejo

Antonio T. Valderama

Teresito A. Constantino

Ramon Valderama

Eduardo A. Diaz

Benigno N. Melendez

Emigdio Abarquez

Claudio A. Modesto

Herbert Ayo

Solomon Reyes

Mario Bataclan

Isaias Talactac

Ricardo Ordonez

William G. Taruc

Bernardino Robillos Oscar C. Calderon

Francisco Villaflores Pacifico P. Campano
Angel Villarba Eulalio G. Arguelles
Honesto Jardiniano Ben G. Belir
Juan Y. Olindo

Cornelio L. Castillo

Hernani T. Victoriano Valeriano B. Francisco

Ubed B. Ello, Sr.

Jaime L. Relosa

Ernesto V. Macaraig Alex Q. Villahermosa

Espiritu A. Munoz, Sr. Vivencio V. Abello, Jr.
Rodrigo E. Ocampo

Renato C. Corcuera

Rodolfo V. Ramirez

Emiliano B. Dela Cruz, Jr.

Ceferino Batitis

Esteban B. Jose, Jr.

Augusto R. Bondoc

Ricardo B. Martinez

Jaime C. Catli Bienvenido Vergara

Gerardo B. Limuaco, Jr.

Pedro G. Cagatan

Macario S. Magsino Francisco Apolinario

Domingo B. Solano

Miguel Abestano

Ricardo De Rama

Prudencio Araullo

Arturo V. Araullo

The Lawphil Project - Arellano Law Foundation

Home Insurance Co. v. Dick, 281 U.S. 397 (1930)

Home Insurance Co. v. Dick

No. 232

Argued February 27, 1930

Decided May 5, 1930

281 U.S. 397

APPEAL FROM THE SUPREME COURT OF TEXAS

Syllabus

A contract of fire insurance issued by a Mexican company, made and to be performed in

Mexico, and covered in part by reinsurance effected there or in New York with New York
companies licensed to do business in Texas, was assigned by the insured to a citizen of Texas
who was present in Mexico when the policy issued and continued to reside there until after a
loss had occurred. He then returned to Texas and sued on the policy in a Texas Court naming
the Mexican company, which was never present in Texas and did not appear, as principal
defendant, and the two New York companies, because of their reinsurance liability, as
garnishees. The policy stipulated that no suit should be brought under it unless within one
year of the loss, but a defense based on this was overruled by the Texas Supreme Court, and
recovery against the garnishees affirmed, by applying a Texas statute which forbade any
agreement limiting the time for suit to a shorter period than two years

Page 281 U. S. 398

and declared that no agreement for such shorter limitation should ever be valid in that state.

Held:

1. The objection that, as applied to contracts made and to be performed outside of Texas, the
statute violates the federal Constitution, raises federal questions of substance, and the
existence of the federal claim is not disproved by saying that the statute, or the one-year
provision in the policy, relates to the remedy, and not to the substance. P. 281 U. S. 405.

2. That the federal questions were not raised in the trial court is immaterial, since the Court of
Civil Appeals and the supreme court of the state considered them as properly raised in the
appellate proceedings and passed on them adversely to the federal claim. P. 281 U. S. 407.

3. The case is properly here on appeal, and petition for certiorari is therefore denied. Id.

4. The statute as construed and applied deprives the garnishees of property without due
process of law, since the state was without power, under the circumstances, to affect the
terms of the insurance contract by imposing a greater obligation than that agreed upon and to
seize property in payment of the imposed obligation. Id.

5. When the parties to a contract have expressly agreed upon a time limit on their obligation, a
statute which invalidates the agreement and directs enforcement of the contract after that
time has expired increases their obligation and imposes a burden not contracted for. P. 281 U.
S. 408.

6. The statute, as here involved, is not one dealing with remedies and procedure merely; it
purports to create rights and obligations. P. 281 U. S. 409.

7. Assuming that a state may properly refuse to recognize foreign rights that violate its
declared policy, or restrict the conduct of persons within its limits, this does not mean that it
may abrogate the rights of parties beyond its borders having no relation to anything done or to

be done within them. P. 281 U. S. 410.

15 S.W.2d 1028 reversed.

Appeal from a judgment of the Supreme Court of Texas affirming a judgment of the Court of
Civil Appeals, 8 S.W. 2d 354, which affirmed recoveries against the appellants in garnishment
proceedings ancillary to an action on a fire insurance policy.

Page 281 U. S. 402

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

Dick, a citizen of Texas, brought this action in a court of that state against Compania General
Anglo-Mexicana de Seguros S.A. a Mexican corporation, to recover on a policy of fire
insurance for the total loss of a tug. Jurisdiction was asserted in rem through garnishment, by
ancillary writs issued against the Home Insurance Company and Franklin Fire Insurance
Company, which reinsured, by contracts with the Mexican corporation, parts of the risk which
it had assumed. The garnishees are New York corporations. Upon them, service was effected
by serving their local agents in Texas appointed pursuant to Texas statutes, which require the
appointment of local agents by foreign corporations seeking permits to do business within the
state.

The controversy here is wholly between Dick and the garnishees. The defendant has never
been admitted to do business in Texas, has not done any business there, and has not
authorized anyone to receive service of process or enter an appearance for it in this cause. It
was cited by publication, in accordance with a Texas statute, attorneys were appointed for it by
the trial court, and they filed on its behalf an answer which denied liability. But there is no
contention that thereby jurisdiction in personam over it was acquired. Dick's claim is that,
since the obligation of a reinsurer to pay the original insurer arises upon the happening of the
loss, and is not conditional upon prior payment of the loss by the insurer, Allemannia Fire
Insurance Co. v. Firemen's Insurance Co., 209 U. S. 326; Hicks v. Poe, 269 U. S. 118, the New
York companies are indebted to the Mexican company, and these debts are subject to
garnishment in a proceeding against the latter quasi in rem, even though it is not suable in
personam. The garnishees concede that inability to sue the

Page 281 U. S. 403

Mexican corporation in Texas in personam is not material if a cause of action against it

existed at the time of garnishment and there was within the state a res belonging to it. But they
deny the existence of the cause of action or of the res.

Their defense rests upon the following facts: this suit was not commenced till more than one
year after the date of the loss. The policy provided:

"It is understood and agreed that no judicial suit or demand shall be entered before any
tribunal for the collection of any claim under this policy unless such suits or demands are filed
within one year counted as from the date on which such damage occurs."

This provision was in accord with the Mexican law to which the policy was expressly made
subject. [Footnote 1] It was issued by the Mexican company in Mexico to one Bonner, of
Tampico, Mexico, and was there duly assigned to Dick prior to the loss. It covered the vessel
only in certain Mexican waters. The premium was paid in Mexico, and the loss was "payable in
the City of Mexico in current funds of the United States of Mexico, or their equivalent
elsewhere." [Footnote 2] At the time the policy was issued,

Page 281 U. S. 404

when it was assigned to him, and, until after the loss, Dick actually resided in Mexico, although
his permanent residence was in Texas. The contracts of reinsurance were effected by
correspondence between the Mexican company in Mexico and the New York companies in
New York. Nothing thereunder was to be done, or was in fact done, in Texas.

In the trial court, the garnishees contended that, since the insurance contract was made and
was to be performed in Mexico, and the one-year provision was valid by its laws, Dick's failure
to sue within one year after accrual of the alleged cause of action was a complete defense to
the suit on the policy; that this failure also relieved the garnishees of any obligation as
reinsurers, the same defense being open to them, New York state Marine Ins. Co. v. Protection
Ins. Co., 1 Story, 458, 460, and that they consequently owed no debt to the Mexican company
subject to garnishment. [Footnote 3] To this defense, Dick demurred on the ground that Article

5545 of the Texas Revised Civil Statutes (1925) provides:

"No person, firm, corporation, association or combination of whatsoever kind shall enter into
any stipulation, contract, or agreement,

Page 281 U. S. 405

by reason whereof the time in which to sue thereon is limited to a shorter period than two
years. And no stipulation, contract, or agreement for any such shorter limitation in which to
sue shall ever be valid in this state."

The trial court sustained Dick's contention and entered judgment against the garnishees. On
appeal, both in the Court of Civil Appeals (8 S.W.2d 354) and in the supreme court of the state
(15 S.W.2d 1028), the garnishees asserted that, as construed and applied, the Texas statute
violated the due process clause of the Fourteenth Amendment and the contract clause. Both
courts treated the policy provision as equivalent to a foreign statute of limitation; held that
Article 5545 related to the remedy available in Texas courts; concluded that it was validly
applicable to the case at bar, and affirmed the judgment of the trial court. The garnishees
appealed to this Court on the ground that the statute, as construed and applied, violated their
rights under the federal Constitution. Dick moved to dismiss the appeal for want of
jurisdiction. Then the garnishees filed also a petition for a writ of certiorari. Consideration of
the jurisdiction of this Court on the appeal and of the petition for certiorari was postponed to
the hearing of the case on the merits.

First. Dick contends that this Court lacks jurisdiction of the action, because the errors
assigned involve only questions of local law and of conflict of laws. The argument is that,
while a provision requiring notice of loss within a fixed period is substantive because it is a
condition precedent to the existence of the cause of action, the provision for liability only in
case suit is brought within the year is not substantive, because it relates only to the remedy
after accrual of the cause of action; that, while the validity, interpretation, and performance of
the substantive provisions of a contract are determined by

Page 281 U. S. 406

the law of the place where it is made and is to be performed, matters which relate only to the
remedy are unquestionably governed by the lex fori, and that, even if the Texas court erred in
holding the statute applicable to this contract, the error is one of state law or of the
interpretation of the contract, and is not reviewable here.

The contention is unsound. There is no dispute as to the meaning of the provision in the
policy. It is that the insurer shall not be liable unless suit is brought within one year of the loss.
Whether the provision be interpreted as making the commencement of a suit within the year a
condition precedent to the existence of a cause of action, or as making failure to sue within the
year a breach of a condition subsequent which extinguishes the cause of action, is not of legal
significance here. [Footnote 4] Nor are we concerned with the question whether the provision
is properly described as relating to remedy or to substance. However characterized, it is an
express term in the contract of the parties by which the right of the insurer and the correlative
obligation of the insurer are defined. If effect is given to the clause, Dick cannot recover from
the Mexican corporation, and the garnishees cannot be compelled to pay. If, on the other hand,
the statute is applied to the contract, it admittedly abrogates a contractual right

Page 281 U. S. 407

and imposes liability, although the parties have agreed that there should be none.

The statute is not simply one of limitation. It does not merely fix the time in which the aid of
the Texas courts may be invoked. Nor does it govern only the remedies available in the Texas
courts. It deals with the powers and capacities of persons and corporations. It expressly
prohibits the making of certain contracts. As construed, it also directs the disregard in Texas
of contractual rights and obligations wherever created and assumed, and it commands the
enforcement of obligations in excess of those contracted for. Therefore, the objection that, as
applied to contracts made and to be performed outside of Texas, the statute violates the
federal Constitution raises federal questions of substance, and the existence of the federal
claim is not disproved by saying that the statute, or the one-year provision in the policy, relates
to the remedy and not to the substance.

That the federal questions were not raised in the trial court is immaterial. For the Court of Civil
Appeals and the supreme court of the state considered the questions as properly raised in the
appellate proceedings, and passed on them adversely to the federal claim. Chicago, Rock
Island & Pacific Ry. Co. v. Perry, 259 U. S. 548, 259 U. S. 551; Sully v. American National Bank,
178 U. S. 289, 178 U. S. 298. The case is properly here on appeal. The motion to dismiss the

appeal is overruled, and the petition for certiorari is therefore denied.

Second. The Texas statute as here construed and applied deprives the garnishees of property
without due process of law. A state may, of course, prohibit and declare invalid the making of
certain contracts within its borders. Ordinarily, it may prohibit performance within its borders.
even of contracts validly made elsewhere, if they are required to be performed within the state
and their performance would violate its laws. But, in the

Page 281 U. S. 408

case at bar, nothing in any way relating to the policy sued on, or to the contracts of
reinsurance, was ever done or required to be done in Texas. All acts relating to the making of
the policy were done in Mexico. All in relation to the making of the contracts of reinsurance
were done there or in New York. And likewise, all things in regard to performance were to be
done outside of Texas. Neither the Texas laws nor the Texas courts were invoked for any
purpose except by Dick in the bringing of this suit. The fact that Dick's permanent residence
was in Texas is without significance. At all times here material, he was physically present and
acting in Mexico. Texas was therefore without power to affect the terms of contracts so made.
Its attempt to impose a greater obligation than that agreed upon and to seize property in
payment of the imposed obligation violates the guaranty against deprivation of property
without due process of law. Compania General De Tabacos v. Collector of Internal Revenue,
275 U. S. 87; Aetna Life Ins. Co. v. Dunken, 266 U. S. 389; New York Life Ins. Co. v. Dodge, 246
U. S. 357. Compare Modern Woodmen of America v. Mixer, 267 U. S. 544, 267 U. S. 551.
[Footnote 5]

The cases relied upon, in which it was held that a state may lengthen its statute of limitations,
are not in point.

Page 281 U. S. 409

See Atchafalaya Land Co. v. Williams Cypress Co., 258 U. S. 190; National Surety Co. v.
Architectural Decorating Co., 226 U. S. 276; Vance v. Vance, 108 U. S. 514. In those cases, the
parties had not stipulated a time limit for the enforcement of their obligations. It is true that a
state may extend the time within which suit may be brought in its own courts if, in doing so, it
violates no agreement of the parties. [Footnote 6] And, in the absence of a contractual

provision, the local statute of limitation may be applied to a right created in another jurisdiction
even where the remedy in the latter is barred. [Footnote 7] In such cases, the rights and
obligations of the parties are not varied. When, however, the parties have expressly agreed
upon a time limit on their obligation, a statute which invalidates the agreement and directs
enforcement of the contract after the time has expired increases their obligation and imposes
a burden not contracted for.

It is true also that a state is not bound to provide remedies and procedure to suit the wishes of
individual litigants. It may prescribe the kind of remedies to be available in its courts and
dictate the practice and procedure to be followed in pursuing those remedies. Contractual

Page 281 U. S. 410

procedural

provisions relating to these matters, even if valid where made, are often disregarded by the
court of the forum, pursuant to statute or otherwise. But the Texas statute deals neither with
the kind of remedy available nor with the mode in which it is to be pursued. It purports to
create rights and obligations. It may not validly affect contracts which are neither made nor
are to be performed in Texas.

Third. Dick urges that Article 5545 of the Texas law is a declaration of its public policy, and
that a state may properly refuse to recognize foreign rights which violate its declared policy.
Doubtless a state may prohibit the enjoyment by persons within its borders of rights acquired
elsewhere which violate its laws or public policy, and, under some circumstances, it may
refuse to aid in the enforcement of such rights. Bothwell v. Buckbee, Mears Co., 275 U. S. 274,
275 U. S. 277-279; Union Trust Co. v. Grosman, 245 U. S. 412; compare Fauntleroy v. Lum, 210
U. S. 230. But the Mexican corporation never was in Texas, and neither it nor the garnishees
invoked the aid of the Texas courts or the Texas laws. The Mexican corporation was not
before the court. The garnishees were brought in by compulsory process. Neither has asked
favors. They ask only to be let alone. We need not consider how far the state may go in
imposing restrictions on the conduct of its own residents, and of foreign corporations which
have received permission to do business within its borders, or how far it may go in refusing to
lend the aid of its courts to the enforcement of rights acquired outside its borders. It may not
abrogate the rights of parties beyond its borders having no relation to anything done or to be
done within them.

Fourth. Finally, it is urged that the federal Constitution does not require the states to recognize
and protect rights derived from the laws of foreign countries -- that as to them the full faith and

credit clause has no application.

Page 281 U. S. 411

See Aetna Life Ins. Co. v. Tremblay, 223 U. S. 185. The claims here asserted are not based
upon the full faith and credit clause. Compare Royal Arcanum v. Green, 237 U. S. 531. Modern
Woodmen of America v. Mixer, 267 U. S. 544. They rest upon the Fourteenth Amendment. Its
protection extends to aliens. Moreover, the parties in interest here are American companies.
The defense asserted is based on the provision of the policy and on their contracts of
reinsurance. The courts of the state confused this defense with that based on the Mexican
Code. They held that, even if the effect of the foreign statute was to extinguish the right, Dick's
removal to Texas prior to the bar of the foreign statute removed the cause of action from
Mexico, and subjected it to the Texas statute of limitation. And they applied the same rule to
the provision in the policy. Whether or not that is a sufficient answer to the defense based on
the foreign law we may not consider, for no issue under the full faith and credit clause was
raised. But, in Texas, as elsewhere, the contract was subject to its own limitations.

Fifth. The garnishees contend that the guaranty of the contract clause relates not to the date
of enactment of a statute, but to the date of its effect on contracts; that, when issued, the
policy of the Mexican corporation was concededly not subject to Texas law; that, although the
statute relied upon by Dick was passed prior to the making of the contract, it did not operate
upon the contract until this suit was brought in the Texas court, and that hence the statute
violates the contract clause. Since we hold that the Texas statute, as construed and applied,
violates the due process clause, we have no occasion to consider this contention. Nor have we
considered their further contention, in reliance upon Morris & Co. v. Skandinavia Ins. Co., 279
U. S. 405, that there was lack of jurisdiction over them for purposes of garnishment, because
the authorization of service upon their local agents is limited

Page 281 U. S. 412

to suits brought against them as defendants. For this objection was not made or considered
below on constitutional grounds.

Reversed.

[Footnote 1]

The policy contained also the provision:

"The present policy is subjected to the disposition of the Commercial Code in that it does not
alter or modify the stipulations which that same contains."

The dispositions of the Commercial Code thus incorporated are:

"Article 1038. The rights of action derived from commercial acts shall be subject to
prescription in accordance with the provisions of this Code."

"Article 1039. The periods fixed for the enforcement of rights of action arising out of
commercial acts shall be fatal except restitution against same is given."

"* * * *"

"Article 1043. One year shall prescribe actions derived from contracts of life insurance, sea
and land."

[Footnote 2]

The loss was made payable to Dick and the Texas & Gulf Steamship Company as their
interests might appear. The steamship company and Suderman & Young, Inc., assignee of part
of the cause of action, intervened as plaintiffs, and are joined with Dick as appellees. As there
are no rights peculiar to them, they need not be further referred to. Dick contends that, since
the policy was payable to the Texas & Gulf Steamship Company, the contract was performable
in Texas. The contention is in conflict with the quoted language of the policy, and there is no
provision otherwise lending support to the argument. Texas is nowhere mentioned in the
policy. Moreover, there is nothing in the record to show that the steamship company's sole
place of business was in Texas. The state courts made no findings on this claim.

[Footnote 3]

Besides the defense here discussed, the answers both of the Mexican corporation and of the
garnishees alleged: (2) that the suit was not brought within the period provided by the
Commercial Code of Mexico, and that thereby the right of action was completely barred upon
the expiration of one year; (3) that the policy was void because of plaintiff's
misrepresentations as to the value of the vessel; (4) that the vessel was not a total loss, and
was abandoned in violation of the terms of the policy. None of these defense needs to be
considered.

[Footnote 4]

That a provision requiring notice of loss within a fixed period and one requiring the bringing of
suit stand upon the same footing was held in Riddlesbarger v. Hartford Insurance Co., 7 Wall.
386, 74 U. S. 390. Compare 74 U. S. Hartford Insurance Co., 13 Wall. 158, 80 U. S. 161. The
validity and effectiveness of a clause limiting the time for suit, in the absence of a controlling
statute, was recognized also in Texas, Suggs v. Travelers' Insurance Co., 71 Tex. 579. In that
case, decided before the enactment of article 5545, the Texas court upheld a similar provision
in an insurance policy against the claim of an infant without capacity to sue. The court
described the nature of the provision thus (p. 581):

"It is said to differ from the statutory limitation in this: that it does not merely deny the remedy,
but forfeits the liability, when the suit is not brought within the stipulated time."

[Footnote 5]

The division of this Court in the Tabacos and Dodge cases was not on the principle here
stated, but on the question of fact whether there were in those cases things done within the
state of which the state could property lay hold as the basis of the regulations there imposed.
Compare Bothwell v. Buckabee, Mears Co., 275 U. S. 274; Palmetto Fire Ins. Co. v. Conn, 272
U. S. 295. In the absence of any such things, as in this case, the Court was agreed that a state
is without power to impose either public or private obligations on contracts made outside of
the state and not to be performed there. Compare Mutual Life Insurance Co. v. Liebing, 259 U.
S. 209; E. Merick Dodd, Jr., "The Power of the Supreme Court to Review state Decisions in the

Field of Conflict of Laws," 39 Harv.L.Rev. (1926) 533, 548.

[Footnote 6]

The state courts placed some reliance on Campbell v. Holt, 115 U. S. 620. Whether, as there
held, a statute of limitations may also be lengthened so as to affect liabilities already barred is
not here pertinent. There is a clear difference between the revival of a liability which is
unenforceable only because a statute has barred the remedy regardless of the will of the
parties, and the extension of a liability beyond the limit expressly agreed upon by the parties.
Compare National Surety Co. v. Architectural Decorating Co., 226 U. S. 276, 226 U. S. 282;
William Danzer & Co. v. Gulf Island R. Co., 268 U. S. 633, 268 U. S. 636.

[Footnote 7]

Whether a distinction is to be drawn between statutes of limitation which extinguish or limit

the right and those which merely bar the remedy we need not now determine. Compare Davis
v. Mills, 194 U. S. 451, and Texas Portland Cement Co. v. McCord, 233 U. S. 157, with Canadian
P. Ry. Co. v. Johnston, 61 F. 738.

Allstate Ins. Co. v. Hague, 449 U.S. 302 (1980)

Allstate Ins. Co. v. Hague

No. 79938

Argued October 6, 1980

Decided January 13, 1981

449 U.S. 302

CERTIORARI TO THE SUPREME COURT OF MINNESOTA

Syllabus

Respondent's husband died of injuries suffered when a motorcycle on which he was a

passenger was struck by an automobile. The accident occurred in Wisconsin near the
Minnesota border. The operators of both vehicles were Wisconsin residents, as was the
decedent, who, however, had been employed in Minnesota and had commuted daily to work
from Wisconsin. Neither vehicle operator carried valid insurance, but the decedent held a
policy issued by petitioner covering three automobiles owned by him and containing an
uninsured motorist clause insuring him against loss incurred from accidents with uninsured
motorists, but limiting such coverage to $15,000 for each automobile. After the accident,
respondent moved to and became a resident of Minnesota, and was subsequently appointed
in that State as personal representative of her husband's estate. She then brought an action in
a Minnesota court seeking a declaration under Minnesota law that the $15,000 uninsured
motorist coverage on each of her late husband's three automobiles could be "stacked" to
provide total coverage of $45,000. Petitioner defended on the ground that whether the three
uninsured motorist coverages could be stacked should be determined by Wisconsin law, since
the insurance policy was delivered in Wisconsin, the accident occurred there, and all persons

involved were Wisconsin residents at the time of the accident. The trial court, interpreting
Wisconsin law to disallow stacking, concluded that Minnesota's choice of law rules required
the application of Minnesota law permitting stacking, and granted summary judgment for
respondent. The Minnesota Supreme Court affirmed.

Held: The judgment is affirmed. Pp. 449 U. S. 307-320; 449 U. S. 322-331.

289 N.W.2d 43, affirmed.

JUSTICE BRENNAN, joined by JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE

BLACKMUN, concluded that Minnesota has a significant aggregation of contacts with the
parties and the occurrence, creating state interests, such that application of its law is neither
arbitrary nor fundamentally unfair, and, accordingly, the choice of law by the Minnesota
Supreme Court does not violate the Due Process Clause of the Fourteenth Amendment or the
Full Faith and Credit Clause. Pp. 449 U. S. 307-320.

Page 449 U. S. 303

(a) Respondent's decedent was a member of Minnesota's workforce. The State of employment
has police power responsibilities towards nonresident employees that are analogous to those
it has towards residents, as such employees use state services and amenities and may call
upon state facilities in appropriate circumstances. Also, the State's interest in its commuting
nonresident employees, such as respondent's decedent, reflects a state concern for the safety
and wellbeing of its workforce and the concomitant effect on Minnesota employers. That the
decedent was not killed while commuting to work or while in Minnesota does not dictate a
different result, since vindication of the rights of the estate of a Minnesota employee is an
important state concern. Nor does the decedent's residence in Wisconsin constitutionally
mandate application of Wisconsin law to the exclusion of forum law. Employment status is not
a sufficiently less important status than residence, when combined with the decedent's daily
commute across state lines and the other Minnesota contacts present, to prohibit the choice
of law result in this case on constitutional grounds. Pp. 449 U. S. 313-317.

(b) Petitioner was at all times present and doing business in Minnesota. By virtue of such
presence, petitioner can hardly claim unfamiliarity with the laws of the host jurisdiction and
surprise that the state courts might apply forum law to litigation in which the company is

involved. Moreover, such presence gave Minnesota an interest in regulating the company's
insurance obligations insofar as they affected both a Minnesota resident and court-appointed
representative (respondent) and a longstanding member of Minnesota's workforce
(respondent's decedent). Pp. 449 U. S. 317-318.

(c) Respondent became a Minnesota resident prior to institution of the instant litigation. Such
residence and subsequent appointment in Minnesota as personal representative of her late
husband's estate constitute a Minnesota contact which gives Minnesota an interest in
respondent's recovery. Pp. 449 U. S. 318-319.

JUSTICE STEVENS concluded:

1. The Full Faith and Credit Clause did not require Minnesota, the forum State, to apply
Wisconsin law to the contract interpretation question presented. Although the Minnesota
courts' decision to apply Minnesota law was unsound as a matter of conflicts law, no threat to
Wisconsin's sovereignty ensued from allowing the substantive question as to the meaning of
the insurance contract to be determined by the law of another State. Pp. 449 U. S. 322-326.

2. The Due Process Clause of the Fourteenth Amendment did not prevent Minnesota from
applying its own law. Neither the "stacking" rule itself nor Minnesota's application of it to these
litigants raised any

Page 449 U. S. 304

serious question of fairness. Nor did the Minnesota courts' decision to apply this rule violate
due process because that decision frustrated the contracting parties' reasonable expectations.
The decision was consistent with due process because it did not result unfairness to either
litigant, not because Minnesota had an interest in the plaintiff as resident or the decedent as
employee. Pp. 449 U. S. 326-331.

BRENNAN, J., announced the judgment of the Court and delivered an opinion, in which WHITE,
MARSHALL, and BLACKMUN, JJ., joined. STEVENS, J., filed an opinion concurring in the
judgment, post, p. 449 U. S. 320. POWELL, J., filed a dissenting opinion, in which BURGER, C.J.,
and REHNQUIST, J., joined, post, p. 449 U. S. 332. STEWART, J., took no part in the

consideration or decision of the case.

JUSTICE BRENNAN announced the judgment of the Court and delivered an opinion, in which
JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE BLACKMUN joined.

This Court granted certiorari to determine whether the Due Process Clause of the Fourteenth
Amendment [Footnote 1] or the Full Faith and Credit Clause of Art. IV, 1, [Footnote 2] of the
United States Constitution bars the Minnesota Supreme Court's choice of substantive
Minnesota law to govern the effect of a provision in an insurance policy issued to respondent's
decedent. 44 U.S. 1070 (1980).

Page 449 U. S. 305

Respondent's late husband, Ralph Hague, died of injuries suffered when a motorcycle on
which he was a passenger was struck from behind by an automobile. The accident occurred in
Pierce County, Wis., which is immediately across the Minnesota border from Red Wing, Minn.
The operators of both vehicles were Wisconsin residents, as was the decedent, who, at the
time of the accident, resided with respondent in Hager City, Wis., which is one and one-half
miles from Red Wing. Mr. Hague had been employed in Red Wing for the 15 years immediately
preceding his death and had commuted daily from Wisconsin to his place of employment.

Neither the operator of the motorcycle nor the operator of the automobile carried valid
insurance. However, the decedent held a policy issued by petitioner Allstate Insurance Co.
covering three automobiles owned by him and containing an uninsured motorist clause
insuring him against loss incurred from accidents with uninsured motorists. The uninsured
motorist coverage was limited to 15,000 for each automobile. [Footnote 3]

After the accident, but prior to the initiation of this lawsuit, respondent moved to Red Wing.
Subsequently, she married a Minnesota resident and established residence with her new
husband in Savage, Minn. At approximately the same time, a Minnesota Registrar of Probate
appointed respondent personal representative of her deceased husband's estate. Following
her appointment, she brought this action in Minnesota District Court seeking a declaration

under Minnesota law that the $15,000 uninsured motorist coverage on each of her late
husband's three automobiles could be "stacked" to provide total coverage of $45,000.
Petitioner defended on the ground that whether the three uninsured motorist

Page 449 U. S. 306

coverages could be stacked should be determined by Wisconsin law, since the insurance
policy was delivered in Wisconsin, the accident occurred in Wisconsin, and all persons
involved were Wisconsin residents at the time of the accident.

The Minnesota District Court disagreed. Interpreting Wisconsin law to disallow stacking, the
court concluded that Minnesota's choice of law rules required the application of Minnesota
law permitting stacking. The court refused to apply Wisconsin law as "inimical to the public
policy of Minnesota," and granted summary judgment for respondent. [Footnote 4]

The Minnesota Supreme Court, sitting en banc, affirmed the District Court. [Footnote 5] The
court, also interpreting Wisconsin law to prohibit stacking, [Footnote 6] applied Minnesota law
after analyzing the relevant Minnesota contacts and interests within the analytical framework
developed by Professor Leflar. [Footnote 7] See Leflar, Choice-Influencing Considerations in
Conflicts Law, 41 N.Y.U.L.Rev. 267 (1966). The state court, therefore, examined the conflict of
laws issue in terms of (1) predictability of result, (2) maintenance of interstate order, (3)
simplification of the judicial task, (4) advancement of the forum's governmental interests, and
(5) application of the better rule of law. Although stating that the Minnesota contacts might not
be, "in themselves, sufficient to mandate application of [Minnesota] law," [Footnote 8] 289
N.W.2d 43, 49

Page 449 U. S. 307

(1978), under the first four factors, the court concluded that the fifth factor -- application of the
better rule of law -- favored selection of Minnesota law. The court emphasized that a majority
of States allow stacking, and that legal decisions allowing stacking "are fairly recent and well
considered in light of current uses of automobiles." Ibid. In addition, the court found the
Minnesota rule superior to Wisconsin's "because it requires the cost of accidents with
uninsured motorists to be spread more broadly through insurance premiums than does the
Wisconsin rule." Ibid. Finally, after rehearing en banc, [Footnote 9] the court buttressed its

initial opinion by indicating "that contracts of insurance on motor vehicles are in a class by
themselves," since an insurance company "knows the automobile is a movable item which will
be driven from state to state." 289 N.W.2d at 50 (1979). From this premise, the court
concluded that application of Minnesota law was "not so arbitrary and unreasonable as to
violate due process." Ibid.

II

It is not for this Court to say whether the choice of law analysis suggested by Professor Leflar
is to be preferred or whether we would make the same choice of law decision if sitting as the
Minnesota Supreme Court. Our sole function is to determine whether the Minnesota Supreme
Court's choice of its own substantive law in this case exceeded federal constitutional
limitations. Implicit in this inquiry is the recognition, long accepted by this Court, that a set of
facts giving rise to a lawsuit, or a particular issue within a lawsuit, may justify, in constitutional
terms, application of the law of more than one jurisdiction. See, e.g., Watson v. Employers
Liability Assurance Corp., 348 U. S. 66, 348 U. S. 72-73 (1954); n. 11, infra. See generally Clay
v. Sun Insurance Office, Ltd., 377 U.S.

Page 449 U. S. 308

179, 377 U. S. 181-182 (1964) (hereinafter cited as Clay II). As a result, the forum State may
have to select one law from among the laws of several jurisdictions having some contact with
the controversy.

In deciding constitutional choice of law questions, whether under the Due Process Clause or
the Full Faith and Credit Clause, [Footnote 10] this Court has traditionally examined the
contacts of the State, whose law was applied, with the parties and with the occurrence or
transaction giving rise to the litigation. See Clay II, supra at 377 U. S. 183. In order to ensure
that the choice of law is neither arbitrary nor fundamentally unfair, see Alaska Packers Assn. v.
Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 542 (1935), the Court has invalidated the
choice of law of a State which has had no significant contact or significant aggregation of
contacts, creating state interests, with the parties and the occurrence or transaction. [Footnote
11]

Page 449 U. S. 309

Two instructive examples of such invalidation are Home Ins. Co. v. Dick, 281 U. S. 397 (1930),
and John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936). In both cases, the
selection of forum law rested exclusively on the presence of one nonsignificant forum contact.

Home Ins. Co. v. Dick involved interpretation of an insurance policy which had been issued in
Mexico, by a Mexican insurer, to a Mexican citizen, covering a Mexican risk. The policy was
subsequently assigned to Mr. Dick, who was domiciled in Mexico and "physically present and
acting in Mexico," 281 U.S. at 281 U. S. 408, although he remained a nominal permanent
resident of Texas. The policy restricted coverage to losses occurring in certain Mexican waters
and, indeed, the loss occurred in those waters. Dick brought suit

Page 449 U. S. 310

in Texas against a New York reinsurer. Neither the Mexican insurer nor the New York reinsurer
had any connection to Texas. [Footnote 12] The Court held that application of Texas law to
void the insurance contract's limitation' of actions clause violated due process. [Footnote 13]

The relationship of the forum State to the parties and the transaction was similarly attenuated
in John Hancock Mutual Life Ins. Co. v. Yates. There, the insurer, a Massachusetts
corporation, issued a contract of insurance on the life of a New York resident. The contract
was applied for, issued, and delivered in New York, where the insured and his spouse resided.
After the insured died in New York, his spouse moved to Georgia and brought suit on the policy
in Georgia. Under Georgia law, the jury was permitted to take into account oral modifications
when deciding whether an insurance policy application contained material misrepresentations.
Under New York law, however, such misrepresentations were to be evaluated solely on the
basis of the written application. The Georgia court applied Georgia law. This Court reversed,
finding application of Georgia law to be unconstitutional.

Dick and Yates stand for the proposition that, if a State has only an insignificant contact with
the parties and the

Page 449 U. S. 311

occurrence or transaction, application of its law is unconstitutional. [Footnote 14] Dick

concluded that nominal residence -- standing alone -- was inadequate; Yates held that a
post-occurrence change of residence to the forum State -- standing alone -- was insufficient to
justify application of forum law. Although instructive as extreme examples of selection of
forum law, neither Dick nor Yates governs this case. For, in contrast to those decisions, here,
the Minnesota contacts with the parties and the occurrence are obviously significant. Thus,
this case is like Alaska Packers, Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469 (1947), and
Clay II -- cases where this Court sustained choice of law decisions based on the contacts of
the State, whose law was applied, with the parties and occurrence.

In Alaska Packers, the Court upheld California's application of its Workmen's Compensation
Act, where the most significant contact of the worker with California was his execution of an
employment contract in California. The worker, a nonresident alien from Mexico, was hired in
California for seasonal work in a salmon canning factory in Alaska. As part of the employment
contract, the employer, who was doing business in California, agreed to transport the worker to
Alaska and to return him to California when the work was completed. Even though the
employee contracted to be bound by the Alaska Workmen's Compensation Law and was
injured in Alaska, he sought an award under the California Workmen's Compensation Act. The
Court held that the choice of California law was not "so arbitrary or unreasonable as to amount
to a denial of due process," 294 U.S. at 249 U. S. 542, because "[w]ithout a remedy in
California, [he] would be remediless," ibid., and because of California's interest that the worker
not become a public charge, ibid. [Footnote 15]

Page 449 U. S. 312

In Cardillo v. Liberty Mutual Ins. Co., supra, a District of Columbia resident, employed by a
District of Columbia employer and assigned by the employer for the three years prior to his
death to work in Virginia, was killed in an automobile crash in Virginia in the course of his daily
commute home from work. The Court found the District's contacts with the parties and the
occurrence sufficient to satisfy constitutional requirements, based on the employee's
residence in the District, his commute between home and the Virginia workplace, and his
status as an employee of a company "engaged in electrical construction work in the District of
Columbia and surrounding areas." Id. at 330 U. S. 471. [Footnote 16]

Similarly, Clay II upheld the constitutionality of the application of forum law. There, a policy of
insurance had issued in Illinois to an Illinois resident. Subsequently the insured moved to
Florida and suffered a property loss in Florida. Relying explicitly on the nationwide coverage of
the policy and the presence of the insurance company in Florida and implicitly on the plaintiff's

Florida residence and the occurrence of the property loss in Florida, the Court sustained the
Florida court's choice of Florida law.

The lesson from Dick and Yates, which found insufficient forum contacts to apply forum law,
and from Alaska Packers, Cardillo, and Clay II, which found adequate contacts to sustain the
choice of forum law, [Footnote 17] is that for a State's substantive

Page 449 U. S. 313

law to be selected in a constitutionally permissible manner, that State must have a significant
contact or significant aggregation of contacts, creating state interests, such that choice of its
law is neither arbitrary nor fundamentally unfair. Application of this principle to the facts of
this case persuades us that the Minnesota Supreme Court's choice of its own law did not
offend the Federal Constitution.

III

Minnesota has three contacts with the parties and the occurrence giving rise to the litigation.
In the aggregate, these contacts permit selection by the Minnesota Supreme Court of
Minnesota law allowing the stacking of Mr. Hague's uninsured motorist coverages.

First, and, for our purposes, a very important contact, Mr. Hague was a member of Minnesota's
workforce, having been employed by a Red Wing, Minn., enterprise for the 15

Page 449 U. S. 314

years preceding his death. While employment status may implicate a state interest less
substantial than does resident status, that interest is nevertheless important. The State of
employment has police power responsibilities towards the nonresident employee that are
analogous, if somewhat less profound, than towards residents. Thus, such employees use
state services and amenities and may call upon state facilities in appropriate circumstances.

In addition, Mr. Hague commuted to work in Minnesota, a contact which was important in
Cardillo v. Liberty Mutual Ins. Co., 330 U.S. at 330 U. S. 475-476 (daily commute between
residence in District of Columbia and workplace in Virginia), and was presumably covered by
his uninsured motorist coverage during the commute. [Footnote 18] The State's interest in its
commuting nonresident employees reflects a state concern for the safety and wellbeing of its
workforce and the concomitant effect on Minnesota employers.

That Mr. Hague was not killed while commuting to work or while in Minnesota does not dictate
a different result. To hold that the Minnesota Supreme Court's choice of Minnesota law
violated the Constitution for that reason would require too narrow a view of Minnesota's
relationship with the parties and the occurrence giving rise to the litigation. An automobile
accident need not occur within a particular jurisdiction for that jurisdiction to be connected to
the occurrence. [Footnote 19]

Page 449 U. S. 315

Similarly, the occurrence of a crash fatal to a Minnesota employee in another State is a

Minnesota contact. [Footnote 20] If Mr. Hague had only been injured and missed work for a
few weeks, the effect on the Minnesota employer would have been palpable, and Minnesota's
interest in having its employee made whole would be evident. Mr. Hague's death affects
Minnesota's interest still more acutely, even though Mr. Hague will not return to the Minnesota
workforce. Minnesota's workforce is surely affected by the level of protection the State
extends to it, either directly or indirectly. Vindication of the rights of the estate of a Minnesota
employee, therefore, is an important state concern.

Mr. Hague's residence in Wisconsin does not -- as Allstate seems to argue -- constitutionally
mandate application of Wisconsin law to the exclusion of forum law. [Footnote 21] If, in the
instant

Page 449 U. S. 316

case, the accident had occurred in Minnesota between Mr. Hague and an uninsured Minnesota
motorist, if the insurance contract had been executed in Minnesota covering a Minnesota
registered company automobile which Mr.Hague was permitted to drive, and if a Wisconsin
court sought to apply Wisconsin law, certainly Mr. Hague's residence in Wisconsin, his

commute between Wisconsin and Minnesota, and the insurer's presence in Wisconsin should
be adequate to apply Wisconsin's law. [Footnote 22] See generally Cardillo v. Liberty

Page 449 U. S. 317

Mutual Ins. Co., supra; Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532
(1935); Home Ins. Co. v. Dick, 281 U.S. at 281 U. S. 408, n. 5. Employment status is not a
sufficiently less important status than residence, see generally Carroll v. Lanza, 349 U. S. 408
(1955); Alaska Packers Assn. v. Industrial Accident Comm'n, supra, when combined with Mr.
Hague's daily commute across state lines and the other Minnesota contacts present, to
prohibit the choice of law result in this case on constitutional grounds.

Second, Allstate was at all times present and doing business in Minnesota. [Footnote 23] By
virtue of its presence, Allstate can hardly claim unfamiliarity with the laws of the host
jurisdiction and surprise that the state courts might apply forum law to litigation

Page 449 U. S. 318

in which the company is involved.

"Particularly since the company was licensed to do business in [the forum], it must have
known it might be sued there, and that [the forum] courts would feel bound by [forum] law.
[Footnote 24]"

Clay v. Sun Insurance Office, Ltd., 363 U. S. 207, 363 U. S. 221 (1960) (Black, J., dissenting).
[Footnote 25] Moreover, Allstate's presence in Minnesota gave Minnesota an interest in
regulating the company's insurance obligations insofar as they affected both a Minnesota
resident and court-appointed representative -- respondent -- and a longstanding member of
Minnesota's workforce -- Mr. Hague. See Hoopeston Canning Co. v. Cullen, 318 U. S. 313, 318
U. S. 316 (1943).

Third, respondent became a Minnesota resident prior to institution of this litigation. The
stipulated facts reveal that she first settled in Red Wing, Minn., the town in which

Page 449 U. S. 319

her late husband had worked. [Footnote 26] She subsequently moved to Savage, Minn., after
marrying a Minnesota resident who operated an automobile service station in Bloomington,
Minn. Her move to Savage occurred "almost concurrently," 289 N.W.2d at 45, with the initiation
of the instant case. [Footnote 27] There is no suggestion that Mrs. Hague moved to Minnesota
in anticipation of this litigation or for the purpose of finding a legal climate especially
hospitable to her claim. [Footnote 28] The stipulated facts, sparse as they are, negate any such
inference.

While John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), held that a
post-occurrence change of residence to the forum State was insufficient, in and of itself, to
confer power on the forum State to choose its law, that case did not hold that such a change
of residence was irrelevant. Here, of course, respondent's bona fide residence in Minnesota
was not the sole contact Minnesota had with this litigation. And in connection with her
residence in Minnesota, respondent was appointed personal representative of Mr. Hague's
estate by the Registrar of Probate for the County of Goodhue, Minn. Respondent's residence
and subsequent appointment in Minnesota as personal representative of her late husband's
estate constitute a Minnesota contact which gives Minnesota an interest in respondent's
recovery, an interest which the court below identified as full compensation for "resident
accident victims" to keep them "off welfare rolls" and able "to meet financial obligations." 289
N.W.2d at 49.

Page 449 U. S. 320

In sum, Minnesota had a significant aggregation [Footnote 29] of contacts with the parties and
the occurrence, creating state interests, such that application of its law was neither arbitrary
nor fundamentally unfair. Accordingly, the choice of Minnesota law by the Minnesota Supreme
Court did not violate the Due Process Clause or the Full Faith and Credit Clause. Affirmed.

JUSTICE STEWART took no part in the consideration or decision of this case.

[Footnote 1]

The Due Process Clause of the Fourteenth Amendment provides that no State "shall . . .
deprive any person of life, liberty, or property, without due process of law. . . ."

[Footnote 2]

The Full Faith and Credit Clause, Art. IV, 1, provides:

"Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial
Proceedings of every other State. And the Congress may by general Laws prescribe the
Manner in which such Acts, Records, and Proceedings shall be proved, and the Effect thereof."

[Footnote 3]

Ralph Hague paid a separate premium for each automobile including an additional separate
premium for each uninsured motorist coverage.

[Footnote 4]

App. C to Pet. for Cert. A-29.

[Footnote 5]

289 N.W.2d 43 (1978) .

[Footnote 6]

Respondent has suggested that this case presents a "false conflict." The court below rejected

this contention and applied Minnesota law. Even though the Minnesota Supreme Court's
choice of Minnesota law followed a discussion of whether this case presents a false conflict,
the fact is that the court chose to apply Minnesota law. Thus, the only question before this
Court is whether that choice was constitutional.

[Footnote 7]

Minnesota had previously adopted the conceptual model developed by Professor Leflar in
Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973).

[Footnote 8]

The court apparently was referring to sufficiency as a matter of choice of law, and not as a
matter of constitutional limitation on its choice of law decision .

[Footnote 9]

289 N.W.2d at 50 (1979).

[Footnote 10]

This Court has taken a similar approach in deciding choice of law cases under both the Due
Process Clause and the Full Faith and Credit Clause. In each instance, the Court has examined
the relevant contacts and resulting interests of the State whose law was applied. See, e.g.,
Nevada v. Hall, 440 U. S. 410, 440 U. S. 424 (1979). Although at one time the Court required a
more exacting standard under the Full Faith and Credit Clause than under the Due Process
Clause for evaluating the constitutionality of choice of law decisions, see Alaska Packers
Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 549-550 (1935) (interest of State
whose law was applied was no less than interest of State whose law was rejected), the Court
has since abandoned the weighing of interests requirement. Carroll v. Lanza, 349 U. S. 408
(1955); see Nevada v. Hall, supra; Weintraub, Due Process and Full Faith and Credit
Limitations on a State's Choice of Law, 44 Iowa L.Rev. 449 (1959). Different considerations
are, of course, at issue when full faith and credit is to be accorded to acts, records, and

proceedings outside the choice of law area, such as in the case of sister state court
judgments.

[Footnote 11]

Prior to the advent of interest analysis in the state courts as the "dominant mode of analysis in
modern choice of law theory," Silberman, Shaffer v. Heitner: The End of an Era, 53 N.Y.U.L.Rev.
33, 80, n. 259 (1978); cf. Richards v. United States, 369 U. S. 1, 369 U. S. 11-13, and nn. 26-27
(1962) (discussing trend toward interest analysis in state courts), the prevailing choice of law
methodology focused on the jurisdiction where a particular event occurred. See, e.g.,
Restatement of Conflict of Laws (1934). For example, in cases characterized as contract
cases, the law of the place of contracting controlled the determination of such issues as
capacity, fraud, consideration, duty, performance, and the like. Id. 332; see Beale, What Law
Governs the Validity of a Contract, 23 Harv.L.Rev. 260, 270-271 (1910). In the tort context, the
law of the place of the wrong usually governed traditional choice of law analysis. Restatement,
supra, 378; see Richards v. United States, supra at 369 U. S. 11-12.

Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143 (1934), can, perhaps,
best be explained as an example of that period. In that case, the Court struck down application
by the Mississippi courts of Mississippi law which voided the limitations provision in a fidelity
bond written in Tennessee between a Connecticut insurer and Delta, both of which were doing
business in Tennessee and Mississippi. By its terms, the bond covered misapplication of
funds "by any employee in any position, anywhere. . . .'" Id. at 293 U. S. 145. After Delta
discovered defalcations by one of its Mississippi-based employees, a lawsuit was commenced
in Mississippi.

That case, however, has scant relevance for today. It implied a choice of law analysis which,
for all intents and purposes, gave an isolated event -- the writing of the bond in Tennessee -controlling constitutional significance, even though there might have been contacts with
another State (there Mississippi) which would make application of its law neither unfair nor
unexpected. See Martin, Personal Jurisdiction and Choice of Law, 78 Mich.L.Rev. 872, 874,
and n. 11 (1980).

[Footnote 12]

Dick sought to obtain quasi-in-rem jurisdiction by garnishing the reinsurance obligation of the
New York reinsurer. The reinsurer had never transacted business in Texas, but it

"was cited by publication, in accordance with a Texas statute; attorneys were appointed for it
by the trial court; and they filed on its behalf an answer which denied liability."

281 U.S. at 281 U. S. 402. There would be no jurisdiction in the Texas courts to entertain such
a lawsuit today. See Rush v. Savchuk, 444 U. S. 320 (1980); Shaffer v. Heitner, 433 U. S. 186
(1977); Silberman, supra at 62-65.

[Footnote 13]

The Court noted that the result might have been different if there had been some connection to
Texas upon "which the State could properly lay hold as the basis of the regulations there
imposed." 281 U.S. at 281 U. S. 408, n. 5; see Watson v. Employers Liability Assurance Corp.,
348 U. S. 66, 348 U. S. 71 (1954).

[Footnote 14]

See generally Weintraub, supra, n. 10, at 455-457.

[Footnote 15]

The Court found no violation of the Full Faith and Credit Clause, since California's interest was
considered to be no less than Alaska's, 294 U.S. at 294 U. S. 547-548, 294 U. S. 549-550, even
though the injury occurred in Alaska while the employee was performing his contract
obligations there. While Alaska Packers balanced the interests of California and Alaska to
determine the full faith and credit issue, such balancing is no longer required. See Nevada v.
Hall, 440 U.S. at 440 U. S. 424; n 10, supra.

[Footnote 16]

The precise question raised was whether the Virginia Compensation Commission "had sole
jurisdiction over the claim." 330 U.S. at 330 U. S. 472-473. In finding that application of the
District's law did not violate either due process or full faith and credit requirements, the Court
in effect treated the question as a constitutional choice of law issue.

[Footnote 17]

The Court has upheld choice of law decisions challenged on constitutional grounds in
numerous other decisions. See Nevada v. Hall, supra (upholding California's application of
California law to automobile accident in California between two California residents and a
Nevada official driving car owned by State of Nevada while engaged in official business in
California); Carroll v. Lanza, 349 U. S. 408 (1955) (upholding Arkansas' choice of Arkansas law
where Missouri employee executed employment contract with Missouri employer and was
injured on job in Arkansas but was removed immediately to a Missouri hospital); Watson v.
Employers Liability Assurance Corp., 348 U. S. 66 (1954) (allowing application of Louisiana
direct action statute by Louisiana resident against insurer even though policy was written and
delivered in another State, where plaintiff was injured in Louisiana); Pacific Employers Ins. Co.
v. Industrial Accident Comm'n, 306 U. S. 493 (1939) (holding Full Faith and Credit Clause not
violated where California applied own Workmen's Compensation Act in case of injury suffered
by Massachusetts employee temporarily in California in course of employment). Thus, Nevada
v. Hall, supra, and Watson v. Employers Liability Assurance Corp., supra, upheld application of
forum law where the relevant contacts consisted of plaintiff's residence and the place of the
injury. Pacific Employers Ins. Co. v. Industrial Accident Comm'n, supra, and Carroll v. Lanza,
supra, relied on the place of the injury arising from the respective employee's temporary
presence in the forum State in connection with his employment.

[Footnote 18]

The policy issued to Mr. Hague provided that Allstate would pay to the insured, or his legal
representative, damages "sustained by the insured, caused by accident and arising out of the
ownership, maintenance or use of [an] uninsured automobile. . . ." No suggestion has been
made that Mr. Hague's uninsured motorist protection is unavailable because he was not killed
while driving one of his insured automobiles.

[Footnote 19]

Numerous cases have applied the law of a jurisdiction other than the situs of the injury where
there existed some other link between that jurisdiction and the occurrence. See, e.g., Cardillo v.
Liberty Mutual Ins. Co., 330 U. S. 469 (1947); Alaska Packers Assn. v. Industrial Accident
Comm'n, 294 U. S. 532 (1935); Rosenthal v. Warren, 475 F.2d 438 (CA2), cert. denied, 414 U.S.
856 (1973); Clark v. Clark, 107 N.H. 351, 222 A.2d 205 (1966); Tooker v. Lopez, 24 N.Y.2d 569,
249 N.E.2d 394 (1969); Babcock v. Jackson, 12 N.Y.2d 473, 191 N.E.2d 279 (1963).

[Footnote 20]

The injury or death of a resident of State A in State B is a contact of State A with the
occurrence in State B. See cases cited in n19, supra.

[Footnote 21]

Petitioner's statement that the instant dispute involves the interpretation of insurance
contracts which were "underwritten, applied for, and paid for by Wisconsin residents and
issued covering cars garaged in Wisconsin," Brief for Petitioner 6, is simply another way of
stating that Mr. Hague was a Wisconsin resident. Respondent could have replied that the
insurance contract was underwritten, applied for and paid for by a Minnesota worker, and
issued covering cars that were driven to work in Minnesota and garaged there for a substantial
portion of the day. The former statement is hardly more significant than the latter, since the
accident, in any event, did not involve any of the automobiles which were covered under Mr.
Hague's policy. Recovery is sought pursuant to the uninsured motorist coverage.

In addition, petitioner's statement that the contracts were "underwritten . . . by Wisconsin

residents" is not supported by the stipulated facts if petitioner means to include itself within
that phrase. Indeed, the policy, which is part of the record, recites that Allstate signed the
policy in Northbrook, Ill. Under some versions of the hoary rule of lex loci contracts, and
depending on the precise sequence of events, a sequence which is unclear from the record
before us, the law of Illinois arguably might apply to govern contract construction, even though
Illinois would have less contact with the parties and the occurrence than either Wisconsin or
Minnesota. No party sought application of Illinois law on that basis in the court below.

[Footnote 22]

Of course, Allstate could not be certain that Wisconsin law would necessarily govern any
accident which occurred in Wisconsin, whether brought in the Wisconsin courts or elsewhere.
Such an expectation would give controlling significance to the wooden lex loci delicti doctrine.
While the place of the accident is a factor to be considered in choice of law analysis, to apply
blindly the traditional, but now largely abandoned, doctrine, Silberman, supra, n 11, at 80, n.
259; see n 11, supra, would fail to distinguish between the relative importance of various legal
issues involved in a lawsuit, as well as the relationship of other jurisdictions to the parties and
the occurrence or transaction. If, for example, Mr. Hague had been a Wisconsin resident and
employee who was injured in Wisconsin and was then taken by ambulance to a hospital in Red
Wing, Minn., where he languished for several weeks before dying, Minnesota's interest in
ensuring that its medical creditors were paid would be obvious. Moreover, under such
circumstances, the accident itself might be reasonably characterized as a bi-state occurrence
beginning in Wisconsin and ending in Minnesota. Thus, reliance by the insurer that Wisconsin
law would necessarily govern any accident that occurred in Wisconsin, or that the law of
another jurisdiction would necessarily govern any accident that did not occur in Wisconsin,
would be unwarranted. See n. 11 supra; cf. Rosenthal v. Warren, supra, (Massachusetts
hospital could not have purchased insurance with expectation that Massachusetts law would
govern damages recovery as to New York patient who died in hospital and whose widow
brought suit in New York).

If the law of a jurisdiction other than Wisconsin did govern, there was a substantial likelihood,
with respect to uninsured motorist coverage, that stacking would be allowed. Stacking was the
rule in most States at the time the policy was issued. Indeed, the Wisconsin Supreme Court, in
Nelson v. Employers Mutual Casualty Co., 63 Wis.2d 558, 563-566, and nn. 2, 3, 217 N.W.2d
670, 672, 674, and nn. 2, 3 (1974), identified 29 States, including Minnesota, whose law it
interpreted to allow stacking, and only 9 States whose law it interpreted to prohibit stacking.
Clearly then, Allstate could not have expected that an anti-stacking rule would govern any
particular accident in which the insured might be involved, and thus cannot claim unfair
surprise from the Minnesota Supreme Court's choice of forum law.

[Footnote 23]

The Court has recognized that examination of a State's contacts may result in divergent
conclusions for jurisdiction and choice of law purposes. See Kulko v. California Superior Court,
436 U. S. 84, 436 U. S. 98 (1978) (no jurisdiction in California but California law "arguably
might" apply); Shaffer v. Heitner, 433 U.S. at 433 U. S. 215 (no jurisdiction in Delaware,
although Delaware interest "may support the application of Delaware law"); cf. Hanson v.
Denckla, 357 U. S. 235, 357 U. S. 254, and n. 27 (1958) (no jurisdiction in Florida; the "issue is

personal jurisdiction, not choice of law," an issue which the Court found no need to decide).
Nevertheless, "both inquiries are often closely related, and to a substantial degree depend
upon, similar considerations.'" Shaffner, 433 U.S. at 433 U. S. 224-225 (BRENNAN, J.,
concurring in part and dissenting in part). Here, of course, jurisdiction in the Minnesota courts
is unquestioned, a factor not without significance in assessing the constitutionality of
Minnesota's choice of its own substantive law. Cf. id. at 433 U. S. 225 ("the decision that it is
fair to bind a defendant by a State's laws and rules should prove to be highly relevant to the
fairness of permitting that same State to accept jurisdiction for adjudicating the controversy").

[Footnote 24]

There is no element of unfair surprise or frustration of legitimate expectations as a result of

Minnesota's choice of its law. Because Allstate was doing business in Minnesota and was
undoubtedly aware that Mr. Hague was a Minnesota employee, it had to have anticipated that
Minnesota law might apply to an accident in which Mr. Hague was involved. See Clay II, 377 U.
S. 179, 377 U. S. 182 (1964); Watson v. Employers Liability Assurance Corp., 348 U.S. at 348 U.
S. 72-73; Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U.S. at 294 U. S. 538-543;
cf. Home Ins. Co. v. Dick, 281 U.S. at 281 U. S. 404 (neither insurer nor reinsurer present in
forum State). Indeed, Allstate specifically anticipated that Mr. Hague might suffer an accident
either in Minnesota or elsewhere in the United States, outside of Wisconsin, since the policy it
issued offered continental coverage. Cf. id. at 281 U. S. 403 (coverage limited to losses
occurring in certain Mexican waters which were outside of jurisdiction whose law was
applied). At the same time, Allstate did not seek to control construction of the contract, since
the policy contained no choice of law clause dictating application of Wisconsin law. See Clay
II, supra at 377 U. S. 182 (nationwide coverage of policy and lack of choice of law clause).

[Footnote 25]

Justice Black's dissent in the first Clay decision, a decision which vacated and remanded a
lower court determination to obtain an authoritative construction of state law that might moot
the constitutional question, subsequently commanded majority support in the second Clay
decision. Clay II, supra at 377 U. S. 180-183.

[Footnote 26]

The stipulated facts do not reveal the date on which Mrs. Hague first moved to Red Wing.

[Footnote 27]

These proceedings began on May 28, 1976. Mrs. Hague was remarried on June 19, 1976.

[Footnote 28]

The dissent suggests that considering respondent's post-occurrence change of residence as

one of the Minnesota contacts will encourage forum shopping. Post at 449 U. S. 337. This
overlooks the fact that her change of residence was bona fide, and not motivated by litigation
considerations.

[Footnote 29]

We express no view whether the first two contacts, either together or separately, would have
sufficed to sustain the choice of Minnesota law made by the Minnesota Supreme Court.

JUSTICE STEVENS, concurring in the judgment.

As I view this unusual case -- in which neither precedent nor constitutional language provides
sure guidance -- two separate questions must be answered. First, does the Full Faith and
Credit Clause [Footnote 2/1] require Minnesota, the forum State, to apply Wisconsin law?
Second, does the Due Process Clause [Footnote 2/2] of the Fourteenth Amendment prevent
Minnesota from applying its own law? The first inquiry implicates the federal interest in
ensuring that Minnesota respect the sovereignty of the State of Wisconsin; the second
implicates the litigants' interest in a fair adjudication of their rights. [Footnote 2/3]

Page 449 U. S. 321

I realize that both this Court's analysis of choice of law questions [Footnote 2/4] and scholarly
criticism of those decisions [Footnote 2/5] have treated these two inquiries as though they
were indistinguishable. [Footnote 2/6]

Page 449 U. S. 322

Nevertheless, I am persuaded that the two constitutional provisions protect different interests,
and that proper analysis requires separate consideration of each,

The Full Faith and Credit Clause is one of several provisions in the Federal Constitution
designed to transform the several States from independent sovereignties into a single, unified
Nation. See Thomas v. Washington Gas Light Co., 448 U. S. 261, 448 U. S. 271-272 (1980)
(plurality opinion); Milwaukee County v. M. E. White Co., 296 U. S. 268, 296 U. S. 276-277
(1935). [Footnote 2/7] The Full Faith and Credit Clause implements this design by directing
that a State, when acting as the forum for litigation having multistate aspects or implications,
respect the legitimate interests of other States and avoid infringement upon their sovereignty.
The Clause does not, however, rigidly

Page 449 U. S. 323

require the forum State to apply foreign law whenever another State has a valid interest in the
litigation. See Nevada v. Hall, 440 U. S. 410, 440 U. S. 424 (1979); Alaska Packers Assn. v.
Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 546-548 (1935); Pacific Employers Ins.
Co. v. Industrial Accident Comm'n, 306 U. S. 493, 306 U. S. 501-502 (1939). [Footnote 2/8] On
the contrary, in view of the fact that the forum State is also a sovereign in its own right, in
appropriate cases, it may attach paramount importance to its own legitimate interests.
[Footnote 2/9] Accordingly, the fact that a choice of law decision may be unsound as a matter
of conflicts law does not necessarily implicate the federal concerns embodied in the Full Faith
and Credit Clause. Rather, in my opinion, the Clause should not invalidate a state court's
choice of forum law unless that choice threatens the federal interest in national unity by
unjustifiably infringing upon the legitimate interests of another State. [Footnote 2/10]

Page 449 U. S. 324

In this case, I think the Minnesota courts' decision to apply Minnesota law was plainly
unsound as a matter of normal conflicts law. Both the execution of the insurance contract and
the accident giving rise to the litigation took place in Wisconsin. Moreover, when both of those
events occurred, the plaintiff, the decedent, and the operators of both vehicles were all
residents of Wisconsin. Nevertheless, I do not believe that any threat to national unity or
Wisconsin's sovereignty ensues from allowing the substantive question presented by this case
to be determined by the law of another State.

The question on the merits is one of interpreting the meaning of the insurance contract.
Neither the contract itself nor anything else in the record reflects any express understanding
of the parties with respect to what law would be applied or with respect to whether the
separate uninsured motorist coverage for each of the decedent's three cars could be
"stacked." Since the policy provided coverage for accidents that might occur in other States, it
was obvious to the parties at the time of contracting that it might give rise to the application of
the law of States other than Wisconsin. Therefore, while Wisconsin may have an interest in
ensuring that contracts formed in Wisconsin in reliance upon Wisconsin law are interpreted in
accordance with that law, that interest is not implicated in this case. [Footnote 2/11]

Page 449 U. S. 325

Petitioner has filed to establish that Minnesota's refusal to apply Wisconsin law poses any
direct [Footnote 2/12] or indirect threat to Wisconsin's sovereignty. [Footnote 2/13] In the
absence of any such

Page 449 U. S. 326

threat, I find it unnecessary to evaluate the forum State's interest in the litigation in order to
reach the conclusion that the Full Faith and Credit Clause does not require the Minnesota
courts to apply Wisconsin law to the question of contract interpretation presented in this case.

II

It may be assumed that a choice of law decision would violate the Due Process Clause if it
were totally arbitrary or if it were fundamentally unfair to either litigant. I question whether a
judge's decision to apply the law of his own State could ever be described as wholly irrational.
For judges are presumably familiar with their own state law, and may find it difficult and time
consuming to discover and apply correctly the law of another State. [Footnote 2/14] The forum
State's interest in the fair and efficient administration of justice is therefore sufficient, in my
judgment, to attach a presumption of validity to a forum State's decision to apply its own law
to a dispute over which it has jurisdiction.

The forum State's interest in the efficient operation of its judicial system is clearly not
sufficient, however, to justify the application of a rule of law that is fundamentally unfair to one
of the litigants. Arguably, a litigant could demonstrate such unfairness in a variety of ways.
Concern about the fairness of the forum's choice of its own rule might arise

Page 449 U. S. 327

if that rule favored residents over nonresidents, if it represented a dramatic departure from the
rule that obtains in most American jurisdictions, or if the rule itself was unfair on its face or as
applied. [Footnote 2/15]

The application of an otherwise acceptable rule of law may result in unfairness to the litigants
if, in engaging in the activity which is the subject of the litigation, they could not reasonably
have anticipated that their actions would later be judged by this rule of law. A choice of law
decision that frustrates the justifiable expectations of the parties can be fundamentally unfair.
This desire to prevent unfair surprise to a litigant has been the central concern in this Court's
review of choice of law decisions under the Due Process Clause. [Footnote 2/16]

Neither the "stacking" rule itself nor Minnesota's application of that rule to these litigants
raises any serious question of fairness. As the plurality observes, "[s]tacking was

Page 449 U. S. 328

the rule in most States at the time the policy was issued." Ante at 449 U. S. 316, n. 22.
[Footnote 2/17] Moreover, the rule is consistent with the economics of a contractual
relationship in which the policyholder paid three separate premiums for insurance coverage
for three automobiles, including a separate premium for each uninsured motorist coverage.
[Footnote 2/18] Nor am I persuaded that the decision of the Minnesota courts to apply the
"stacking" rule in this case can be said to violate due process because that decision frustrates
the reasonable expectations of the contracting parties.

Contracting parties can, of course, make their expectations explicit by providing in their
contract either that the law of a particular jurisdiction shall govern questions of contract
interpretation [Footnote 2/19] or that a particular substantive rule, for instance "stacking," shall
or shall not apply. [Footnote 2/20] In the absence

Page 449 U. S. 329

of such express provisions, the contract nonetheless may implicitly reveal the expectations of
the parties. For example, if a liability insurance policy issued by a resident of a particular State
provides coverage only with respect to accidents within that State, it is reasonable to infer that
the contracting parties expected that their obligations under the policy would be governed by
that State's law. [Footnote 2/21]

In this case, no express indication of the parties' expectations is available. The insurance
policy provided coverage for accidents throughout the United States; thus, at the time of
contracting, the parties certainly could have anticipated that the law of States other than
Wisconsin would govern particular claims arising under the policy. [Footnote 2/22] By virtue of
doing business

Page 449 U. S. 330

in Minnesota, Allstate was aware that it could be sued in the Minnesota courts; Allstate also
presumably was aware that Minnesota law, as well as the law of most States, permitted
"stacking." Nothing in the record requires that a different inference be drawn. Therefore, the
decision of the Minnesota courts to apply the law of the forum in this case does not frustrate
the reasonable expectations of the contracting parties, and I can find no fundamental
unfairness in that decision requiring the attention of this Court. [Footnote 2/23]

Page 449 U. S. 331

In terms of fundamental fairness, it seems to me that two factors relied upon by the plurality -the plaintiff's post-accident move to Minnesota and the decedent's Minnesota employment -are either irrelevant to or possibly even tend to undermine the plurality's conclusion. When the
expectations of the parties at the time of contracting are the central due process concern, as
they are in this case, an unanticipated post-accident occurrence is clearly irrelevant for due
process purposes. The fact that the plaintiff became a resident of the forum State after the
accident surely cannot justify a ruling in her favor that would not be made if the plaintiff were a
nonresident. Similarly, while the fact that the decedent regularly drove into Minnesota might be
relevant to the expectations of the contracting parties, [Footnote 2/24] the fact that he did so
because he was employed in Minnesota adds nothing to the due process analysis. The choice
of law decision of the Minnesota courts is consistent with due process because it does not
result in unfairness to either litigant, not because Minnesota now has an interest in the plaintiff
as resident or formerly had an interest in the decedent as employee.

III

Although I regard the Minnesota courts' decision to apply forum law as unsound as a matter of
conflicts law, and there

Page 449 U. S. 332

is little in this record other than the presumption in favor of the forum's own law to support
that decision, I concur in the plurality's judgment. It is not this Court's function to establish and
impose upon state courts a federal choice of law rule, nor is it our function to ensure that state
courts correctly apply whatever choice of law rules they have themselves adopted. [Footnote
2/25] Our authority may be exercised in the choice of law area only to prevent a violation of the
Full Faith and Credit or the Due Process Clause. For the reasons stated above, I find no such
violation in this case.

[Footnote 2/1]

Article IV, 1, provides:

"Full Faith and Credit shall be given in each State to the public Acts, Records, and Judicial
Proceedings of every other State. And the Congress may by general Laws prescribe the
Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof."

[Footnote 2/2]

Section 1 of the Fourteenth Amendment provides, in part:

"No State shall . . . deprive any person of life, liberty, or property, without due process of law. . .
."

[Footnote 2/3]

The two questions presented by the choice of law issue arise only after it is assumed or
established that the defendant's contacts with the forum State are sufficient to support
personal jurisdiction. Although the choice of law concerns -- respect for another sovereign and
fairness to the litigants -- are similar to the two functions performed by the jurisdictional
inquiry, they are not identical. In World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 444
U. S. 291-292 (1980), we stated:

"The concept of minimum contacts, in turn, can be seen to perform two related, but
distinguishable, functions. It protects the defendant against the burdens of litigating in a
distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not
reach out beyond the limits imposed on them by their status as coequal sovereigns in a
federal system."

See also Reese, Legislative Jurisdiction, 78 Colum.L.Rev. 1587, 1589-1590 (1978). While it has
been suggested that this same minimum contacts analysis be used to define the
constitutional limitations on choice of law, see, e.g., Martin, Personal Jurisdiction and Choice
of Law, 78 Mich.L.Rev. 872 (1980), the Court has made it clear over the years that the personal
jurisdiction and choice of law inquiries are not the same. See Kulko v. California Superior

Court, 436 U. S. 84, 436 U. S. 98 (1978); Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 215 (1977);
id. at 433 U. S. 224-226 (BRENNAN, J., dissenting in part); Hanson v. Denckla, 357 U. S. 235,
357 U. S. 253-254 (1958); id. at 357 U. S. 258 (Black, J., dissenting).

[Footnote 2/4]

Although the Court has struck down a state court's choice of forum law on both due process,
see, e.g., Home Ins. Co. v. Dick, 281 U. S. 397 (1930), and full faith and credit grounds, see, e.g.,
John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), no clear analytical
distinction between the two constitutional provisions has emerged. The Full Faith and Credit
Clause, of course, was inapplicable in Home Ins. Co. because the law of a foreign nation,
rather than of a sister State, was at issue; a similarly clear explanation for the Court's reliance
upon the Full Faith and Credit Clause in John Hancock Mutual Life Ins. cannot be found.
Indeed, John Hancock Mutual Life Ins. is probably best understood as a due process case.
See Reese, supra at 1589, and n. 17; Weintraub, Due Process and Full Faith and Credit
Limitations on a State's Choice of Law, 44 Iowa L.Rev. 449, 457-458 (1959).

[Footnote 2/5]

See R. Leflar, American Conflicts Law 5, p. 7, 55, pp. 106-107 (3d ed.1977). The Court's
frequent failure to distinguish between the two Clauses in the choice of law context may
underlie the suggestions of various commentators that either the Full Faith and Credit Clause
or the Due Process Clause be recognized as the single appropriate source for constitutional
limitations on choice of law. Compare Martin, Constitutional Limitations on Choice of Law, 61
Cornell L.Rev. 185 (1976) (full faith and credit), with Reese, supra, (due process); see also
Kirgis, The Roles of Due Process and Full Faith and Credit in Choice of Law, 62 Cornell L.Rev.
94 (1976).

[Footnote 2/6]

Even when the Court has explicitly considered both provisions in a single case, the
requirements of the Due Process and Full Faith and Credit Clauses have been measured by
essentially the same standard. For example, in Watson v. Employers Liability Assurance Corp.,
348 U. S. 66 (1954), the Court separately considered the due process and full faith and credit
questions. See id. at 348 U. S. 70-73. However, in concluding that the Full Faith and Credit

Clause did not bar the Louisiana courts from applying Louisiana law in that case, the Court
substantially relied upon its preceding analysis of the requirements of due process. Id. at 348
U. S. 73. By way of contrast, in Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S.
532, 294 U. S. 544-550 (1935), the Court's full faith and credit analysis differed significantly
from its due process analysis. However, as noted in the plurality opinion, ante at 449 U. S. 308,
n. 10, the Court has since abandoned the full faith and credit standard represented by Alaska
Packers.

[Footnote 2/7]

See also Sumner, The Full Faith and Credit Clause -- Its History and Purpose, 34 Or.L.Rev. 224,
242 (1955); Weintraub, supra at 477; R. Leflar, supra, 73, P. 143.

[Footnote 2/8]

As the Court observed in Alaska Packers, supra, an overly rigid application of the Full Faith and
Credit Clause would produce anomalous results:

"A rigid and literal enforcement of the full faith and credit clause, without regard to the statute
of the forum, would lead to the absurd result that, wherever the conflict arises, the statute of
each state must be enforced in the courts of the other, but cannot be in its own."

294 U.S. at 294 U. S. 547.

[Footnote 2/9]

For example, it is well established that "the Full Faith and Credit Clause does not require a
State to apply another State's law in violation of its own legitimate public policy." . Nevada v.
Hall, 440 U. S. 410, 440 U. S. 422 (1979) (footnote omitted).

[Footnote 2/10]

The kind of state action the Full Faith and Credit Clause was designed to prevent has been
described in a variety of ways by this Court. In Carroll v. Lanza, 349 U. S. 408, 349 U. S. 413
(1955), the Court indicated that the Clause would be invoked to restrain "any policy of hostility
to the public Acts" of another State. In Nevada v. Hall, supra at 440 U. S. 424, n. 24, we
approved action which "pose[d] no substantial threat to our constitutional system of
cooperative federalism." And in Thomas v. Washington Gas Light Co., 448 U. S. 261, 448 U. S.
272 (1980), the plurality opinion described the purpose of the Full Faith and Credit Clause as
the prevention of "parochial entrenchment on the interests of other State."

[Footnote 2/11]

While the justifiable expectations of the litigants are a major concern for purposes of due
process scrutiny of choice of law decisions, see 449 U. S. infra, the decision in John Hancock
Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), suggests that this concern may also
implicate state interests cognizable under the Full Faith and Credit Clause. In John Hancock
Mutual Life Ins., the Court struck down on full faith and credit grounds a Georgia court's choice
of Georgia law over a conflicting New York statute in a suit on a New York life insurance
contract brought after the insured's death in New York. Central to the decision in that case was
the Court's apparent concern that application of Georgia law would result in unfair surprise to
one of the contracting parties. The Court found that the New York statute was "a rule of
substantive law which became a term of the contract, as much so as the amount of the
premium to be paid or the time for its payment." Id. at 299 U. S. 182 (footnote omitted). This
statute "determine[d] the substantive rights of the parties as fully as if a provision to that effect
had been embodied in writing in the policy." Id. at 299 U. S. 182-183. The insurer had no
reason to expect that the New York statute would not control all claims arising under the life
insurance policy. The parties to a life insurance contract normally would not expect the place
of death to have any bearing upon the proper construction of the policy; by way of contrast, in
the case of a liability policy, the place of the tort might well be relevant. For that reason, in a life
insurance contract relationship, it is likely that neither party would expect the law of any State
other than the place of contracting to have any relevance in possible subsequent litigation. See
generally C. Carnahan, Conflict of Laws and Life Insurance Contracts 15, pp. 51-52, 47, pp.
264-265, 267-268, 60, pp. 325-327 (2d ed.1958) .

Paul Freund has aptly characterized John Hancock Mutual Life Ins. as perhaps this Court's
"most ambitious application of the full faith and credit clause." Freund, Chief Justice Stone and
the Conflict of Laws, 59 Harv.L.Rev. 1210, 1233 (1946). Like Bradford Electric Light Co. v.
Clapper, 286 U. S. 145 (1932), on which the Court relied, see 299 U.S. at 299 U. S. 183, John
Hancock Mutual Life Ins. was one of a series of constitutional decisions in the 1930's that

have been limited by subsequent cases. See Carroll v. Lanza, 349 U.S. at 349 U. S. 412;
Thomas v. Washington Gas Light Co., supra at 448 U. S. 272-273, n. 18 (plurality opinion). See
also Traynor, Is This Conflict Really Necessary?, 37 Texas L.Rev. 657, 675 (1959).

[Footnote 2/12]

Compare Nevada v. Hall, supra, in which the Court permitted a California court to disregard
Nevada's statutory limitation on damages available against the State. The Court found this
direct intrusion upon Nevada's sovereignty justified because the Nevada statute was
"obnoxious" to California's public policy. Id. at 424.

[Footnote 2/13]

It is clear that a litigant challenging the forum's application of its own law to a lawsuit properly
brought in its courts bears the burden of establishing that this choice of law infringes upon
interests protected by the Full Faith and Credit Clause. See Alaska Packers Assn. v. Industrial
Accident Comm'n, 294 U.S. at 294 U. S. 547-548.

It is equally clear that a state court's decision to apply its own law cannot violate the Full Faith
and Credit Clause where the application of forum law does not impinge at all upon the
interests of other States. Cf. Reese, supra, n. 3, at 1601.

[Footnote 2/14]

This task can be particularly difficult for a trial judge who does not have ready access to a law
library containing the statutes and decisions of all 50 States. If that judge is able to apply law
with which he is thoroughly familiar or can easily discover, substantial savings can accrue to
the State's judicial system. Moreover, an erroneous interpretation of the governing rule is less
likely when the judge is applying a familiar rule. Cf. Shaffer v. Heitner, 433 U.S. at 433 U. S.
225-226 (BRENNAN, J., dissenting in part) (such concerns indicate that a State's ability to
apply its own law to a transaction should be relevant for purposes of evaluating its power to
exercise jurisdiction over the parties to that transaction).

[Footnote 2/15]

Discrimination against nonresidents would be constitutionally suspect even if the Due Process
Clause were not a check upon a State's choice of law decisions. See Currie & Schreter,
Unconstitutional Discrimination in the Conflict of Laws: Equal Protection, 28 U.Chi.L.Rev. 1
(1960); Currie & Schreter, Unconstitutional Discrimination in the Conflict of Laws: Privileges
and Immunities, 69 Yale L.J. 1323 (1980); Note, Unconstitutional Discrimination in Choice of
Law, 77 Colum.L.Rev. 272 (1977). Moreover, both discriminatory and substantively unfair rules
of law may be detected and remedied without any special choice of law analysis; familiar
constitutional principles are available to deal with both varieties of unfairness. See, e.g.,
Martin, supra, n. 5, at 199.

[Footnote 2/16]

Upon careful analysis, most of the decisions of this Court that struck down on due process
grounds a state court's choice of forum law can be explained as attempts to prevent a State
with a minimal contact with the litigation from materially enlarging the contractual obligations
of one of the parties where that party had no reason to anticipate the possibility of such
enlargement. See, e.g., Home Ins. Co. v. Dick, 281 U. S. 397 (1930); Hartford Accident &
Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143 (1934); cf. John Hancock Mutual Life Ins.
Co. v. Yates, 299 U. S. 178 (1936) (similar concern under Full Faith and Credit Clause, see n.
11, supra). See generally Weintraub, supra, n. 4, at 457-460.

[Footnote 2/17]

See also Nelson v. Employers Mutual Casualty Co., 63 Wis.2d 558, 563-566, and nn. 2, 3, 217
N.W.2d 670, 672-674, and nn. 2, 3 (1974), discussed ante at 449 U. S. 316-317, n. 22.

[Footnote 2/18]

The "stacking" rule provides that all of the uninsured motorist coverage purchased by an
insured party may be aggregated, or "stacked," to create a fund available to provide a recovery
for a single accident.

[Footnote 2/19]

For example, in Home Ins. Co. v. Dick, supra at 281 U. S. 403, and n. 1, the insurance policy
was subject, by its express terms, to Mexican law.

[Footnote 2/20]

Home Ins. Co., supra, again provides a useful example. In that case, the insurance policy
expressly provided a l-year limitations period for claims arising thereunder. Id. at 281 U. S.
403. Similarly, the insurance policy at issue in Hartford Accident & Indemnity Co. v. Delta &
Pine Land Co., supra at 292 U. S. 146, also prescribed a specific limitations period.

While such express provisions are obviously relevant, they are not always dispositive. In Clay
v. Sun Insurance Office, Ltd., 377 U. S. 179 (1964), the Court allowed the lower court's choice
of forum law to override an express contractual limitations period. The Court emphasized the
fact that the insurer had issued the insurance policy with the knowledge that it would cover the
insured property wherever it was taken. Id. at 377 U. S. 181-182. The Court also noted that the
insurer had not attempted to provide in the policy that the law of another State would control.
Id. at 377 U. S. 182.

In Watson v. Employers Liability Assurance Corp., 348 U.S. at 348 U. S. 68, the insurance
policy expressly provided that an injured party could not maintain a direct action against the
insurer until after the insured's liability had been determined. The Court found that neither the
Due Process Clause nor the Full Faith and Credit Clause prevented the Louisiana courts from
applying forum law to permit a direct action against the insurer prior to determination of the
insured's liability. As in Clay, the Court noted that the policy provided coverage for injuries
anywhere in the United States. 348 U.S. at 348 U. S. 71-72. An additional, although
unarticulated, factor in Watson was the fact that the litigant urging that forum law be applied
was not a party to the insurance contract. While contracting parties may be able to provide in
advance that a particular rule of law will govern disputes between them, their expectations are
clearly entitled to less weight when the rights of third-party litigants are at issue.

[Footnote 2/21]

In Home Ins. Co., supra, the insurance policy was issued in Mexico by a Mexican corporation
and covered the insured vessel only in certain Mexican waters. Id. at 281 U. S. 403.

[Footnote 2/22]

In Clay v. Sun Insurance Office, Ltd., supra at 377 U. S. 182, and Watson v. Employers Liability
Assurance Corp., supra at 348 U. S. 71-72, the Court considered it significant, in upholding the
lower courts' choice of forum law, that the insurance policies provided coverage throughout
the United States. See n. 20, supra. Of course, in both Clay and Watson, the loss to which the
insurance applied actually occurred in the forum State, whereas the accident in this case
occurred in Wisconsin, not Minnesota. However, as the dissent recognizes, post at 449 U. S.
336-337, because the question on the merits is one of contract interpretation, rather than tort
liability, the actual site of the accident is not dispositive with respect to the due process
inquiry. More relevant is the fact that the parties, at the time of contracting, anticipated that an
accident covered by the policy could occur in a "stacking" State. The fact that this particular
accident did not occur in Minnesota does not undercut the expectations formed by the parties
at the time of contracting.

In Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., supra, the Court struck down a
state court's choice of forum law despite the fact that the insurance contract's coverage was
not limited by state boundaries. While Hartford Accident may indeed have "scant relevance for
today," ante at 449 U. S. 309, n. 11, it is nonetheless consistent with a due process analysis
based upon fundamental fairness to the parties. One of the statutes applied by the Mississippi
courts in Hartford Accident was offensively broad, providing that "[a]ll contracts of insurance
on property, lives or interests in this state shall be deemed to be made therein." 292 U.S. at 292
U. S. 148. No similar statute is involved in this case. In addition, the Mississippi courts applied
the law of the forum to override an express contractual provision, and thus frustrated the
expectations of the contracting parties. In the present case, the insurance contract contains no
similar declaration of the intent of the parties.

[Footnote 2/23]

Comparison of this case with Home Ins. Co. v. Dick, 281 U. S. 397 (1930), confirms my
conclusion that the application of Minnesota law in this case does not offend the Due Process
Clause. In Home Ins. Co., the contract expressly provided that a particular limitations period

would govern claims arising under the insurance contract, and that Mexican law was to be
applied in interpreting the contract; in addition, the contract was limited in effect to certain
Mexican waters. The parties could hardly have made their expectations with respect to the
applicable law more plain. In this case, by way of contrast, nothing in the contract suggests
that Wisconsin law should be applied or that Minnesota's "stacking" rule should not be applied.
In this case, unlike Home Ins. Co., the court's choice of forum law results in no unfair surprise
to the insurer.

[Footnote 2/24]

Even this factor may not be of substantial significance. At the time of contracting, the parties
were aware that the insurance policy was effective throughout the United States, and that the
law of any State, including Minnesota, might be applicable to particular claims. The fact that
the decedent regularly drove to Minnesota, for whatever purpose, is relevant only to the extent
that it affected the parties' evaluation, at the time of contracting, of the likelihood that
Minnesota law would actually be applied at some point in the future. However, because the
applicability of Minnesota law was perceived as possible at the time of contracting, it does not
seem especially significant for due process purposes that the parties may also have
considered it likely that Minnesota law would be applied. This factor merely reinforces the
expectation revealed by the policy's national coverage.

[Footnote 2/25]

In Kryger v. Wilson, 24 U. S. 171, 24 U. S. 176 (1916), after rejecting a due process challenge to
a state court's choice of law, the Court stated:

"The most that the plaintiff in error can say is that the state court made a mistaken application
of doctrines of the conflict of laws in deciding that the cancellation of a land contact is
governed by the law of the situs, instead of the place of making and performance. But that,
being purely a question of local common law, is a matter with which this court is not
concerned."

JUSTICE POWELL, with whom THE CHIEF JUSTICE and JUSTICE REHNQUIST Join,
dissenting.

My disagreement with the plurality is narrow. I accept with few reservations 449 U. S. which
sets forth the basic principles that guide us in reviewing state choice of law decisions under
the Constitution. The Court should invalidate a forum State's decision to apply its own law only
when there are no significant contacts between the State and the litigation. This modest check
on state power is mandated by the Due Process Clause of the Fourteenth Amendment and the
Full Faith and Credit Clause of Art. IV, 1. I do not believe, however, that the plurality
adequately analyzes the policies such review must serve. In consequence, it has found
significant what appear to me to be trivial contacts between the forum State and the litigation.

Page 449 U. S. 333

At least since Carroll v. Lanza, 349 U. S. 408 (1955), the Court has recognized that both the
Due Process and the Full Faith and Credit Clauses are satisfied if the forum has such
significant contacts with the litigation that it has a legitimate state interest in applying its own
law. The significance of asserted contacts must be evaluated in light of the constitutional
policies that oversight by this Court should serve. Two enduring policies emerge from our
cases.

First, the contacts between the forum State and the litigation should not be so "slight and
casual" that it would be fundamentally unfair to a litigant for the forum to apply its own State's
law. Clay v. Sun Ins. Office, Ltd., 377 U. S. 179, 377 U. S. 182 (1964). The touchstone here is
the reasonable expectation of the parties. See Weintraub, Due Process and Full Faith and
Credit Limitations on a State's Choice of Law, 44 Iowa L.Rev. 449, 445-457 (1959) (Weintraub).
Thus, in Clay, the insurer sold a policy to Clay "with knowledge that he could take his property
anywhere in the world he saw fit without losing the protection of his insurance.'" 377 U.S. at
182, quoting Clay v. Sun Ins. Office, Ltd., 363 U. S. 207, 363 U. S. 221 (1960) (Black, J.,
dissenting). When the insured moved to Florida with the knowledge of the insurer, and a loss
occurred in that State, this Court found no unfairness in Florida's applying its own rule of
decision to permit recovery on the policy. The insurer "must have known it might be sued
there." Ibid. See also Watson v. Employers Liability Assurance Corp., 348 U. S. 66 (1954).
[Footnote 3/1]

Page 449 U. S. 334

Second, the forum State must have a legitimate interest in the outcome of the litigation before
it. Pacific Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493 (1939). The Full Faith and
Credit Clause addresses the accommodation of sovereign power among the various States.
Under limited circumstances, it requires one State to give effect to the statutory law of another
State. Nevada v. Hall, 440 U. S. 410, 440 U. S. 423 (1979). To be sure, a forum State need not
give effect to another State's law if that law is in "violation of its own legitimate public policy."
Id. at 440 U. S. 422. Nonetheless, for a forum State to further its legitimate public policy by
applying its own law to a controversy, there must be some connection between the facts
giving rise to the litigation and the scope of the State's lawmaking jurisdiction.

Both the Due Process and Full Faith and Credit Clauses ensure that the States do not "reach
out beyond the limits imposed on them by their status as coequal sovereigns in a federal
system." World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 444 U. S. 292 (1980)
(addressing Fourteenth Amendment limitation on state court jurisdiction). As the Court stated
in Pacific Ins. Co., supra:

"[T]he full faith and credit clause does not require one state to substitute for its own statute,
applicable to persons and events within it, the conflicting statute of another state."

Id. at 306 U. S. 502 (emphasis added). The State has a legitimate interest in applying a rule of
decision to the litigation only if the facts to which the rule will be applied have created effects
within the State, toward which the State's public policy is directed. To assess the sufficiency of
asserted contacts between the forum and the litigation, the court must determine if the
contacts form a reasonable link between the litigation and a state policy. In short, examination
of contacts addresses whether "the state

Page 449 U. S. 335

has an interest in the application of its policy in this instance." Currie, The Constitution and the
Choice of Law: Governmental Interests and the Judicial Function, in B. Currie Selected Essays
on the Conflict of Laws 188, 189 (1963) (Currie). If it does, the Constitution is satisfied.

John Hancock Mut. Life Ins. Co. v. Yates, 299 U. S. 178 (1936), illustrates this principle. A life
insurance policy was executed in New York, on a New York insured with a New York

beneficiary. The insured died in New York; his beneficiary moved to Georgia and sued to
recover on the policy. The insurance company defended on the ground that the insured, in the
application for the policy, had made materially false statements that rendered it void under
New York law. This Court reversed the Georgia court's application of its contrary rule that all
questions of the policy's validity must be determined by the jury. The Court found a violation of
the Full Faith and Credit Clause, because, "[i]n respect to the accrual of the right asserted
under the contract . . . , there was no occurrence, nothing done, to which the law of Georgia
could apply." Id. at 299 U. S. 182. In other words, the Court determined that Georgia had no
legitimate interest in applying its own law to the legal issue of liability. Georgia's contacts with
the contract of insurance were nonexistent. [Footnote 3/2] See Home Ins. Co. v. Dick, 281 U. S.
397, 281 U. S. 408 (1930).

In summary, the significance of the contacts between a forum State and the litigation must be
assessed in light of

Page 449 U. S. 336

these two important constitutional policies. [Footnote 3/3] A contact, or a pattern of contacts,
satisfies the Constitution when it protects the litigants from being unfairly surprised if the
forum State applies its own law, and when the application of the forum's law reasonably can
be understood to further a legitimate public policy of the forum State.

II

Recognition of the complexity of the constitutional inquiry requires that this Court apply these
principles with restraint. Applying these principles to the facts of this case, I do not believe,
however, that Minnesota had sufficient contacts with the "persons and events" in this litigation
to apply its rule permitting stacking. I would agree that no reasonable expectations of the
parties were frustrated. The risk insured by petitioner was not geographically limited. See Clay
v. Sun Ins. Office, Ltd., 377 U.S. at 377 U. S. 182. The close proximity of Hager City, Wis., to
Minnesota, and the fact that Hague commuted daily to Red Wing, Minn., for many years,
should have led the insurer to realize that there was a reasonable probability that the risk
would materialize in Minnesota. Under our precedents, it is plain that Minnesota could have
applied its own law to an accident occurring within its borders. See ante at 449 U. S. 318, n. 24.
The fact that the accident did not, in fact, occur in Minnesota is not controlling, because the
expectations of the litigants before the cause of

Page 449 U. S. 337

action accrues provide the pertinent perspective. See Weintraub 455; n. 1, supra.

The more doubtful question in this case is whether application of Minnesota's substantive law
reasonably furthers a legitimate state interest. The plurality attempts to give substance to the
tenuous contacts between Minnesota and this litigation. Upon examination, however, these
contacts are either trivial or irrelevant to the furthering of any public policy of Minnesota.

First, the post-accident residence of the plaintiff beneficiary is constitutionally irrelevant to the
choice of law question. John Hancock Mut. Life Ins. Co. v. Yates, supra. The plurality today
insists that Yates only held that a post-occurrence move to the forum State could not, "in and
of itself," confer power on the forum to apply its own law, but did not establish that such a
change of residence was irrelevant. Ante at 449 U. S. 319. What the Yates Court held, however,
was that "there was no occurrence, nothing done, to which the law of Georgia could apply." 299
U.S. at 299 U. S. 182 (emphasis added). Any possible ambiguity in the Court's view of the
significance of a post-occurrence change of residence is dispelled by Home Ins. Co. v. Dick,
supra, cited by the Yates Court, where it was held squarely that Dick's post-accident move to
the forum State was "without significance." 281 U.S. at 281 U. S. 408.

This rule is sound. If a plaintiff could choose the substantive rules to be applied to an action by
moving to a hospitable forum, the invitation to forum shopping would be irresistible. Moreover,
it would permit the defendant's reasonable expectations at the time the cause of action
accrues to be frustrated, because it would permit the choice of law question to turn on a
post-accrual circumstance. Finally, post-accrual residence has nothing to do with facts to
which the forum State proposes to apply its rule; it is unrelated to the substantive legal issues
presented by the litigation.

Second, the plurality finds it significant that the insurer does business in the forum State. Ante
at 449 U. S. 317-318. The State

Page 449 U. S. 338

does have a legitimate interest in regulating the practices of such an insurer. But this
argument proves too much. The insurer here does business in all 50 States. The forum State
has no interest in regulating that conduct of the insurer unrelated to property, persons, or
contracts executed within the forum State. [Footnote 3/4] See Hoopeston Canning Co. v.
Cullen, 318 U. S. 313, 318 U. S. 319 (1943). The plurality recognizes this flaw, and attempts to
bolster the significance of the local presence of the insurer by combining it with the other
factors deemed significant: the presence of the plaintiff and the fact that the deceased worked
in the forum State. This merely restates the basic question in the case.

Third, the plurality emphasizes particularly that the insured worked in the forum State.
[Footnote 3/5] Ante at 449 U. S. 313-317. The fact that the insured was a nonresident
employee in the forum

Page 449 U. S. 339

State provides a significant contact for the furtherance of some local policies. See, e.g., Pacific
Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493 (1939) (forum State's interest in
compensating workers for employment-related injuries occurring within the State); Alaska
Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 294 U. S. 549 (1935) (forum
State's interest in compensating the employment-related injuries of a worker hired in the
State). The insured's place of employment is not, however, significant in this case. Neither the
nature of the insurance policy, the events related to the accident, nor the immediate question
of stacking coverage is in any way affected or implicated by the insured's employment status.
The plurality's opinion is understandably vague in explaining how trebling the benefits to be
paid to the estate of a nonresident employee furthers any substantial state interest relating to
employment. Minnesota does not wish its workers to die in automobile accidents, but
permitting stacking will not further this interest. The substantive issue here is solely one of
compensation, and whether the compensation provided by this policy is increased or not will
have no relation to the State's employment policies or police power. See n. 5, supra.

Neither taken separately nor in the aggregate do the contacts asserted by the plurality today
indicate that Minnesota's application of its substantive rule in this case will further any
legitimate state interest. [Footnote 3/6] The plurality focuses

Page 449 U. S. 340

only on physical contacts vel non, and, in doing, so pays scant attention to the more
fundamental reasons why our precedents require reasonable policy-related contacts in choice
of law cases. Therefore, I dissent.

[Footnote 3/1]

Home Ins. Co. v. Dick, 281 U. S. 397 (1930), is a case where the reasonable expectations of a
litigant were frustrated. The insurance contract confined the risk to Mexico, where the loss
occurred and where both the insurer and the insured resided until the claim accrued. This
Court found a violation of the Due Process Clause when Texas, the forum State, applied a local
rule to allow the insured to gain a recovery unavailable under Mexican law. Because of the
geographic limitation on the risk, and because there were no contacts with the forum State
until the claim accrued, the insurer could have had no reasonable expectation that Texas law
would be applied to interpret its obligations under the contract. See Weintraub 455.

[Footnote 3/2]

"It is manifest that Georgia had no interest in the application to this case of any policy to be
found in its laws. When the contract was entered into, and at all times until the insured died,
the parties and the transaction were beyond the legitimate reach of whatever policy Georgia
may have had. Any interest asserted by Georgia must relate to the circumstance that the
action is tried there, and must arise not from any policy directed to the business of life
insurance but from some policy having to do with the business of the courts. This was
apparently recognized even by the Georgia court; hence the disingenuous characterization of
the matter as one of 'procedure,' rather than of 'substance.'"

Currie 236. See also id. at 232-233.

[Footnote 3/3]

The plurality today apparently recognizes that the significance of the contacts must be
evaluated in light of the policies our review serves. It acknowledges that the sufficiency of the
same contacts sometimes will differ in jurisdiction and choice of law questions. Ante at 449 U.
S. 317, n. 23. The plurality, however, pursues the rationale for the requirement of sufficient

contacts in choice of law cases no further than to observe that the forum's application of its
own law must be "neither arbitrary nor fundamentally unfair." Ante at 449 U. S. 313. But this
general prohibition does not distinguish questions of choice of law from those of jurisdiction,
or from much of the jurisprudence of the Fourteenth Amendment.

[Footnote 3/4]

The petitioner in John Hancock Mut. Life Ins. Co. v. Yates, 299 U. S. 178 (1936), did business
in Georgia, the forum State, at the time of that case. See The Insurance Almanac 715 (1935).
Also, Georgia extensively regulated insurance practices within the State at that time. See
Ga.Code 56-101 et seq. (1933). This Court did not hint in Yates that this fact was of the
slightest significance to the choice of law question, although it would have been crucial for the
exercise of in personam jurisdiction.

[Footnote 3/5]

The plurality exacts double service from this fact, by finding a separate contact in that the
insured commuted daily to his job. Ante at 449 U. S. 314-315. This is merely a repetition of the
facts that the insured lived in Wisconsin and worked in Minnesota. The State does have an
interest in the safety of motorists who use its roads. This interest is not limited to employees,
but extends to all nonresident motorists on its highways. This safety interest, however, cannot
encompass, either in logic or in any practical sense, the determination whether a nonresident's
estate can stack benefit coverage in a policy written in another State regarding an accident
that occurred on another State's roads.

Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469 (1947), hardly establishes commutation as an
independent contact; the case merely approved the application of a forum State's law to an
industrial accident occurring in a neighboring State when the employer and the employee both
resided in the forum State.

[Footnote 3/6]

The opinion of JUSTICE STEVENS concurring in the judgment supports my view that the
forum State's application of its own law to this case cannot be justified by the existence of

relevant minimum contacts. As JUSTICE STEVENS observes, the principal factors relied on by
the plurality are "either irrelevant to or possibly even tend to undermine the [plurality's]
conclusion." Ante at 449 U. S. 331. The interesting analysis he proposes to uphold the State's
judgment is, however, difficult to reconcile with our prior decisions, and may create more
problems than it solves. For example, it seems questionable to measure the interest of a State
in a controversy by the degree of conscious reliance on that State's law by private parties to a
contract. Ante at 449 U. S. 324. Moreover, scrutinizing the strength of the interests of a
nonforum State may draw this Court back into the discredited practice of weighing the relative
interests of various States in a particular controversy. See ante at 449 U. S. 308, n. 10 (plurality
opinion).